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What changed in Ventas's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ventas's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+583 added−516 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-10)

Top changes in Ventas's 2023 10-K

583 paragraphs added · 516 removed · 379 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+72 added−42 removed60 unchanged
Biggest changeUnder various federal, local and foreign environmental laws, ordinances and regulations, an owner of real property or a secured lender, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property). 14 With respect to our properties that are operated or managed by third parties, we may be held primarily or jointly and severally liable for costs relating to the investigation and cleanup of any property from which there is or has been an actual or threatened release of a regulated material and any other affected properties, regardless of whether we knew of or caused the release.
Biggest changeUnder various federal, local and foreign environmental laws, ordinances and regulations, an owner of real property or a secured lender, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property).
Competition We generally compete for investments in healthcare real estate with publicly traded, private and non-listed healthcare REITs, real estate partnerships, healthcare providers, healthcare lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do.
Competition We generally compete for investments in real estate with publicly traded, private and non-listed healthcare REITs, real estate partnerships, healthcare providers, healthcare lenders and other investors, including developers, banks, insurance companies, pension funds, government-sponsored entities and private equity firms, some of whom may have greater financial resources and lower costs of capital than we do.
The ability of our tenants, operators and managers to compete successfully could be affected by private, federal and state reimbursement programs and other laws and regulations. See “Risk Factors—Our Legal, Compliance and Regulatory Risks—We and our tenants, borrowers and managers may be adversely affected by regulation and enforcement.” included in Part I, Item 1A of this Annual Report.
The ability of our tenants, operators and managers to compete successfully could be affected by private, federal and state reimbursement programs and other laws and regulations. See “Risk Factors—Our Legal, Compliance and Regulatory Risks—We and our tenants, managers and borrowers may be adversely affected by regulation and enforcement.” included in Part I, Item 1A of this Annual Report.
See “Risk Factors—Our Business Operations and Strategy Risks—Our operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
See “Risk Factors—Risks Related to Our Business Operations and Strategy—Our operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
United States Healthcare Regulation, Licensing and Enforcement Overview We, along with our tenants, borrowers, and managers in the United States, are subject to or impacted by extensive and complex federal, state and local healthcare laws and regulations, including laws and regulations relating to quality of care, licensure and certificates of need (“CON”), conduct of operations, government reimbursement, such as Medicare and Medicaid, fraud and abuse, qualifications of personnel, appropriateness and classification of care, adequacy of plant and equipment and data security and privacy.
GOVERNMENT REGULATION United States Healthcare Regulation, Licensing and Enforcement Overview We, along with our tenants, borrowers, and managers in the United States, are subject to or impacted by extensive and complex federal, state and local healthcare laws and regulations, including laws and regulations relating to quality of care, licensure and certificates of need (“CON”), conduct of operations, government reimbursement, such as Medicare and Medicaid, fraud and abuse, qualifications of personnel, appropriateness and classification of care, adequacy of plant and equipment and data privacy and cybersecurity.
It is difficult to predict the nature and success of future financial or delivery system reforms, but changes to reimbursement rates and related policies could adversely impact our and our tenants’ results of operations.
It is difficult to predict the nature and success of future 11 financial or delivery system reforms, but changes to reimbursement rates and related policies could adversely impact our and our tenants’ results of operations.
Continuing care retirement communities are typically age-restricted properties that offer a continuum of care, and may include a combination of independent living, assisted living, memory care or skilled nursing units.
Continuing care retirement communities are typically age-restricted properties that offer a continuum of care, and may include a combination of independent living, assisted living, memory care and skilled nursing units.
By way of example, Ventas has the right to terminate Atria’s management of 91 communities that were historically managed by Holiday Senior Living upon short term notice. We hold a 34% ownership interest in Atria, which entitles us to customary minority rights and protections, as well as the right to appoint two members to the Atria Board of Directors.
By way of example, Ventas has the right to terminate Atria’s management of 67 communities that were historically managed by Holiday Senior Living upon short term notice. We hold a 34% ownership interest in Atria, which entitles us to customary minority rights and protections, as well as the right to appoint two members to the Atria Board of Directors.
GOVERNMENT REGULATION CARES Act and Similar Governmental Funding Programs In response to the COVID-19 pandemic, in 2020, Congress enacted a series of economic stimulus and relief measures through the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”) and the Consolidated Appropriations Act, 2021 (“CAA”).
CARES Act and Similar Governmental Funding Programs In response to the COVID-19 pandemic, in 2020, Congress enacted a series of economic stimulus and relief measures through the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”) and the Consolidated Appropriations Act, 2021 (“CAA”).
These laws empower regulators in each province to take a variety of steps to ensure compliance, conduct inspections, issue reports and generally regulate the industry. Our communities in Canada are also subject to privacy legislation, including, in certain provinces, privacy laws specifically related to personal health information.
These laws empower regulators in each province to take a variety of steps to ensure compliance, conduct inspections, issue reports and generally regulate the industry. Our communities in Canada are also subject to data privacy and cybersecurity legislation, including, in certain provinces, data privacy and cybersecurity laws specifically related to personal health information.
The operators of these LTACs have the capability to treat patients who suffer from multiple systemic failures or conditions such as neurological disorders, head injuries, brain stem and spinal cord trauma, cerebral vascular accidents, chemical brain injuries, central nervous system disorders, developmental anomalies and cardiopulmonary disorders.
The tenants of these LTACs have the capability to treat patients who suffer from multiple systemic failures or conditions such as neurological disorders, head injuries, brain stem and spinal cord trauma, cerebral vascular accidents, chemical brain injuries, central nervous system disorders, developmental anomalies and cardiopulmonary disorders.
Geographic Diversification of Properties Our portfolio of assets is broadly diversified by geographic location throughout the United States, Canada and the United Kingdom, with properties in only one state (California) accounting for more than 10% of our total continuing revenues and NOI for the year ended December 31, 2022.
Geographic Diversification of Properties Our portfolio of assets is broadly diversified by geographic location throughout the United States, Canada and the United Kingdom, with properties in only one state (California) accounting for more than 10% of our total continuing revenues and NOI for the year ended December 31, 2023.
We also rely on our managers to set appropriate resident fees, to provide accurate property-level financial results in a timely manner and otherwise operate our senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations.
We also rely on the third-party managers to set appropriate resident fees, to provide accurate property-level financial results in a timely manner and otherwise operate the senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations.
Kindred Lease As of December 31, 2022, we leased 29 properties to Kindred pursuant to a single, triple-net master lease agreement (together with certain other agreements related to such master lease, collectively, the “Kindred Lease”). Pursuant to the Kindred Lease, the 29 properties are divided into two groups.
Kindred Lease As of December 31, 2023, we leased 29 properties to Kindred pursuant to a single, triple-net master lease agreement (together with certain other agreements related to such master lease, collectively, the “Kindred Lease”). Pursuant to the Kindred Lease, the 29 properties are divided into two groups.
Reimbursement Sources of revenue for us and some of our tenants include, among others, governmental healthcare programs, such as the federal Medicare programs and state Medicaid programs, and non-governmental third-party payors, such as insurance carriers and health maintenance organizations.
Reimbursement Sources of revenue for us and some of our tenants or borrowers include, among others, governmental healthcare programs, such as the federal Medicare programs and state Medicaid programs, and non-governmental third-party payors, such as insurance carriers and health maintenance organizations.
There can be no assurance as to the total amount of financial assistance we or our tenants or borrowers will receive or retain.” included in Part I, Item 1A of this Annual Report.
There can be no assurance as to the total amount of financial assistance that we or our tenants, managers or borrowers will receive or retain.” included in Part I, Item 1A of this Annual Report.
LTACs have a Medicare average length of stay of greater than 25 days and serve medically complex, chronically ill patients who require a high level of monitoring and specialized care, but whose conditions do not necessitate the continued services of an intensive care unit.
LTACs typically serve medically complex, chronically ill patients who require a high 1evel of monitoring and specialized care, but whose conditions do not necessitate the continued services of an intensive care unit and have a Medicare average length of stay of greater than 25 days.
Our Atria Management Agreements have initial terms expiring between 2024 and 2041. In some cases, the Atria Management Agreements include mutual renewal provisions. Ventas has the ability to terminate some or all of the Atria Management Agreements upon certain events with or without the payment of a fee.
Our Atria management agreements (collectively, the “Atria Management Agreements”) have initial terms expiring between 2024 and 2041. In some cases, the Atria Management Agreements include mutual renewal provisions. Ventas has the ability to terminate some or all of the Atria Management Agreements upon certain events with or without the payment of a fee.
Although the obligations of senior living residences in the various provinces differ, they all include the obligation to protect personal information. The powers of privacy regulators and penalties for violations of privacy law vary according to the applicable law or are left to the courts.
Although the obligations of senior living residences in the various provinces differ, they all include the obligation to protect personal information. The powers of data privacy and cybersecurity regulators and penalties for violations of data privacy and cybersecurity laws vary according to the applicable law or are left to the courts.
See “Risk Factors—Our Business Operations and Strategy Risk—Our ongoing strategy depends, in part, upon identifying and consummating future investments and effectively managing our expansion opportunities.” included in Part I, Item 1A of this Annual Report and “Note 10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
See “Risk Factors—Risks Related to Our Business Operations and Strategy—Our ongoing strategy depends, in part, upon identifying and consummating future acquisitions and investments and effectively managing our expansion opportunities.” included in Part I, Item 1A of this Annual Report and “Note 10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Assisted living communities typically offer supportive care that is provided by trained employees to residents who require assistance with activities of daily living, such as bathing, dressing and medication management. Memory care communities provide care for individuals with Alzheimer’s disease and other forms of dementia or memory loss.
Assisted living communities typically offer similar services as independent living communities, plus supportive care that is provided by trained employees to residents who require assistance with activities of daily living, such as bathing, dressing and medication management. Memory care communities provide care for individuals with Alzheimer’s disease and other forms of dementia or memory loss.
See “Risk Factors—Our Business Operations and Strategy Risks—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale Senior Living, Ardent, Kindred, Atria and Sunrise.” included in Part I, Item 1A of this Annual Report.
See “Risk Factors—Risks Related to Our Business Operations and Strategy—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale, Ardent, Kindred, Atria and Sunrise.” included in Part I, Item 1A of this Annual Report.
Our chief operating decision maker evaluates performance of the combined properties in each reportable business segment and determines how to allocate resources to these segments, in significant part, based on NOI and related measures.
Our chief operating decision maker evaluates performance of the combined properties in each operating segment and determines how to allocate resources to these segments, in significant part, based on NOI and related measures for each segment.
The difference between the aggregate contractual base rent due in 2022 and the current aggregate contractual base rent (computed in accordance with GAAP) is, in part, a result of the amortization over the remaining lease term of $235 million of up-front consideration received as part of certain amendments to the Brookdale Lease in July 2020.
The difference between the aggregate contractual base rent due in 2023 and the current aggregate contractual base rent (computed in accordance with GAAP) is, in part, a result of the amortization over the remaining lease term of $235 million of up-front consideration received as part of certain amendments to the Brookdale Lease in July 2020 (the “2020 Consideration”).
These grants are intended to reimburse eligible providers for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19.
These grants were intended to reimburse eligible providers for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19.
Our life science, research and innovation centers contain laboratory and office space primarily for universities, academic medical centers, technology, biotechnology, medical device and pharmaceutical companies and other organizations involved in the life science, research and innovation industry. While these properties have characteristics similar to commercial office buildings, they generally contain more advanced electrical, mechanical, heating, ventilating and air conditioning systems.
Our research centers generally contain laboratory and office space primarily for universities, academic medical centers, technology, biotechnology, medical device and pharmaceutical companies and other organizations involved in the research industry. While these properties may have certain characteristics similar to commercial office buildings, they generally contain more advanced electrical, mechanical, heating, ventilating and air conditioning systems.
Inpatient rehabilitation and long-term acute care facilities, health systems, and skilled nursing facilities, which we do not directly operate, are typically subject to extensive federal and state regulation and must hold various licenses, certifications, and permits.
Inpatient rehabilitation and long-term acute care facilities, other healthcare facilities, and skilled nursing facilities, which we do not directly operate, are typically subject to extensive federal and state regulation and must hold various licenses, certifications, and permits.
The Data Protection Act imposes a significant number of obligations on controllers with the potential for fines of up to 4% of annual worldwide turnover or €20 million, whichever is greater. Our business operations in the United Kingdom are also subject to a range of other regulations, such as the U.K. Bribery Act 2010.
The UK GDPR imposes a significant number of obligations on data controllers with the potential for fines of up to 4% of annual worldwide turnover or £17.5 million, whichever is greater. Our business operations in the United Kingdom are also subject to a range of other regulations, such as the U.K. Bribery Act 2010.
Human Capital Management At Ventas, our experienced team drives our success and creates value. As of December 31, 2022, we had 451 employees, none of which are subject to a collective bargaining agreement.
Human Capital Management At Ventas, our experienced team drives our success and creates value. As of December 31, 2023, we had 486 employees, none of which are subject to a collective bargaining agreement.
In a RIDEA structure, we are required to rely on a third-party manager to manage and operate the property, including procuring supplies, hiring and training all employees, entering into all third-party contracts for the benefit of the property, including resident/patient agreements, complying with laws and regulations, including but not limited to healthcare laws, and providing resident care and services, in exchange for a management fee.
For these senior housing communities we are required to rely on a third-party manager to manage and operate the property, including for purposes of procuring supplies, hiring and training all employees, entering into all third-party contracts for the benefit of the property, including resident/patient agreements, complying with laws and regulations, including but not limited to healthcare laws, and providing resident care and services, in exchange for a management fee.
For the year ended December 31, 2022, approximately 7.0% of our total revenues and 15.6% of our total NOI were attributable to acute and post-acute healthcare facilities in which our third-party tenants receive reimbursement for their healthcare services under governmental healthcare programs, such as Medicare and Medicaid.
For the year ended December 31, 2023, approximately 7.6% of our total revenues and 17.5% of our total NOI were attributable to acute and post-acute healthcare facilities in which our third-party tenants receive reimbursement for their healthcare services under governmental healthcare programs, such as Medicare and Medicaid.
Typically, our MOBs, which are predominantly located on or contiguous to a health system campus, are multi-tenant properties leased to several unrelated medical practices, although in many cases they may be associated with a large single specialty or multi-specialty group, including neighboring health systems.
Our outpatient medical buildings, which are predominantly located on or contiguous to a health system campus, are generally multi-tenant properties leased to health systems and several unrelated medical practices, although in many cases they may be associated with a large single specialty or multi-specialty group, including neighboring health systems.
The Brookdale Lease is guaranteed by Brookdale Senior Living, Inc. 6 In addition, we hold warrants for 16.3 million shares of Brookdale Senior Living common stock, which are exercisable at any time prior to December 31, 2025 and have an exercise price of $3.00 per share.
In addition, we hold warrants for 16.3 million shares of Brookdale Senior Living, Inc. common stock, which are exercisable at any time prior to December 31, 2025 and have an exercise price of $3.00 per share.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” included in Part II, Item 7 of this Annual Report for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with U.S. generally accepted accounting principles (“GAAP”), to NOI.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” included in Part II, Item 7 of this Annual Report for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.
We primarily invest in a diversified portfolio of healthcare real estate assets through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior housing operating portfolio, which we also refer to as “SHOP” and which was formerly known as senior living operations, and office operations.
We primarily invest in our portfolio of real estate assets through wholly-owned subsidiaries and other co-investment entities. We operate through three reportable business segments: senior housing operating portfolio, which we also refer to as “SHOP”, outpatient medical and research portfolio, which was formerly known as office operations, and triple-net leased properties.
We believe that the combination of steady contractual growth from our long-term triple-net leases, steady, reliable cash flows from our loan investments, stable cash flows from our office buildings, and the higher growth potential inherent in our senior housing operating communities will enable us to generate sustainable, growing cash flows that are resilient to economic downturns.
We believe that the combination of the higher growth potential inherent in our senior housing operating communities, steady contractual growth from our long-term triple-net leases and stable cash flows from our outpatient medical buildings and research centers will enable us to generate sustainable, growing cash flows that are resilient to economic downturns.
Brookdale Senior Living Lease As of December 31, 2022, we leased 121 properties (excluding nine properties managed by Brookdale Senior Living pursuant to long-term management agreements and included in the SHOP reportable business segment) to Brookdale Senior Living pursuant to a single, triple-net master lease agreement (together with certain other agreements related to such master lease, collectively, the “Brookdale Lease”).
Brookdale Lease As of December 31, 2023, we leased 121 properties (excluding ten properties managed by Brookdale pursuant to long-term management agreements and included in the SHOP segment) to Brookdale pursuant to a single, triple-net master lease agreement (together with certain other agreements related to such master lease, collectively, the “Brookdale Lease”).
The aggregate contractual base rent due to us from Brookdale Senior Living in 2022 was approximately $105.9 million, and the current aggregate contractual base rent (computed in accordance with GAAP) is approximately $148.8 million.
The aggregate contractual base rent due to us from Brookdale in 2023 was approximately $105.9 million, and the current aggregate contractual base rent (computed in accordance with GAAP) is approximately $148.9 million.
With respect to MOBs and life science, research and innovation centers, we and our third-party managers compete to attract and retain tenants based on many of the same factors, in addition to quality of the affiliated health system or university, physician preferences and proximity to hospital or university campuses or life science centers and quality of lab space.
With respect to outpatient medical buildings and 7 research centers, we and our third-party managers compete to attract and retain tenants based on many of the same factors, in addition to quality of the affiliated health system or university, physician preferences and proximity to hospital or university campuses or research centers and quality of lab space.
We also maintain liability insurance for certain office properties, as well as the general and professional liability insurance for certain senior housing communities and related operations in our SHOP reportable business segment.
We also maintain liability insurance for certain outpatient medical properties, as well as the general and professional liability insurance for certain senior housing communities and related operations in our SHOP segment.
We have a third-party institutional capital management business, Ventas Investment Management (“VIM”), which includes our open-ended investment vehicle, the Ventas Life Science & Healthcare Real Estate Fund (the “Ventas Fund”). Through VIM, we partner with third-party institutional investors to invest in healthcare real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner.
Through VIM, we partner with third-party institutional investors to invest in real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner, including our open-ended investment vehicle, the Ventas Life Science & Healthcare Real Estate Fund (the “Ventas Fund”).
Our tenants and managers also compete on a local and regional basis with other healthcare operating companies that provide comparable services.
Our operators also compete on a local and regional basis with other healthcare companies that provide comparable services.
The facilities generally have specialty equipment including emergency generators, fume hoods, lab bench tops and related amenities. In many instances, research and innovation center tenants make significant investments to improve their leased space, in addition to landlord improvements, to accommodate biology, chemistry or medical device research initiatives.
The facilities generally have specialty equipment including emergency generators, fume hoods, lab bench tops and related amenities. In many instances, research center tenants make significant investments to improve their leased space, in addition to landlord improvements, to accommodate biology, chemistry or medical device research initiatives. Our research centers are often located on or contiguous to university and academic medical campuses.
Our senior housing communities include independent living communities, assisted living communities, memory care communities and continuing care retirement communities. Independent living communities are typically age-restricted multifamily rental properties with central dining facilities that provide residents with access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.
Independent living communities are typically age-restricted multifamily rental properties with central dining facilities that provide residents with access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.
The Ardent Lease is guaranteed by the Ardent parent company. We also hold a 9.8% ownership interest in Ardent, which entitles us to customary minority rights and protections, as well as the right to appoint one member to the Ardent Board of Directors. We account for our investment in Ardent under the equity method of accounting.
The Ardent Lease is guaranteed by the Ardent parent company. As of December 31, 2023, we held a 7.5% ownership interest in Ardent, which entitles us to customary minority rights and protections and the right to appoint one member to the Ardent Board of Directors. We account for our investment in Ardent under the equity method of accounting.
There remains a high degree of uncertainty surrounding the implementation, interpretation and application of the CARES Act, the PPPHCE Act and the CAA and the rules, regulations and guidance thereunder. See “Risk Factors—COVID-19 Risks—There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other pandemic-related legislation and any future COVID-19 relief measures.
There remains a high degree of uncertainty surrounding the interpretation and application of the CARES Act, the PPPHCE Act and the CAA and the rules, regulations and guidance thereunder. See “Risk Factors—Our Legal, Compliance and Regulatory Risks—There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other pandemic-related legislation.
The insurance that we maintain or require may take the form of commercial insurance, captive insurance or self-insurance. We maintain the property insurance for a vast majority of our properties in our office operations and SHOP reportable business segments.
The insurance that we maintain or require may take the form of commercial insurance, captive insurance or self-insurance. We maintain the property insurance for a vast majority of our properties in our outpatient medical and research portfolio and SHOP segments.
Our assisted living, memory care and continuing care retirement communities are generally subject to state licensure requirements for the delivery of some or all of their services, while our independent living communities generally are not. Charges for room, board and services at these communities are generally paid from private sources.
Our assisted living, memory care and continuing care retirement communities are generally subject to state licensure requirements for the delivery of some or all of their services, while our independent living communities generally are not.
We typically report on human capital matters at each regularly scheduled meeting of the Compensation 8 Committee, on DE&I matters at each regularly scheduled meeting of the Nominating, Governance and Corporate Responsibility Committee and periodically (and at least annually) to our Board of Directors.
We typically report on human capital matters at each regularly scheduled meeting of the Compensation Committee, on DE&I matters at each regularly scheduled meeting of the Nominating, Governance and Corporate Responsibility Committee and periodically (and at least annually) to our Board of Directors. The most significant human capital measures and objectives that we focus on include the topics described below.
See “Risk Factors—Our Business Operations and Strategy Risks—If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms, if at all, and we could be subject to delays, limitations and expenses, which could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report. 11 In addition, many of our licensed facilities and tenants are subject to state CON laws, which require governmental approval prior to the development or expansion of licensed facilities and services.
See “Risk Factors—Risks Related to Our Business Operations and Strategy—If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms, if at all, and we could be subject to delays, 10 limitations and expenses, which could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
Ventas convenes a cross-functional ESG Steering Committee, which provides oversight and monitoring of our ESG strategy and is led by our Chairman and CEO and overseen by our Vice President, Corporate ESG & Sustainability.
Our key ESG topics and progress against our goals are reported annually in our Corporate Sustainability Report. Ventas convenes a cross-functional ESG Steering Committee, which provides oversight and monitoring of our ESG strategy and is led by our Chairman and CEO and overseen by our Vice President, Corporate ESG & Sustainability.
The aggregate 2022 contractual base rent due to us from Ardent was approximately $130.4 million, and the current aggregate contractual base rent (computed in accordance with GAAP) was approximately $130.5 million.
The aggregate 2023 contractual base rent due to us from Ardent was approximately $133.7 million, and the current aggregate contractual base rent (computed in accordance with GAAP) was approximately $133.8 million.
Health systems provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. These health systems also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy.
Other healthcare facilities, such as short term acute care hospitals, provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. 4 These other healthcare facilities also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy.
As a result, we must rely on our managers’ personnel, expertise, technical resources and information systems, risk management processes, proprietary information, good faith and judgment to manage our senior housing operations efficiently and effectively.
In this structure, we must rely on the third-party managers’ personnel, expertise, technical resources and information systems, risk management processes, proprietary information, good faith and judgment to manage the senior housing communities’ operations efficiently and effectively.
Our loans receivable and investments generally provide us with interest income and fees, and are often 4 secured by mortgage liens or leasehold mortgages on the underlying properties and corporate or personal guarantees by affiliates of the borrowing entity.
Other Business Activities Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable. Our loans receivable and investments generally provide us with interest income and fees and are often secured by mortgage liens or leasehold mortgages on the underlying properties and corporate or personal guarantees by affiliates of the borrowing entity.
The most significant human capital measures and objectives that we focus on include the topics described below. Talent Acquisition, Development and Retention We strive to foster a culture that attracts and retains individuals who share a passion for integrity, flawless execution, collaborative problem-solving and, above all, excellence.
Talent Acquisition, Development and Retention We strive to foster a culture that attracts and retains individuals who share a passion for integrity, flawless execution, collaborative problem-solving and, above all, excellence.
Provided we qualify for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is currently distributed to our stockholders. This treatment substantially eliminates the “double taxation” that ordinarily results from investment in a C corporation.
Provided we qualify for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is currently distributed to our stockholders.
Entities subject to HIPAA include most healthcare providers, including some of our tenants and borrowers. These covered entities are required to implement administrative, physical and technical practices to protect the security of individually identifiable health information that is electronically maintained or transmitted.
Entities subject to HIPAA include most healthcare providers, including some of our 12 tenants and borrowers. These covered entities are required to implement administrative, physical and technical practices to protect the security of PHI that is electronically maintained or transmitted. Business associates of covered entities who create, receive, maintain or transmit PHI are also subject to certain HIPAA provisions.
Preserving Our Financial Strength, Flexibility and Liquidity Our goal to maintain a strong, flexible balance sheet and substantial liquidity helps enable us to capitalize on strategic growth opportunities in the healthcare industry through acquisitions, investments and development and redevelopment projects.
Preserving Our Financial Strength, Flexibility and Liquidity Our goal to maintain a strong, flexible balance sheet and substantial liquidity helps enable us to capitalize on strategic growth opportunities through acquisitions, investments and development and redevelopment projects. We aim to maintain our financial strength to pursue profitable investment opportunities by actively managing our leverage and improving our cost of capital.
Regulation Impacting Life Science, Research and Innovation Centers We lease a number of our assets to tenants in the life science, research and innovation sector, which includes university-affiliated organizations and private sector companies. These tenants may be dependent on private investors, the federal government or other sources of funding to support their activities.
Regulation Impacting Life Sciences Research Some of our tenants, including university-affiliated organizations and private sector companies, conduct life sciences, medical device or related research. These tenants may be dependent on private investors, the federal government or other sources of funding to support their activities.
Collectively, management fee calculations typically result in the operators receiving annual management fees ranging from 4.5% to 7% of revenues generated by the applicable properties and, in some cases, additional management fees based on the achievement of specified performance targets. 7 Atria Senior Living Management Agreements As of December 31, 2022, Atria managed 242 communities for Ventas pursuant to multiple management agreements (collectively, the “Atria Management Agreements”).
Collectively, management fee calculations typically result in the managers receiving annual management fees ranging from 4.5% to 7% of revenues generated by the applicable properties and, in some cases, additional management fees based on the achievement of specified performance targets. As of December 31, 2023, 23 third-party operators managed 587 properties in our SHOP segment on our behalf.
We are neither a participant in, nor a direct recipient of, any reimbursement under these programs with respect to those leased facilities. 12 Data Privacy and Security Privacy and security regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”), restrict the use and disclosure of individually identifiable health information (“protected health information” or “PHI”), provide for individual rights and require safeguards for PHI and notification of breaches of unsecure PHI.
For example, data privacy and cybersecurity regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”), restrict the use and disclosure of individually identifiable health information (“protected health information” or “PHI”), provide for individual rights and require safeguards for PHI and notification of breaches of unsecure PHI.
The first group is composed of six properties (“Group 1”) and the second renewal group is composed of 23 properties (“Group 2”). The aggregate 2022 contractual base rent due to us from Kindred was approximately $132.1 million, and the current aggregate contractual base rent (computed in accordance with GAAP) was approximately $134.1 million.
The first group is composed of six properties (“Group 1”) and the second group is composed of 23 properties (“Group 2”). The aggregate 2023 contractual base rent due to us from Kindred was approximately $130.6 million, which is comprised of $25.8 million of base rent associated with Group 1 and $104.8 million of base rent associated with Group 2.
The approval process in states with CON laws generally requires a facility to demonstrate the need for additional or expanded licensed facilities or services.
In addition, many of our licensed facilities and tenants are subject to state CON laws, which require governmental approval prior to the development or expansion of licensed facilities and services. The approval process in states with CON laws generally requires a facility to demonstrate the need for additional or expanded licensed facilities or services.
Triple-Net Leased Properties In our triple-net leased properties reportable business segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under triple-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures.
We lease those properties to tenants under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures.
Health & Safety Ventas is committed to the health and safety of its employees. Helping to make our workplaces secure and hazard-free is a responsibility shared with each Ventas employee. Our commitment to health and safety is maintained by effective administration, training and education, and we expect our operating and development partners to comply with applicable company and legal requirements.
Our commitment to health and safety is maintained by effective administration, training and education, and we expect our operating and development partners to comply with applicable company and legal requirements. Organizational Resilience Our talented employee base is the foundation of our organizational resilience.
Office Operations In our office operations reportable business segment, we primarily acquire, own, develop, lease and manage MOBs and life science, research and innovation centers throughout the United States.
Outpatient Medical and Research Portfolio In our outpatient medical and research portfolio segment, we primarily acquire, own, develop, lease and manage outpatient medical buildings and research centers throughout the United States.
In addition, in such event we would no longer be required to pay dividends to maintain REIT status, which could adversely affect the value of our common stock. See “Risk Factors—Our REIT Status Risks”. Environmental Regulation A wide variety of federal, local and foreign environmental and occupational health and safety laws and regulations affect our assets.
In addition, in such event we would no longer be required to pay dividends to maintain REIT status, which could adversely affect the value of our common stock.
In May 2020, the Company formed a wholly owned captive insurance company, which provides insurance coverage for losses below the deductible and within the self-insured retention of the commercial property, general and professional liability insurance that we maintain for certain of our office and senior housing locations.
Through our outpatient medical and research portfolio, we provide engineering, construction and architectural services in connection with new development projects, and we maintain and cause tenants, contractors, design professionals and other parties involved with such services to maintain property and liability insurance with respect to those activities. 9 In May 2020, the Company formed a wholly-owned captive insurance company, which provides insurance coverage for losses below the deductible and within the self-insured retention of the commercial property, general and professional liability insurance that we maintain for certain of our outpatient medical and senior housing locations.
Ardent Lease As of December 31, 2022, we leased 11 properties (excluding 19 MOBs leased to Ardent under separate leases included in our office operations segment) to Ardent pursuant to a single, triple-net master lease agreement (together with certain other agreements related to such master lease, collectively, the “Ardent Lease”).
The warrants are classified within other assets on our Consolidated Balance Sheets and measured at fair value with changes in fair value being recognized within other expense in our Consolidated Statements of Income. 5 Ardent Lease As of December 31, 2023, we leased 11 properties (excluding 19 outpatient medical buildings leased to Ardent under separate leases included in our outpatient medical and research portfolio segment) to Ardent pursuant to a single, triple-net master lease agreement (together with certain other agreements related to such master lease, collectively, the “Ardent Lease”).
See “Risk Factors” in Part I, Item 1A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Consolidated Financial Statements and the related notes thereto” included in Part II, Item 8, in each case, of this Annual Report. 1 Business Strategy We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a balanced, diversified portfolio of high-quality assets and (3) preserving our financial strength, flexibility and liquidity.
Business Strategy We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a portfolio of high-quality assets that are unified in serving the large and growing aging population and (3) preserving our financial strength, flexibility and liquidity.
In addition, we seek to actively preserve our access to multiple sources of capital and liquidity, including unsecured bank debt, mortgage financings, public and private debt and equity markets, and through our third-party institutional capital management business, VIM. 2 Portfolio Summary The following table summarizes our consolidated portfolio of properties and other investments, including construction in progress, as of and for the year ended December 31, 2022 (dollars in thousands): Real Estate Investments Revenues Asset Type Properties (1) Units/ Sq.
In addition, we seek to actively preserve our access to multiple sources of capital and liquidity, including unsecured bank debt, mortgage financings, public and private debt and equity markets, and through our third-party institutional capital management business, VIM.
Providers of care home services are also subject (as data controllers) to laws and regulations governing their use of personal data (including in relation to their employees, clients and recipients of their services). These laws take the form of the U.K.’s Data Protection Act 2018.
Providers of care home services are also subject (as data controllers) to the U.K.’s Data Protection Act 2018, as supplemented by the European Union’s General Data Protection Regulation as implemented into U.K. law (collectively, “UK GDPR”), which governs the processing of personal data (including in relation to employees, clients and residents of care home services).
See “Note 6 – Loans Receivable and Investments” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Development and Redevelopment Projects We are party to certain agreements that obligate us to develop properties funded through capital that we and, in certain circumstances, our joint venture partners provide.
See “Note 6 – Loans Receivable and Investments” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. We have investments in unconsolidated entities, including through our third-party institutional capital management business, VIM.
Through our Lillibridge subsidiary and 5 our ownership interest in PMBRES, we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.
Through our Lillibridge subsidiary and our 50% ownership interest in PMB Real Estate Services LLC (“PMBRES”), a property management platform in which we hold an ownership interest, we also provide outpatient medical building and research center management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems and universities, academic medical centers, biotech and other similar companies throughout the United States.
See “Note 7 – Investments in Unconsolidated Entities” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Starting in 2020, our business was significantly impacted by the COVID-19 pandemic, including actions taken to prevent the spread of the virus and its variants, and its extended consequences.
See “Note 7 – Investments in Unconsolidated Entities” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
In addition, from time to time, we engage in redevelopment projects with respect to our existing properties to maximize the value, increase net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and third party capital management expenses), maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
In addition, from time to time, we engage in redevelopment projects with respect to our existing senior housing communities, outpatient medical buildings and research centers to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
However, some senior housing managers maintain the general and professional liability insurance for our senior housing communities and related operations that they manage in accordance with the terms of our management agreements. 9 Through our office operations, we provide engineering, construction and architectural services in connection with new development projects, and we maintain and cause tenants, contractors, design professionals and other parties involved with such services to maintain property and liability insurance with respect to those activities.
However, some senior housing managers maintain the general and professional liability insurance for our senior housing communities and related operations that they manage in accordance with the terms of our management agreements.
We account for our investment in Atria under the equity method of accounting. Sunrise Senior Living Management Agreements As of December 31, 2022, Sunrise managed 92 communities for Ventas pursuant to multiple management agreements (collectively, the “Sunrise Management Agreements”). Our Sunrise Management Agreements have initial terms expiring between 2035 and 2040.
We account for our ownership interest in Atria under the equity method of accounting. 3 Our Sunrise management agreements (collectively, the “Sunrise Management Agreements”) have initial terms expiring between 2035 and 2040. Ventas has the ability to terminate some or all of the Sunrise Management Agreements upon certain circumstances with or without the payment of a fee.
For example, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response to data breaches. In most cases, we depend on our tenants and managers to fulfill any compliance obligations with respect to HIPAA and other privacy and security laws and regulations.
Data Privacy and Cybersecurity There are several other laws and regulations, and legislative and regulatory initiatives, at the federal and state levels addressing data privacy and cybersecurity. In most cases, we depend on our tenants and managers to fulfill any compliance obligations with respect to these privacy and security laws and regulations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe extent of the continuing effect of the pandemic, policy and other actions taken in response to the pandemic and their respective extended consequences on our operational and financial performance will depend on a variety of factors, including the rise of new variants of the COVID-19 virus and the effectiveness of available vaccines and therapeutics against those variants; the availability and accuracy of testing; the rate of acceptance of available vaccines, vaccine boosters and therapeutics; the speed at which available vaccines, including boosters and updated versions of vaccines, and therapeutics can be successfully deployed; the rise and spread of other health conditions, such as flu and RSV; ongoing clinical experience, which may differ considerably across regions and fluctuate over time; the ongoing impact on the macroeconomic environment and global financial markets, including on inflation, interest rates and the labor market; and on other future developments, including the ultimate duration, spread and intensity of new outbreaks of COVID-19 and other conditions, such as flu and RSV, the extent to which governments impose, rollback or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants, managers and borrowers. 16 There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other pandemic-related legislation and any future COVID-19 relief measures.
Biggest changeSee also “—Risks Related to Our Business Operations and Strategy-Macroeconomic trends including rising labor costs and historically low unemployment, increases in inflation, changes in exchange rates and rising interest rates may adversely affect our business and financial results.” The extent of the secondary and tertiary effects of the COVID-19 pandemic, policy and other actions taken in response to the pandemic on our operational and financial performance will depend on a variety of factors, including the rise of new variants of the COVID-19 virus and the effectiveness of available vaccines and therapeutics against those variants; the availability and accuracy of testing; the rate of acceptance of available vaccines, vaccine boosters and therapeutics; the speed at which available vaccines, including boosters and updated versions of vaccines, and therapeutics can be successfully deployed; the rise and spread of other health conditions, such as flu and RSV; ongoing clinical experience, which may differ considerably across governmental and regulatory bodies and regions and fluctuate over time; the ongoing impact on the macroeconomic environment and global financial markets, including on inflation, interest rates and the labor market; and on other future developments, including the ultimate duration, spread and intensity of new outbreaks of COVID-19 and other conditions, such as flu and RSV, the extent to which governments impose, rollback or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants, managers and borrowers.
Competitive pressures, including historically low unemployment and rising inflation, may require that we or our tenants, managers and borrowers enhance pay and benefits packages to compete effectively for such personnel or use more costly contract or overtime labor.
Competitive pressures, including historically low unemployment and rising inflation, may require that we or our tenants, managers or borrowers enhance pay and benefits packages to compete effectively for such personnel or use more costly contract or overtime labor.
We have limited control over the success or failure of our 20 tenants’, managers’ and borrowers’ businesses, and, at any time, a tenant, borrower or manager may experience a downturn in its business that weakens its financial condition.
We have limited control over the success or failure of our tenants’, managers’ and borrowers’ businesses, and, at any time, a tenant, borrower or manager may experience a downturn in 20 its business that weakens its financial condition.
From time to time, we or our tenants or managers may be subject to lawsuits, investigations, claims and other legal or regulatory proceedings arising out of our alleged actions or the alleged actions of our tenants and managers.
From time to time, we or our tenants or managers may be subject to lawsuits, investigations, claims and other legal or regulatory proceedings arising out of our alleged actions or the alleged actions of our tenants or managers.
Our assumptions are subject to risks generally associated with development and redevelopment projects, including, among others, that: • Tenants may not lease the amount of space projected or at the projected rental rate levels or lease on the projected schedule, including due to increased competition in the market and other market and economic conditions; • Our underwriting assumptions and other financial and operating metrics that we develop, such as the estimated costs necessary to develop or redevelop the property, may be inaccurate, in which case we may not be able to realize the expected benefits of the project; • We may not complete the project on schedule or within budgeted amounts; • We may not be able to recognize rental revenue even though cash rent is being paid and the lease has commenced; • We may encounter delays in obtaining or we may fail to obtain necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations; • We may be unable to obtain financing for the project on favorable terms or at all, including at the maturity of an applicable construction loan; • Construction or other delays may provide tenants or residents the right to terminate preconstruction leases or cause us to incur additional costs, including through rent abatement; • Volatility in the price of construction materials or labor may increase our project costs; • Any partners in the project may maintain significant decision-making authority with respect to the project, which lessens our control and could lead to increased costs, project delays or disputes; • Our builders or development managers may fail to meet their obligations to us or satisfy the expectations of our tenants and partners; and • We may incorrectly forecast risks associated with development in new geographic regions or addressing markets that are new to us, including new markets where we may not have sufficient depth of market knowledge.
Our assumptions are subject to risks generally associated with development and redevelopment projects, including, among others, that: • Tenants may not lease the amount of space projected or at the projected rental rate levels or lease on the projected schedule, including due to increased competition in the market and other market and economic conditions; • Our underwriting assumptions and other financial and operating metrics that we develop, such as the estimated costs necessary to develop or redevelop the property, may be inaccurate, in which case we may not be able to realize the expected benefits of the project; • We may not complete the project on schedule or within budgeted amounts; • We may not be able to recognize rental revenue even though cash rent is being paid and the lease has commenced; • We may encounter delays in obtaining or we may fail to obtain necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations; • We may be unable to obtain financing for the project on favorable terms or at all, including at the maturity of an applicable construction loan; • Construction or other delays may provide tenants or residents the right to terminate preconstruction leases or cause us to incur additional costs, including through rent abatement; • Volatility in the price of construction materials or labor may increase our project costs; • Any partners in the project may maintain significant decision-making authority with respect to the project, which lessens our control and could lead to increased costs, project delays or disputes; 27 • Our builders or development managers may fail to meet their obligations to us or satisfy the expectations of our tenants and partners; and • We may incorrectly forecast risks associated with development in new geographic regions or addressing markets that are new to us, including new markets where we may not have sufficient depth of market knowledge.
These investments and ventures involve significant risk, including, among others, the following: • We may be unable to take actions that are opposed by our partners under arrangements that require us to share decision-making authority; • For investments and ventures in which we have a noncontrolling interest, our partners may take actions that we oppose; • If our partners become bankrupt, insolvent or otherwise fail to fund their share of required capital contributions or fulfill other partner obligations, we may choose to or be required to contribute that capital; • Some of our investments and ventures may incur indebtedness; in some cases, we may guarantee the payment of such indebtedness, in whole or in part; depending on credit market conditions, the refinancing or payoff of such indebtedness may require equity capital calls, which we or our partner may not be capable of funding or which may be required at inopportune times; • We may be subject to restrictions on our ability to transfer our interest in the investment or venture, which may require us to retain our interest at a time when we would otherwise prefer to sell it; • Our partners may have business interests or goals that conflict with our business interests and goals, i ncluding the timing, terms and strategies for any investments, and what levels of financing to incur or carry ; • Our partners may be structured differently than us for tax purposes and this could create conflicts of interest, including with respect to our compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures do not operate in compliance with REIT requirements; • Our investments or ventures or our partners may be unable to meet their financial or other obligations to us or to the investment or venture, including any obligation to provide equity to the investment or venture or indemnify us or the investment or venture for losses; • Our partners may have competing interests in our markets that could create conflicts of interest; • We could experience an impasse on certain decisions where we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes; • We could become engaged in a dispute with any of our partners that could lead to the sale of either parties’ ownership interest or the underlying assets; • Disagreements with our partners could result in litigation or arbitration; and • We may suffer other losses as a result of actions taken by our partners.
These investments and ventures involve significant risk, including, among others, the following: • We may be unable to take actions that are opposed by our partners under arrangements that require us to share decision-making authority; • For investments and ventures in which we have a noncontrolling interest, our partners may take actions that we oppose; • If our partners become bankrupt, insolvent or otherwise fail to fund their share of required capital contributions or fulfill other partner obligations, we may choose to or be required to contribute that capital; • Some of our investments and ventures may incur indebtedness; in some cases, we may guarantee the payment of such indebtedness, in whole or in part; depending on credit market conditions, the refinancing or payoff of such indebtedness may require equity capital calls, which we or our partner may not be capable of funding or which may be required at inopportune times; • We may be subject to restrictions on our ability to transfer our interest in the investment or venture, which may require us to retain our interest at a time when we would otherwise prefer to sell it; • Our partners may have business interests or goals that conflict with our business interests and goals, including the timing, terms and strategies for any investments, and what levels of financing to incur or carry; • Our partners may be structured differently than us for tax purposes and this could create conflicts of interest, including with respect to our compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures do not operate in compliance with REIT requirements; • Our investments or ventures or our partners may be unable to meet their financial or other obligations to us or to the investment or venture, including any obligation to provide equity to the investment or venture or indemnify us or the investment or venture for losses; • Our partners may have competing interests in our markets that could create conflicts of interest; • We could experience an impasse on certain decisions where we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes; • We could become engaged in a dispute with any of our partners that could lead to the sale of either parties’ ownership interest or the underlying assets; • Disagreements with our partners could result in litigation or arbitration; and • We may suffer other losses as a result of actions taken by our partners.
Adverse developments affecting economies throughout the world, including rising inflation, a general tightening of availability of credit (including the price, terms and conditions under which it can be obtained), the state of the public and private capital markets, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, declining consumer confidence, the actual or perceived state of the real estate market, tightened labor markets or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could impact our business, financial condition and results of operations.
Adverse developments affecting economies throughout the world, including rising inflation, a general tightening of availability of credit (including the price, terms and conditions under which it can be obtained), the state of the public and private capital markets, decreased liquidity in certain financial markets, elevated or increased interest rates, foreign exchange fluctuations, declining consumer confidence, the actual or perceived state of the real estate market, tightened labor markets or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could impact our business, financial condition and results of operations.
We may seek to manage our exposure to interest rate volatility with hedging arrangements that involve additional risks, including the risks that counterparties may fail to honor their obligations under these arrangements, that these 30 arrangements may not be effective in reducing our exposure to interest rate changes, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to pay higher interest rates on our debt obligations than otherwise would be the case.
We may seek to manage our exposure to interest rate volatility with hedging arrangements that involve additional risks, including the risks that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to pay higher interest rates on our debt obligations than otherwise would be the case.
In order to maintain our qualification as a REIT, we must satisfy a number of requirements, generally including requirements regarding the ownership of our stock, requirements regarding the composition of our assets, a requirement that at least 95% of our gross income in any year must be derived from qualifying sources, and a requirement to make distributions to our stockholders aggregating annually at least 90% of our net taxable income, excluding capital gains.
In order to maintain our qualification as a REIT, we must satisfy a number of requirements, generally including requirements regarding the ownership of our stock, requirements regarding the composition of our assets, a requirement that at least 95% of our gross income in any year must be derived from qualifying sources, and a requirement to make distributions to our stockholders aggregating annually 36 at least 90% of our net taxable income, excluding capital gains.
See also “—Market conditions and the actual and perceived state of the capital markets generally could negatively impact our business, financial condition and results of operations”, “—If our tenants’, managers’ or borrowers’ financial condition or business prospects deteriorate, our business, financial condition and results of operations could be adversely affected.” Macroeconomic conditions and other events or occurrences that affect areas in which our properties are geographically concentrated may impact financial results.
See also “—Market conditions and the actual and perceived state of the capital markets generally could negatively impact our business, financial condition and results of operations.”, “—If our tenants’, managers’ or borrowers’ financial condition or business prospects deteriorate, our business, financial condition and results of operations could be adversely affected.” Macroeconomic conditions and other events or occurrences that affect areas in which our properties are geographically concentrated may impact financial results.
If we or our tenants and managers are unable to maintain adequate insurance coverage or are required to pay damages, we or they may be exposed to substantial liabilities, and the adverse impact on our or our tenants’ and managers’ respective financial condition, results of operations and cash flows could be material, and could adversely affect our tenants’ and managers’ ability to meet their obligations to us.
If we or our tenants and managers are unable to maintain adequate insurance coverage or are required to pay damages, we or they may be exposed to substantial liabilities, and the adverse impact on our or our tenants’ and 35 managers’ respective financial condition, results of operations and cash flows could be material, and could adversely affect our tenants’ and managers’ ability to meet their obligations to us.
An increase in interest rates also could limit our ability to refinance existing debt upon maturity or cause us to pay higher rates upon refinancing, as well as decrease the amount that third parties are willing to pay for our assets, thereby limiting our ability to promptly reposition our portfolio in response to changes in economic or other conditions.
An increase in or elevated interest rates also could limit our ability to refinance existing debt upon maturity or cause us to pay higher rates upon refinancing, as well as decrease the amount that third parties are willing to pay for our assets, thereby limiting our ability to promptly reposition our portfolio in response to changes in economic or other conditions.
Damage to our reputation could result in a decrease in the market price 27 of our common stock or make it more difficult to continue to grow and expand our relationships with our tenants, managers, development partners and lenders, which could adversely affect our business, financial condition and results of operations. Development, redevelopment and construction risks could affect our profitability.
Damage to our reputation could result in a decrease in the market price of our common stock or make it more difficult to continue to grow and expand our relationships with our tenants, managers, development partners and lenders, which could adversely affect our business, financial condition and results of operations. Development, redevelopment and construction risks could affect our profitability.
We mortgage, and expect to continue to mortgage, certain of our properties to secure payment of indebtedness. If we are unable to meet our mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a resulting loss of income and asset value. We are highly dependent on access to the capital markets.
We mortgage, and expect to continue to mortgage, certain of our properties to secure payment of indebtedness. If we are unable to meet our mortgage payments, then the encumbered properties could be foreclosed upon or transferred to the mortgagee with a resulting loss of income and asset value. 30 We are highly dependent on access to the capital markets.
Any 25 new strategies, markets or businesses that we enter into may not be successful or meet our expectations, or we may be unable to effectively monitor or manage our portfolio of properties as it expands. Failure to meet any of these objectives could adversely affect our business, financial condition and results of operations.
Any new strategies, markets or businesses that we enter into may not be successful or meet our expectations, or we may be unable to effectively monitor or manage our portfolio of properties as it expands. Failure to meet any of these objectives could adversely affect our business, financial condition and results of operations.
This may require us to sell our interest in the investment or venture when we would otherwise prefer to retain it. In certain circumstances, Ventas serves as managing member, general partner or controlling party with respect to investments and ventures, including the Ventas Fund and our joint venture with GIC.
This may require us to sell our interest in the investment or venture when we would otherwise prefer to retain it. 26 In certain circumstances, Ventas serves as managing member, general partner or controlling party with respect to investments and ventures, including the Ventas Fund and our joint venture with GIC.
See “Business—Competition” included in Part I, Item 1 of this Annual Report. If we are unsuccessful at identifying and capitalizing on investment, acquisition, development and redevelopment opportunities and otherwise expanding and diversifying our portfolio, our growth and profitability may be adversely affected.
See “Business—Competition” included in Part I, Item 1 of this Annual Report. If 24 we are unsuccessful at identifying and capitalizing on investment, acquisition, development and redevelopment opportunities and otherwise expanding and diversifying our portfolio, our growth and profitability may be adversely affected.
Some of our properties are in areas particularly susceptible to revenue loss, cost increase or damage caused by catastrophic or extreme weather and other natural events, including fires, snow, rain or ice storms, windstorms, tornadoes, hurricanes, earthquakes, flooding and other severe weather.
Some of our properties are in areas particularly susceptible to revenue loss, cost increase or damage caused by catastrophic or extreme weather and other natural events, including fires, snow, rain or ice storms, windstorms, tornadoes, 28 hurricanes, earthquakes, flooding and other severe weather.
Any future downgrades could increase our borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. 31 We rely on the financial institutions that are parties to our revolving credit facilities.
Any future downgrades could increase our borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. We rely on the financial institutions that are parties to our revolving credit facilities.
We maintain or require in our lease, management and other agreements that our tenants, managers or other counterparties maintain comprehensive insurance coverage on our properties and their operations with terms, conditions, limits 34 and deductibles that we believe are customary for similarly situated companies in each industry.
We maintain or require in our lease, management and other agreements that our tenants, managers or other counterparties maintain comprehensive insurance coverage on our properties and their operations with terms, conditions, limits and deductibles that we believe are customary for similarly situated companies in each industry.
We cannot assure you that they will be able to, or will continue to, satisfy their obligations to us, and any failure, inability or 19 unwillingness by them to do so could adversely affect our business, financial condition and results of operations.
We cannot assure you that they will be able to, or will continue to, satisfy their obligations to us, and any failure, inability or unwillingness by them to do so could adversely affect our business, financial condition and results of operations.
Any of our tenants, managers or borrowers may experience a weakening in their overall financial condition, including as a result of deteriorating operating performance, changes in industry or market conditions, including supply-demand dynamics, rising interest rates or inflation, or other factors.
Any of our tenants, managers or borrowers may experience a weakening in their overall financial condition, including as a result of deteriorating operating performance, changes in industry or market conditions, including supply-demand dynamics, rising or elevated interest rates or inflation, or other factors.
A substantial portion of our value is derived from properties in California, New York, Texas, Pennsylvania and Illinois, and as a result, we are subject to increased exposure to adverse conditions affecting these regions, including downturns in the local economies or changes in local real estate conditions, changing demographics, increased construction and competition or decreased demand for our properties, regional climate events, such as wildfires or storms, and changes in state-specific legislation, which could adversely affect our business, financial condition and results of operations.
A substantial portion of our value is derived from properties in California, Illinois, New York, Pennsylvania, Texas and Quebec, Canada, and as a result, we are subject to increased exposure to adverse conditions affecting these regions, including downturns in the local economies or changes in local real estate conditions, changing demographics, increased construction and competition or decreased demand for our properties, regional climate events, such as wildfires or storms, and changes in state-specific legislation, which could adversely affect our business, financial condition and results of operations.
For example, the healthcare industry is subject to laws and regulations that relate to, among other things, licensure and certificates of need, conduct of operations, ownership of communities and facilities, construction of new communities and facilities and addition of equipment, governmental reimbursement programs, such as Medicare and Medicaid, allowable costs, services, prices for services, qualified beneficiaries, appropriateness and classification of care, patient rights, resident health and safety, data privacy and security laws, wage and hour laws, fraud and abuse and financial and other arrangements that may be entered into by healthcare providers.
For example, the healthcare industry is subject to laws and regulations that relate to, among other things, licensure and certificates of need, conduct of operations, ownership of communities and facilities, construction of new communities and facilities and addition of equipment, governmental reimbursement programs, such as Medicare and Medicaid, allowable costs, services, prices for services, qualified beneficiaries, appropriateness and classification of care, patient rights, resident health and safety, data privacy and cybersecurity, wage and hour, fraud and abuse and financial and other arrangements that may be entered into by healthcare providers.
If any of these occur, our and our tenants’, managers’ and borrowers’ businesses, results of operations (including results of properties) or financial condition could be adversely affected. Our investments may expose us to unknown liabilities.
If any of these occur, our and our tenants’, managers’ and borrowers’ businesses, reputation, results of operations (including results of properties) or financial condition could be adversely affected. Our investments may expose us to unknown liabilities.
Financial and other covenants that limit our operational flexibility, as well as defaults resulting from our breach of any of these covenants, could adversely affect our business, financial condition and results of operations. 32 Our Legal, Compliance and Regulatory Risks Significant legal or regulatory proceedings could subject us or our tenants or managers to increased operating costs and substantial uninsured liabilities, which could adversely affect our or their liquidity, financial condition and results of operations.
Financial and other covenants that limit our operational flexibility, as well as defaults resulting from our breach of any of these covenants, could adversely affect our business, financial condition and results of operations. 31 Our Legal, Compliance and Regulatory Risks Significant legal or regulatory proceedings could subject us or our tenants or managers to increased operating costs and substantial uninsured liabilities, which could adversely affect our or their liquidity, financial condition and results of operations.
In some cases, we and our tenants and managers may be subject to professional liability, general liability, employment, premise, privacy, environmental, unfair business practice and contracts claims brought by plaintiffs’ attorneys seeking significant damages and attorneys’ fees, some of which may not be insured or indemnified and some of which may result in significant damage awards.
In some cases, we and our tenants and managers may be subject to professional liability, general liability, employment, premise, data privacy, cybersecurity, environmental, unfair business practice and contracts claims brought by plaintiffs’ attorneys seeking significant damages and attorneys’ fees, some of which may not be insured or indemnified and some of which may result in significant damage awards.
See also “—If a borrower defaults, we may be unable to obtain payment, successfully foreclose on collateral or realize the value of any collateral, which could adversely affect our ability to recover our investment” below. We may be required to recognize reserves, allowances, credit losses or impairment charges.
See also “—If a borrower defaults, we may be unable to obtain payment, successfully foreclose on collateral or realize the value of any collateral, which could adversely affect our ability to recover our investment.” below. We may be required to recognize reserves, allowances, credit losses or impairment charges.
The failure of these systems or of disaster recovery plans for any reason could cause significant interruptions in our operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information, material nonpublic information and intellectual property and trade secrets and other sensitive information we possess.
The failure of our systems or of our disaster recovery plans for any reason could cause significant interruptions in our operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information, material nonpublic information and intellectual property and trade secrets and other confidential or sensitive information we possess.
Our tenants, managers and borrowers include senior housing managers, hospitals, post-acute facilities and other healthcare systems, medical offices and life sciences and technology companies that are subject to a complex set of trends affecting their businesses and the industries in which they operate.
Our tenants, managers and borrowers include senior housing managers, hospitals, post-acute facilities and other healthcare systems, medical practices and life sciences and technology companies that are subject to a complex set of trends affecting their businesses and the industries in which they operate.
We depend on Brookdale Senior Living, Ardent and Kindred to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing, if any, affecting the properties they lease from us.
We depend on Brookdale, Ardent and Kindred to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing, if any, affecting the properties they lease from us.
These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims and employment claims, as well as regulatory proceedings, including proceedings related to our SHOP segment, where we are typically the holder of the applicable healthcare license.
These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims, class action claims, employment claims, as well as regulatory proceedings, including proceedings related to our SHOP segment, where we are typically the holder of the applicable healthcare license.
The rents we receive from a TRS pursuant to this arrangement are treated as qualifying rents from real property if the healthcare property is a qualified health care property (as defined in the Code), the rents are paid pursuant to an arm’s-length lease with a TRS and the manager qualifies as an eligible independent contractor (as defined in the Code).
The rents we receive from a TRS pursuant to this arrangement are treated as qualifying rents from real property if the healthcare property is a qualified health care property (as defined in the Code), the rents are paid pursuant to a lease with a TRS and the manager qualifies as an eligible independent contractor (as defined in the Code).
Any failure by any one of Brookdale Senior Living, Ardent or Kindred to effectively conduct its operations or to maintain and improve the properties they lease from us could adversely affect their financial condition and, in turn, our business, financial condition and results of operations.
Any failure by any one of Brookdale, Ardent or Kindred to effectively conduct its operations or to maintain and improve the properties they lease from us could adversely affect their financial condition and, in turn, our business, financial condition and results of operations.
An unfavorable resolution of any such lawsuit, investigation, claims or other legal or regulatory proceeding could materially and adversely affect our or our tenants’ or managers’ liquidity, financial condition and results of operations, and may not be protected by sufficient insurance coverage.
An unfavorable resolution of any such lawsuit, investigation, claim or other legal or regulatory proceeding could materially and adversely affect our or our tenants’ or managers’ liquidity, financial condition and results of operations, and may not be protected by sufficient or any insurance coverage.
Insurance for other claims such as wage and hour, certain environmental, privacy and unfair business practices may no longer be available, and the premiums on that insurance coverage, to the extent it is available, remain costly.
Insurance for other claims such as wage and hour, certain environmental, data privacy, cybersecurity and unfair business practices may no longer be available, and the premiums on that insurance coverage, to the extent it is available, remain costly.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to satisfy the available safe harbors.
If we or our tenants, managers or borrowers fail to comply with the extensive laws, regulations and other requirements applicable to our or their businesses and the operation of our or their properties, we or they could face a number of remedial actions, including forced closure, loss of accreditation, bans on admissions of new patients or residents, imposition of fines, ineligibility to receive reimbursement from governmental and private third-party payor programs or civil or 33 criminal penalties.
If we or our tenants, managers or borrowers fail to comply with the extensive laws, regulations and other requirements applicable to our or their businesses and the operation of 32 our or their properties, we or they could face a number of remedial actions, including forced closure, loss of accreditation, bans on admissions of new patients or residents, enforcement actions, investigations, imposition of fines, ineligibility to receive reimbursement from governmental and private third-party payor programs or civil or criminal penalties.
For instance, our financial results have been adversely impacted by increased operating costs at our senior housing communities as a result of labor pressures, public health measures and other operational and regulatory dynamics attributable or related to the pandemic and decreased revenues due to a reduction in occupancy in these communities.
For instance, our financial results were adversely impacted by increased operating costs at our senior housing communities as a result of labor pressures, public health measures and other operational and regulatory dynamics attributable or related to the pandemic and decreased revenues due to a reduction in occupancy in these communities.
We believe our arrangements with our TRSs are on arm's-length terms and intend to continue to operate in a manner that allows us to avoid incurring the 100% excise tax described above, but there can be no assurance that we will be able to avoid application of that tax.
We believe our arrangements with or involving our TRSs are on arm's-length terms and intend to continue to operate in a 37 manner that allows us to avoid incurring the 100% excise tax described above, but there can be no assurance that we will be able to avoid application of that tax.
Increases in interest rates may also adversely affect the securities markets generally, which could reduce the market price of our common stock without regard to our operating performance.
Increases in or elevated interest rates may also adversely affect the securities markets generally, which could reduce the market price of our common stock without regard to our operating performance.
We receive a significant portion of our revenues by leasing assets under long-term triple-net leases that generally provide for fixed rental rates subject to annual escalations, while certain of our debt obligations are floating rate obligations with interest and related payments that vary with the movement of the London Interbank Offered Rate (“LIBOR”), the Secured Overnight Financing Rate (“SOFR”), Bankers’ Acceptance or other indexes.
We receive a significant portion of our revenues by leasing assets under long-term triple-net leases that generally provide for fixed rental rates subject to annual escalations, while certain of our debt obligations are floating rate obligations with interest and related payments that vary with the movement of the Secured Overnight Financing Rate (“SOFR”), Bankers’ Acceptance or other indexes.
If we lose our status as a REIT (currently or with respect to any tax years for which the statute of limitations has not expired), we will face serious tax consequences that will substantially reduce the funds available to satisfy our obligations, to implement our business strategy and to make distributions to our stockholders for each of the years involved because: • We would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax; • We could be subject to increased state and local taxes; and • Unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the year during which we were disqualified.
If we lose our status as a REIT (currently or with respect to any tax years for which the statute of limitations has not expired), we will face serious tax consequences that will substantially reduce the funds available to satisfy our obligations, to implement our business strategy and to make distributions to our stockholders because: • We would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax for any taxable year for which we did not qualify as a REIT; • We could be subject to increased state and local taxes for those years; and • Unless we are entitled to relief under statutory provisions, we could not elect to be subject to tax as a REIT for four taxable years following the latest taxable year during which we were disqualified.
In the event that timing differences occur or we decide to retain cash or to distribute such greater amount as may be necessary to avoid income and excise taxation, we may seek to borrow funds, issue additional equity securities, pay taxable stock dividends, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements.
In the event that timing differences occur (or, as applicable, we decide to retain cash or to distribute such greater amount as may be necessary to avoid income and excise taxation), we may seek to borrow funds, issue additional equity securities, pay taxable stock dividends, distribute other property or securities or engage in other transactions intended to enable us to meet the REIT distribution requirements.
The price of commodities and skilled labor for our construction projects may increase due to external factors, including, but not limited to, performance of third-party suppliers and contractors; overall market supply and demand; government regulation and policies, including actions taken by the Federal Reserve, and changes in general business, economic or political conditions.
The price of commodities and skilled labor for our construction projects may increase due to external factors, including, but not limited to, performance of third-party suppliers and contractors; overall market supply and demand; elevated or increasing interest rates; government regulation and policies, including actions taken by the Federal Reserve, and changes in general business, economic or political conditions.
Increases in interest rates may result in a decrease in the value of our real estate, a decrease in the market price of our common stock and a decrease in our cash flows and net income.
Increases in or elevated interest rates may result in a decrease in the value of our real estate, a decrease in the market price of our common stock and a decrease in our cash flows and net income.
Also, the law relating to 37 the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities 38 more attractive relative to an investment in a REIT.
Although our lease, loan and management agreements give us the right to exercise, under certain circumstances, certain remedies in the event of default on the obligations owing to us, we may decide not to exercise those remedies for one or more reasons.
Although our loan agreements give us the right to exercise, under certain circumstances, certain remedies in the event of default on the obligations owing to us, we may decide not to exercise those remedies for one or more reasons.
The financing market for life science, research and innovation companies has been and may continue to be volatile, which may contribute to these risks. The research and development, clinical testing, manufacture and marketing of some of our tenants’ products require federal, state and foreign regulatory approvals. The approval process is typically long, expensive and uncertain.
The financing market for research companies has been and may continue to be volatile, which may contribute to these risks. 23 The research and development, clinical testing, manufacture and marketing of some of our tenants’ products require federal, state and foreign regulatory approvals. The approval process is typically long, expensive and uncertain.
That could adversely impact the hospital’s ability to attract physicians and other healthcare-related clients, and, in some cases, the hospital might even close or relocate. We rely on proximity to and affiliations with hospitals to create leasing demand in our MOB and similar properties.
That could adversely impact the hospital’s ability to attract physicians and other healthcare-related clients, and, in some cases, the hospital might even close or relocate. We rely on proximity to and affiliations with hospitals to create leasing demand in our outpatient medical buildings and similar properties.
If either Atria or Sunrise experience financial, legal, accounting, regulatory or other difficulties that impact their financial stability, our business, financial condition and results of operations could be adversely affected.
If either Atria or Sunrise experience financial, legal, accounting, regulatory or other difficulties that impact their financial stability or ability to operate, our business, financial condition and results of operations could be adversely affected.
Although we may pursue hedging alternatives, including borrowing in local currencies, to protect against foreign currency fluctuations, we cannot assure you that such hedging will be successful and that fluctuations will not adversely affect our business, financial condition and results of operations. The phasing out of LIBOR may affect our financial results .
Although we may pursue hedging alternatives, including borrowing in local currencies, to protect against foreign currency fluctuations, we cannot assure you that such hedging will be successful and that fluctuations will not adversely affect our business, financial condition and results of operations.
In our operating assets, including those in our SHOP and office segments, we are generally responsible for all liabilities of the properties, including any lawsuits, investigations, claims and other legal or regulatory proceedings, other than those arising out of certain actions by our managers, such as those caused by gross negligence, fraud or willful misconduct.
In our operating assets, including those in our SHOP and outpatient medical and research segments, we are generally responsible for all liabilities of the properties, including any lawsuits, investigations, claims and other legal or regulatory proceedings, other than those arising out of certain limited actions by our managers, such as those caused by gross negligence, fraud or willful misconduct.
Lower labor force participation rates and inflationary pressures affecting wages have driven increased labor expenses across senior housing communities, with 15 our tenants, managers and borrowers implementing higher wage rates, more costly overtime and usage of contract labor to address these challenges.
Lower labor force participation rates and inflationary pressures affecting wages drove increased labor expenses across senior housing communities, with our tenants, managers and borrowers implementing higher wage rates, more costly overtime and usage of contract labor to address these challenges.
The generally fixed rate nature of a significant portion of our revenues and the variable rate nature of certain of our debt obligations create interest rate risk. If interest rates continue to rise, the costs of our existing floating rate debt and any new debt that we incur would increase.
The generally fixed rate nature of a significant portion of our revenues and the variable rate nature of certain of our debt obligations create interest rate risk. If interest rates continue to rise or remain elevated, the costs of our existing floating rate debt would increase or remain elevated and any new debt that we incur could increase.
These risks include, and our resulting revenues are impacted by, among other things, fluctuations in occupancy levels, the inability to charge desirable resident fees (including anticipated increases in those fees), increases in the cost of food, materials, energy, labor (as a result of labor shortages, unionization, inflation or otherwise) or other services, rent control regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, changes in management or equity, accounting misstatements, professional and general liability claims, litigation and regulatory actions, and the availability and cost of insurance.
These risks include, and our financial performance is impacted by, among other things, fluctuations in occupancy levels, the inability to charge desirable resident fees (including anticipated increases in those fees), increases in the cost of food, supplies, energy, labor (as a result of labor shortages, unionization, inflation or otherwise) or other services, rent control regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, changes in management or equity, accounting misstatements, professional and general liability claims, litigation and regulatory actions, and the availability and cost of insurance.
New legislation, U.S. Treasury Department regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT , the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us.
Treasury Department regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us.
Our investments in medical office, life science and research and innovation buildings and facilities as well as other properties may be made through leasehold interests in the land on which the buildings are located, leases of air rights for the space above the land on which the buildings are located, or other similar restrictive arrangements.
Our investments in outpatient medical buildings and research buildings and facilities as well as other properties may be made through leasehold interests in the land on which the buildings are located, leases of air rights for the space above the land on which the buildings are located, or other similar restrictive arrangements.
For example, timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand, or non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may prevent us from having sufficient cash or liquid assets to satisfy the 90% distribution requirement.
For example, timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand, or non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may prevent us from having sufficient cash or liquid assets to distribute 100% of our REIT taxable income.
If our life science, research and innovation 24 tenants’ business deteriorates for these or any other reasons, they may be unable to make payments or meet their other obligations to us. We cannot assure you that any of our life science, research and innovation tenants will be successful in their businesses.
If our research tenants’ business deteriorates for these or any other reasons, they may be unable to make payments or meet their other obligations to us. We cannot assure you that any of our research tenants will be successful in their businesses.
We have a significant amount of outstanding indebtedness and may incur additional indebtedness in the future. As of December 31, 2022, we had approximately $12.4 billion of outstanding principal indebtedness. The instruments governing our existing indebtedness permit us to incur substantial additional debt, including secured debt, and we may satisfy our capital and liquidity needs through additional borrowings.
We have a significant amount of outstanding indebtedness and may incur additional indebtedness in the future. As of December 31, 2023, we had approximately $13.6 billion of outstanding principal indebtedness. The instruments governing our existing indebtedness permit us to incur substantial additional debt, including secured debt, and we may satisfy our capital and liquidity needs through additional borrowings.
Our tenants may be unable to manufacture their products successfully or economically, may be unable to adapt to rapid technological advances in their industry, may be unable to adequately protect their intellectual property, may face competition from new products or may not receive acceptance of their products.
Our tenants may be unable to manufacture their products successfully or economically, may be unable to adapt to rapid technological advances in their industry, may be unable to adequately obtain, maintain, enforce, defend, protect or commercialize their intellectual property, may face competition from new products or may not receive acceptance of their products.
We are exposed to increases in interest rates in the short term through our variable-rate borrowings, which consist of borrowings under our unsecured credit facility, our unsecured term loans and our commercial paper program.
We are exposed to increases in or elevated interest rates in the short term through our variable-rate borrowings, which consist of borrowings under our unsecured credit facility, our unsecured term loans, our commercial paper program and certain other credit facilities.
Cybersecurity incidents and cyber-attacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future.
Cybersecurity threats and incidents have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency and severity in the future.
Such damage to our reputation could result if, for example, we experience a sustained period of distress, where our properties underperform, our tenants or managers default or in other instances that result in misalignment with those parties.
Such damage to our reputation could result if, for example, we experience a sustained period of distress, either as a result of general market conditions or otherwise, where our properties underperform, our tenants or managers default or in other instances that result in misalignment with those parties.
The hospitals on or near the campuses where our MOBs are located and their affiliated health systems may not remain competitive or financially viable.
The hospitals on or near the campuses where our outpatient medical buildings are located and their affiliated health systems may not remain competitive or financially viable.
Many of our tenants, managers and borrowers have also incurred significant costs or losses or are under increased financial pressure as a result of the pandemic and its extended consequences, including as a result of increased expenses due to labor and inflationary pressures and rising interest rates and decreased revenues, which increases the risk that they are unable to comply with their obligations to us.
Many of our tenants, managers and borrowers also incurred significant costs or losses or are under increased financial pressure as a result of the pandemic and its secondary and tertiary effects, including as a result of increased expenses due to labor and inflationary pressures and elevated interest rates and decreased revenues, which increased the risk that they are unable to comply with their obligations to us.
We invest in a variety of assets classes in healthcare real estate, including senior housing, medical office, life science, research and innovation, hospitals, long-term acute care facilities and other healthcare properties.
We invest in a variety of assets classes in real estate, including senior housing, outpatient medical, research, hospitals, long-term acute care facilities and other healthcare properties.
The COVID-19 pandemic, policy and other actions taken in response to the pandemic and their respective extended consequences have impacted the macroeconomic environment and global financial markets in significant ways, including through increased rates of inflation and interest rates and increasing labor pressure.
The secondary and tertiary effects of the COVID-19 pandemic, policy and other actions taken in response to the pandemic have impacted the macroeconomic environment and global financial markets in significant ways, including through increased rates of inflation and interest rates and increasing labor pressure.
Our MOBs and other properties that serve the healthcare industry depend on the competitiveness and financial viability of the hospitals on or near the campuses where our properties are located and their ability to attract physicians and other healthcare-related clients to our properties.
Our outpatient medical buildings and other properties that serve the healthcare industry depend on the competitiveness and financial viability of the hospitals on or near the campuses where our properties are located or that our properties are otherwise affiliated with, and their ability to attract physicians and other healthcare-related clients to our properties.
Our information technology networks and related systems are essential to our ability to perform day-to-day operations of our business, and a cyber incident could result in a data center outage, disrupting our systems and operations or the operations of our managers or business partners, compromise the confidential information of our employees, partners or the residents in our senior housing communities, and damage our business relationships and reputation.
Our information technology systems and networks are essential to our ability to perform day-to-day operations of our business, and a cybersecurity threat or incident could result 34 in a data center outage, disrupt our systems and operations, compromise the confidential or personal information of our employees, partners or the residents in our senior housing communities and damage our business relationships and reputation.
Our life science, research and innovation tenants develop and sell products and services in an industry that is characterized by rapid and significant changes, evolving industry standards, significant research and development risk and uncertainty over the implementation of new healthcare reform legislation.
Our research tenants develop and sell products and services in an industry that is characterized by rapid and significant changes, evolving industry standards, significant research and development risk, in some cases, and uncertainty over the implementation of new healthcare reform or medical device legislation.
We also have the right to purchase the excess shares for a price equal to the lesser of (i) the price per share in the transaction that created the excess shares or (ii) the market price on the day we purchase the shares.
We also have the right to purchase the excess shares for a price equal to the lesser of (i) the price per share in the transaction that created the excess shares or (ii) the market price on the day we purchase the shares, and we may defer payment of the purchase price for up to five years.
The COVID-19 pandemic has caused and may in the future cause our senior housing and healthcare business to face increased exposure to lawsuits or other legal or regulatory proceedings filed at the same time across multiple jurisdictions, such as professional or general liability litigation alleging wrongful death and negligence claims, some of which may result in large damage awards and not be indemnified or subject to sufficient insurance coverage, may require our support as a result of our indemnification agreements or may result in restrictions in the operations of our or our tenants’ or managers’ business.
Our senior housing and healthcare business may be subject to lawsuits or other legal or regulatory proceedings across multiple jurisdictions, such as professional or general liability litigation alleging wrongful death and negligence claims, some of which may result in large damage awards and not be indemnified or subject to sufficient insurance coverage, may require our support as a result of our indemnification agreements or may result in restrictions in the operations of our or our tenants’ or managers’ business.
The ongoing impact of the pandemic and its extended consequences on occupancy remains uncertain, especially as new strains of COVID-19 and other viruses and infections, such as flu and respiratory syncytial virus (RSV), arise and spread and clinical trends fluctuate.
The secondary and tertiary effects of the COVID-19 pandemic on occupancy remains uncertain, especially as new strains of COVID-19 and other viruses and infections, such as flu and respiratory syncytial virus (RSV), arise and spread and clinical trends fluctuate.
A significant portion of our properties are either managed for us by third-party managers or leased from us by third-party tenants. Our third-party managers and tenants are ultimately in control of the day-to-day business of the properties that they manage for or lease from us.
Our third-party managers and tenants are ultimately in control of the day-to-day business of the properties that they manage for or lease from us.
During transition periods to new tenants or managers, the attention of existing tenants or managers may be diverted from the performance of the properties, which could cause the financial and operational performance at those properties to decline.
During transition periods to new tenants or managers or as a result of a repositioning for an alternative use, the attention of existing tenants or managers may be diverted from the performance of the properties, which could cause the financial and operational performance at those properties to decline.
We rely on Atria and Sunrise to manage a significant portion of the properties in our SHOP segment, including by setting appropriate resident fees, managing expenses, providing accurate property-level financial results in a timely manner and otherwise operating our senior housing communities profitably and in compliance with the terms of our management agreements and all applicable law and regulation.
The portfolios managed or leased by Atria, Sunrise, Brookdale, Ardent and Kindred represent a substantial portion of our portfolio and account for a significant portion of our revenues and NOI. 18 We rely on Atria and Sunrise to manage a significant portion of the properties in our SHOP segment, including by setting appropriate resident fees, managing expenses, providing accurate property-level financial results in a timely manner and otherwise operating our senior housing communities profitably and in compliance with the terms of our management agreements and all applicable law and regulation.
In addition to incurred costs, perceived uncertainties as to our future direction may result in the loss of potential business opportunities, damage to our reputation and may make it more difficult to attract and retain qualified directors, personnel and business partners.
In addition to incurred costs, perceived uncertainties as to our future direction may result in the loss of potential business opportunities, damage to our reputation and may make it more difficult to attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to experience periods of volatility.
We are exposed to increases in interest rates, which could reduce our profitability and adversely impact our ability to refinance existing debt, sell assets or engage in acquisition, investment, development and redevelopment activity, and our decision to hedge against interest rate risk might not be effective. Interest rates are rising and are expected to continue to rise.
We are exposed to increases in interest rates, which could reduce our profitability and adversely impact our ability to refinance existing debt, sell assets or engage in acquisition, investment, development and redevelopment activity, and our decision to hedge against interest rate risk might not be effective. Interest rates have risen over the past number of years.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides additional information regarding the geographic diversification of our consolidated portfolio of properties as of December 31, 2022 (excluding properties owned through investments in unconsolidated real estate entities and properties classified as held for sale): 38 Senior Housing Communities SNFs MOBs Life Science, Research and Innovation Centers IRFs and LTACs Health Systems Geographic Location # of Properties Units # of Properties Licensed Beds # of Properties Square Feet (1) # of Properties Square Feet (1) # of Properties Licensed Beds # of Properties Licensed Beds Alabama — — — — 4 469 — — — — — — Arkansas 5 414 — — — — — — — — — — Arizona 27 2,263 — — 15 973 — — 1 60 — — California 80 8,921 — — 26 2,078 — — 5 455 — — Colorado 20 1,816 1 82 12 669 — — 1 68 — — Connecticut 14 1,751 — — — — 1 519 — — — — District of Columbia — — — — 2 103 — — — — — — Florida 46 4,017 — — 11 223 1 259 6 508 — — Georgia 18 1,678 — — 12 1,107 — — — — — — Hawaii 1 123 — — — — — — — — — — Iowa 2 215 — — — — — — — — — — Idaho 1 70 — — — — — — — — — — Illinois 26 3,066 1 82 35 1,425 1 129 4 430 — — Indiana 5 462 — — 22 1,611 — — 1 59 — — Kansas 11 871 — — 2 115 — — — — — — Kentucky 6 624 — — 2 73 — — 1 384 — — Louisiana 3 281 — — 5 365 — — — — — — Massachusetts 17 2,093 — — — — — — — — — — Maryland 4 282 — — 2 83 5 489 — — — — Maine 6 452 — — — — — — — — — — Michigan 23 1,585 — — 13 589 — — — — — — Minnesota 14 856 — — 3 159 — — — — — — Missouri 5 474 — — 19 1,117 5 1,086 1 60 — — Mississippi 1 94 — — 1 51 — — — — — — Montana 5 464 — — — — — — — — — — North Carolina 30 2,656 — — 16 705 9 1,472 1 124 — — North Dakota 2 115 — — 1 114 — — — — — — Nebraska 2 253 — — — — — — — — — — New Hampshire 2 242 — — — — — — — — — — New Jersey 12 1,137 1 153 3 37 — — — — — — New Mexico 4 451 — — — — — — 2 123 4 544 Nevada 5 621 — — 5 417 — — 1 52 — — New York 38 4,403 — — 4 244 — — — — — — Ohio 26 1,797 — — 14 503 — — 1 50 — — Oklahoma 8 558 — — 1 80 — — — — 4 954 Oregon 30 2,846 — — 1 105 — — — — — — Pennsylvania 34 2,662 4 620 8 614 6 1,119 1 52 — — Rhode Island 4 399 — — — — 3 313 — — — — South Carolina 8 702 — — 20 1,095 — — — — — — South Dakota 5 296 — — — — — — — — — — Tennessee 18 1,297 — — 6 251 — — 1 49 — — Texas 52 4,564 — — 32 1,456 — — 9 617 2 445 Utah 6 662 — — — — — — — — — — Virginia 11 1,006 — — 5 233 1 262 — — — — Washington 20 2,102 5 469 10 584 — — — — — — Wisconsin 47 2,451 — — 15 745 — — — — — — West Virginia 2 123 4 326 — — — — — — — — Wyoming 2 169 — — — — — — — — — — Total U.S. 708 64,384 16 1,732 327 18,390 32 5,647 36 3,091 10 1,943 Canada 82 15,484 — — — — — — — — — — United Kingdom 12 776 — — — — — — — — 3 121 Total 802 80,644 16 1,732 327 18,390 32 5,647 36 3,091 13 2,064 ______________________________ (1) Square Feet are in thousands.
Biggest changeThe following table provides additional information regarding the geographic diversification of our consolidated portfolio of properties as of December 31, 2023 (excluding properties owned through investments in unconsolidated real estate entities and properties classified as held for sale): 40 Senior Housing Communities SNFs Outpatient Medical Buildings Research Centers IRFs and LTACs Other Healthcare Facilities Geographic Location # of Properties Units # of Properties Licensed Beds # of Properties Square Feet (1) # of Properties Square Feet (1) # of Properties Licensed Beds # of Properties Licensed Beds Alabama — — 1 120 6 616 — — — — — — Arkansas 5 414 — — 1 10 — — — — — — Arizona 27 2,351 — — 14 880 — — 1 60 — — California 79 8,864 — — 28 2,150 — — 5 455 — — Colorado 20 1,963 1 82 17 885 — — 1 68 — — Connecticut 13 1,668 — — — — — — — — — — District of Columbia — — — — 2 102 — — — — — — Florida 44 4,017 — — 14 342 1 252 6 508 — — Georgia 18 1,678 6 819 18 1,255 — — 1 42 — — Hawaii 1 123 — — 1 23 — — — — — — Iowa 2 215 — — — — — — — — — — Idaho 1 70 — — 1 76 — — — — — — Illinois 32 3,593 1 82 41 1,743 1 129 4 430 — — Indiana 5 462 — — 41 2,267 — — 1 59 — — Kansas 11 871 — — 2 115 — — — — — — Kentucky 5 524 — — 2 73 — — 1 384 — — Louisiana 3 281 1 227 8 454 — — 1 32 — — Massachusetts 18 2,142 2 181 — — — — — — — — Maryland 4 282 — — 2 83 3 320 — — — — Maine 6 517 — — — — — — — — — — Michigan 21 1,420 — — 16 726 — — — — — — Minnesota 14 856 — — 5 193 — — — — — — Missouri 5 474 — — 19 1,076 5 818 4 159 — — Mississippi 1 94 — — 1 51 — — — — — — Montana 5 464 — — — — — — — — — — North Carolina 36 3,049 — — 15 675 9 1,302 1 124 — — North Dakota 2 115 — — 1 114 — — — — — — Nebraska 2 252 — — — — — — — — — — New Hampshire 2 242 — — — — — — — — — — New Jersey 12 1,137 1 153 3 37 — — — — — — New Mexico 4 451 — — 3 53 — — 2 123 4 544 Nevada 5 621 — — 5 416 — — 1 52 — — New York 38 4,403 — — 4 244 — — — — — — Ohio 28 2,492 — — 17 643 — — 1 50 — — Oklahoma 8 556 — — 1 80 — — 1 41 4 954 Oregon 35 3,105 6 360 1 105 — — — — — — Pennsylvania 32 2,521 12 2,526 8 613 6 1,071 1 52 — — Rhode Island 4 399 — — — — 3 444 — — — — South Carolina 5 469 — — 22 1,183 — — — — — — South Dakota 5 295 — — — — — — — — — — Tennessee 14 1,035 2 205 7 305 — — 1 49 — — Texas 52 4,564 — — 49 2,107 — — 9 617 2 445 Utah 6 662 — — — — — — 1 41 — — Virginia 10 928 — — 5 231 1 262 — — — — Washington 20 2,114 7 636 10 579 — — — — — — Wisconsin 45 2,419 — — 15 745 — — — — — — West Virginia 2 123 4 326 — — — — — — — — Wyoming 2 169 — — — — — — — — — — Total U.S. 709 65,464 44 5,717 405 21,248 29 4,598 43 3,346 10 1,943 Canada 83 15,822 — — — — — — — — — — United Kingdom 12 776 — — — — — — — — 3 121 Total 804 82,062 44 5,717 405 21,248 29 4,598 43 3,346 13 2,064 ______________________________ (1) Square Feet are in thousands.
Totals may not foot due to rounding. 39 Corporate Offices Our headquarters are located in Chicago, Illinois and we have additional corporate offices in Louisville, Kentucky and New York, New York. We lease all of our corporate offices.
Totals may not foot due to rounding. 41 Corporate Offices Our headquarters are located in Chicago, Illinois and we have additional corporate offices in Louisville, Kentucky and New York, New York. We lease all of our corporate offices.
As of December 31, 2022, we had $2.4 billion aggregate principal amount of mortgage loan indebtedness outstanding, secured by 105 of our properties. Excluding the portion of such indebtedness attributable to our joint venture partners, our share of mortgage loan indebtedness outstanding was $2.2 billion.
As of December 31, 2023, we had $3.2 billion aggregate principal amount of mortgage loan indebtedness outstanding, secured by 140 of our properties. Excluding the portion of such indebtedness attributable to our joint venture partners, our share of mortgage loan indebtedness outstanding was $2.9 billion.
We believe that maintaining a balanced portfolio of high-quality assets diversified by investment type, geographic location, asset type, tenant/operator, revenue source and operating model makes us less susceptible to single-state regulatory or reimbursement changes, regional climate events and local economic downturns and diminishes the risk that any single factor or event could materially harm our business.
We believe that maintaining a balanced portfolio of high-quality assets that are unified in serving the large and growing aging population and curated across geographic location, asset type, tenant/operator, revenue source and operating model makes us less susceptible to single-state regulatory or reimbursement changes, regional climate events and local economic downturns and diminishes the risk that any single factor or event could materially harm our business.
ITEM 2. Properties Senior Housing and Healthcare Properties As of December 31, 2022, we owned or had investments in approximately 1,300 properties (including properties classified as held for sale), consisting of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, hospitals and other healthcare facilities.
ITEM 2. Properties Senior Housing and Other Properties As of December 31, 2023, we owned or had investments in approximately 1,400 properties (including properties classified as held for sale), consisting of senior housing communities, outpatient medical buildings, research centers, hospitals and other healthcare facilities.
Removed
We had 17 properties under development, five of which are owned by unconsolidated real estate entities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeExcept as set forth therein, we are not a party to, nor is any of our property the subject of, any material pending legal proceedings. ITEM 4. Mine Safety Disclosures Not applicable. 40 PART II
Biggest changeExcept as set forth therein, we are not a party to, nor is any of our property the subject of, any material pending legal proceedings. ITEM 4. Mine Safety Disclosures Not applicable. 42 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe figures in the table below are rounded to the nearest dollar. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Ventas $ 100 $ 103 $ 107 $ 97 $ 104 $ 95 NYSE Composite Index $ 100 $ 91 $ 115 $ 123 $ 148 $ 135 Composite REIT Index $ 100 $ 96 $ 123 $ 116 $ 162 $ 122 S&P 500 Index $ 100 $ 96 $ 126 $ 149 $ 191 $ 157 42 ITEM 6. [Reserved]
Biggest changeThe figures in the table below are rounded to the nearest dollar. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Ventas $100 $103 $93 $101 $92 $106 NYSE Composite Index $100 $126 $135 $163 $148 $168 Composite REIT Index $100 $128 $121 $169 $127 $141 S&P 500 Index $100 $131 $156 $200 $164 $207 ITEM 6. [Reserved] 44
In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We expect to distribute at least 100% of our taxable net income, after the use of any net operating loss carryforwards, to our stockholders for 2023.
In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We expect to distribute at least 100% of our taxable net income, after the use of any net operating loss carryforwards, to our stockholders for 2024.
The comparison assumes $100 was invested on December 31, 2017 in our common stock and in each of the foregoing indexes and assumes reinvestment of dividends, as applicable.
The comparison assumes $100 was invested on December 31, 2018 in our common stock and in each of the foregoing indexes and assumes reinvestment of dividends, as applicable.
The value of the shares withheld is the closing price of our common stock on the date the vesting or exercise occurred (or, if not a trading day, the immediately preceding trading day) or the fair market value of our common stock at the time of the exercise, as the case may be. 41 Stock Performance Graph The following performance graph compares the cumulative total return (including dividends) to the holders of our common stock from December 31, 2017 through December 31, 2022, with the cumulative total returns of the NYSE Composite Index, the FTSE Nareit Composite REIT Index (the “Composite REIT Index”) and the S&P 500 Index over the same period.
The value of the shares withheld is the closing price of our common stock on the date the vesting or exercise occurred (or, if not a trading day, the immediately preceding trading day) or the fair market value of our common stock at the time of the exercise, as the case may be. 43 Stock Performance Graph The following performance graph compares the cumulative total return (including dividends) to the holders of our common stock from December 31, 2018 through December 31, 2023, with the cumulative total returns of the NYSE Composite Index, the FTSE Nareit Composite REIT Index (the “Composite REIT Index”) and the S&P 500 Index over the same period.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock, par value $0.25 per share, is listed and traded on the New York Stock Exchange (the “NYSE”) under the symbol “VTR.” As of February 3, 2023, there were 400.0 million shares of our common stock outstanding, held by approximately 3,520 stockholders of record.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock, par value $0.25 per share, is listed and traded on the New York Stock Exchange (the “NYSE”) under the symbol “VTR.” As of February 7, 2024, there were 402.5 million shares of our common stock outstanding, held by approximately 3,252 stockholders of record.
Each of our directors and executive officers has advised us that he or she is in compliance with the Securities Trading Policy and has not pledged any of our equity securities to secure margin or other loans.
Each of our directors and executive officers has advised us that he or she is in compliance with the Securities Trading Policy and has not pledged any of our equity securities to secure margin or other loans. Stock Repurchases We do not have a publicly announced repurchase plan or program in effect.
In addition, our Securities Trading Policy prohibits our directors and executive officers from holding our securities in margin accounts or pledging our securities to secure loans without the prior approval of our Audit and Compliance Committee.
In addition, our Securities Trading Policy prohibits our directors and executive officers from holding our securities in margin accounts or pledging our securities to secure loans.
Stock Repurchases The table below summarizes repurchases of our common stock made during the quarter ended December 31, 2022: Number of Shares Repurchased (1) Average Price Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs October 1 through October 31 565 $ 37.54 — — November 1 through November 30 56 46.53 — — December 1 through December 31 145 46.37 — — Total 766 $ 39.87 — — (1) Repurchases represent shares withheld to pay taxes on the vesting of restricted stock granted to employees under our 2006 Incentive Plan or 2012 Incentive Plan or restricted stock units granted to employees under the Nationwide Health Properties, Inc.
The table below summarizes repurchases of our common stock made during the quarter ended December 31, 2023: Number of Shares Repurchased (1) Average Price Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs October 1 through October 31 854 $ 42.59 — — November 1 through November 30 56 45.84 — — December 1 through December 31 1,951 46.76 — — Total 2,861 $ 45.50 — — ______________________________ (1) Repurchases represent shares withheld to pay taxes on the vesting of restricted stock and restricted stock units (including time-based and performance-based awards), or to pay taxes and/or exercise price on the exercise of stock options, granted to employees.
Removed
(“NHP”) 2005 Performance Incentive Plan and assumed by us in connection with our acquisition of NHP.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the Years Ended December 31, Increase (Decrease) to Net Income 2022 2021 $ % NOI: SHOP $ 647,466 $ 458,273 $ 189,193 41.3 % Office operations 546,604 543,882 2,722 0.5 Triple-net leased properties 582,853 638,488 (55,635) (8.7) Non-segment 65,717 84,058 (18,341) (21.8) Total NOI 1,842,640 1,724,701 117,939 6.8 Interest and other income 3,635 14,809 (11,174) (75.5) Interest expense (467,557) (440,089) (27,468) (6.2) Depreciation and amortization (1,197,798) (1,197,403) (395) — General, administrative and professional fees (144,874) (129,758) (15,116) (11.6) Loss on extinguishment of debt, net (581) (59,299) 58,718 99.0 Transaction expenses and deal costs (51,577) (47,318) (4,259) (9.0) Allowance on loans receivable and investments (19,757) 9,082 (28,839) (317.5) Other (58,268) (37,110) (21,158) (57.0) Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests (94,137) (162,385) 68,248 42.0 Income from unconsolidated entities 28,500 4,983 23,517 nm Gain on real estate dispositions 7,780 218,788 (211,008) (96.4) Income tax benefit (expense) 16,926 (4,827) 21,753 nm (Loss) income from continuing operations (40,931) 56,559 (97,490) (172.4) Net (loss) income (40,931) 56,559 (97,490) (172.4) Net income attributable to noncontrolling interests 6,516 7,551 (1,035) (13.7) Net (loss) income attributable to common stockholders $ (47,447) $ 49,008 $ (96,455) (196.8) % ______________________________ nm - not meaningful NOI—SHOP The following table summarizes results of operations in our SHOP reportable business segment, including assets sold or classified as held for sale as of December 31, 2022 (dollars in thousands): For the Years Ended December 31, Increase (Decrease) to NOI 2022 2021 $ % NOI—SHOP: Resident fees and services $ 2,651,886 $ 2,270,001 $ 381,885 16.8 % Less: Property-level operating expenses (2,004,420) (1,811,728) (192,692) (10.6) NOI $ 647,466 $ 458,273 $ 189,193 41.3 % 48 Number of Properties at December 31, Average Unit Occupancy for the Years Ended December 31, Average Monthly Revenue Per Occupied Room for the Years Ended December 31, 2022 2021 2022 2021 2022 2021 Total communities 544 545 80.8 % 78.5 % $ 4,396 $ 4,489 Resident fees and services include all amounts earned from residents at our senior housing communities, such as rental fees related to resident leases, extended health care fees and other ancillary service income.
Biggest changeSee “Non-GAAP Financial Measures” included elsewhere in this Annual Report for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI. 51 Years Ended December 31, 2023 and 2022 The table below shows our results of operations for the years ended December 31, 2023 and 2022 and the effect of changes in those results from period to period on our net income attributable to common stockholders (dollars in thousands): For the Years Ended December 31, Increase (Decrease) to Net Income 2023 2022 $ % NOI: SHOP $ 711,407 $ 647,466 $ 63,941 9.9 % Outpatient medical and research portfolio 576,932 546,604 30,328 5.5 Triple-net leased properties 604,651 582,853 21,798 3.7 Non-segment 32,177 65,717 (33,540) (51.0) Total NOI 1,925,167 1,842,640 82,527 4.5 Interest and other income 11,414 3,635 7,779 nm Interest expense (574,112) (467,557) (106,555) (22.8) Depreciation and amortization (1,392,461) (1,197,798) (194,663) (16.3) General, administrative and professional fees (148,876) (144,874) (4,002) (2.8) Gain (loss) on extinguishment of debt, net 6,104 (581) 6,685 nm Transaction, transition and restructuring costs (15,215) (30,884) 15,669 50.7 Allowance on loans receivable and investments 20,270 (19,757) 40,027 nm Gain on foreclosure of real estate 29,127 — 29,127 100.0 Shareholder relations matters — (20,693) 20,693 100.0 Other income (expense) 23,001 (58,268) 81,269 139.5 Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests (115,581) (94,137) (21,444) (22.8) Income from unconsolidated entities 13,626 28,500 (14,874) (52.2) Gain on real estate dispositions 62,119 7,780 54,339 nm Income tax benefit 9,539 16,926 (7,387) (43.6) Loss from continuing operations (30,297) (40,931) 10,634 26.0 Net loss (30,297) (40,931) 10,634 26.0 Net income attributable to noncontrolling interests 10,676 6,516 4,160 63.8 Net loss attributable to common stockholders $ (40,973) $ (47,447) $ 6,474 13.6 % ______________________________ nm—not meaningful NOI—SHOP The following table summarizes results of operations in our SHOP segment, including assets sold or classified as held for sale as of December 31, 2023 (dollars in thousands): For the Years Ended December 31, Increase (Decrease) to NOI 2023 2022 $ % NOI—SHOP: Resident fees and services $ 2,959,219 $ 2,651,886 $ 307,333 11.6 % Less: Property-level operating expenses (2,247,812) (2,004,420) (243,392) (12.1) NOI $ 711,407 $ 647,466 $ 63,941 9.9 % 52 Number of Properties at December 31, Average Unit Occupancy for the Years Ended December 31, Average Monthly Revenue Per Occupied Room for the Years Ended December 31, 2023 2022 2023 2022 2023 2022 Total communities 587 544 81.4 % 80.8 % $ 4,684 $ 4,396 Resident fees and services include all amounts earned from residents at our senior housing communities, such as rental fees related to resident leases, extended health care fees and other ancillary service income.
We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities and commercial paper program.
We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities and commercial paper program.
We believe that the critical accounting policies described below, among others, affect our more significant estimates and judgments used in the preparation of our financial statements. For more information regarding our critical accounting policies, see “Note 2 – Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
We believe that the critical accounting policies described below, among others, affect our more significant estimates and judgments used in the preparation 48 of our financial statements. For more information regarding our critical accounting policies, see “Note 2 – Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP.
A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and 57 presented in accordance with U.S. GAAP.
These market risks result primarily from changes in LIBOR, SOFR rates or prime rates. To manage these risks, we continuously monitor our level of floating rate debt with respect to total debt and other factors, including our assessment of current and future economic conditions.
These market risks result primarily from changes in SOFR rates or prime rates. To manage these risks, we continuously monitor our level of floating rate debt with respect to total debt and other factors, including our assessment of current and future economic conditions.
We perform this analysis on an ongoing basis. 45 Accounting for Real Estate Acquisitions When we acquire real estate, we first make reasonable judgments about whether the transaction involves an asset or a business.
We perform this analysis on an ongoing basis. Accounting for Real Estate Acquisitions When we acquire real estate, we first make reasonable judgments about whether the transaction involves an asset or a business.
Based solely on our results for the year ended December 31, 2022 (including the impact of existing hedging arrangements), if the value of the U.S. dollar relative to the British pound and Canadian dollar were to increase or decrease by one standard deviation compared to the average exchange rate during the year, our Normalized FFO per share for the year ended December 31, 2022 would decrease or increase, as applicable, by less than $0.01 per share or 1%.
Based solely on our results for the year ended December 31, 2023 (including the impact of existing hedging arrangements), if the value of the U.S. dollar relative to the British pound and Canadian dollar were to increase or decrease by one standard deviation compared to the average exchange rate during the year, our Normalized FFO per share for the year ended December 31, 2023 would decrease or increase, as applicable, by less than $0.01 per share or 1%.
Occupancy rates may affect the profitability of our tenants’ operations. For senior housing communities and post-acute properties in our triple-net leased properties reportable business segment, occupancy generally reflects average operator-reported unit and bed occupancy, respectively, for the reporting period. Because triple-net financials are delivered to us following the reporting period, occupancy is reported in arrears.
Occupancy rates may affect the profitability of our tenants’ operations. For senior housing communities and post-acute properties in our triple-net leased properties segment, occupancy generally reflects average operator-reported unit and bed occupancy, respectively, for the reporting period. Because triple-net financials are delivered to us following the reporting period, occupancy is reported in arrears.
Dividends During 2022, we declared four dividends totaling $1.80 per share of our common stock, including a fourth quarter dividend of $0.45 per share. In order to continue to qualify as a REIT, we must make annual distributions to our stockholders of at least 90% of our REIT taxable income (excluding net capital gain).
Dividends During 2023, we declared four dividends totaling $1.80 per share of our common stock, including a fourth quarter dividend of $0.45 per share. In order to continue to qualify as a REIT, we must make annual distributions to our stockholders of at least 90% of our REIT taxable income (excluding net capital gain).
The following table sets forth average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2022 and measured over the trailing 12 months ended September 30, 2022 (which is the most recent information available to us from our tenants) and average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2021 and measured over the 12 months ended September 30, 2021.
The following table sets forth average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2023 and measured over the trailing 12 months ended September 30, 2023 (which is the most recent information available to us from our tenants) and average continuing occupancy rates related to the triple-net leased properties we owned at December 31, 2022 and measured over the 12 months ended September 30, 2022.
If any of Brookdale Senior Living, Ardent or Kindred becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline, and our ability to service our indebtedness and to make distributions to our stockholders could be impaired.
If any of Brookdale, Ardent or Kindred becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline, and our ability to service our indebtedness and to make distributions to our stockholders could be impaired.
In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We intend to pay dividends greater than 100% of our taxable income, after the use of any net operating loss carryforwards, for 2023.
In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We intend to pay dividends greater than 100% of our taxable income, after the use of any net operating loss carryforwards, for 2024.
See “Risk Factors—Our Business Operations and Strategy Risks—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale Senior Living, Ardent, Kindred, Atria and Sunrise.” included in Part I, Item 1A of this Annual Report and “Note 3 – Concentration of Credit Risk” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
See “Risk Factors—Risks Related to Our Business Operations and Strategy—A significant portion of our revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale, Ardent, Kindred, Atria and Sunrise.” included in Part I, Item 1A of this Annual Report and “Note 3 – Concentration of Credit Risk” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
See “Risk Factors—Our Business Operations and Strategy Risk—If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms, if at all, and we could be subject to delays, limitations and expenses, which could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
See “Risk Factors—Risks Related to Our Business Operations and Strategy—If we need to replace any of our tenants or managers, we may be unable to do so on as favorable terms, if at all, and we could be subject to delays, limitations and expenses, which could adversely affect our business, financial condition and results of operations.” included in Part I, Item 1A of this Annual Report.
During the year ended December 31, 2022, we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period.
During the year ended December 31, 2023, we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period.
Nevertheless, we cannot assure you that any such fluctuations will not have an effect on our earnings. 59 Concentration and Credit Risk We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations, business models, and tenants, operators and managers.
Nevertheless, we cannot assure you that any such fluctuations will not have an effect on our earnings. 63 Concentration Risk We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations, business models, and tenants, operators and managers.
We report revenues and property-level operating expenses within our triple-net leased properties reportable business segment for real estate tax and insurance expenses that are paid from escrows collected from our tenants.
We report revenues and property-level operating expenses within our triple-net leased properties segment for real estate tax and insurance expenses that are paid from escrows collected from our tenants.
The amounts involved may be material. The indentures governing our outstanding senior notes require us to comply with various financial and other restrictive covenants. We were in compliance with all of these covenants at December 31, 2022.
The amounts involved may be material. 68 The indentures governing our outstanding senior notes require us to comply with various financial and other restrictive covenants. We were in compliance with all of these covenants at December 31, 2023.
In addition, Ventas, Inc. has fully and unconditionally guaranteed the obligations under our $2.75 billion unsecured revolving credit facility, our C$500 million unsecured term loan facility, the New Credit Agreement and our $100.0 million uncommitted line for standby letters of credit.
In addition, Ventas, Inc. has fully and unconditionally guaranteed the obligations under our $2.75 billion unsecured revolving credit facility, our C$500 million unsecured term loan facility, our $500.0 million unsecured term loan, our $200.0 million unsecured term loan and our $100.0 million uncommitted line for standby letters of credit.
See “Risk Factors—Our Business Operations and Strategy Risks.” included in Part I, Item 1A of this Annual Report. We hold a 34% ownership interest in Atria, which entitles us to customary minority rights and protections, including the right to appoint two members to the Atria Board of Directors.
See “Risk Factors—Risks Related to Our Business Operations and Strategy” included in Part I, Item 1A of this Annual Report. We hold a 34% ownership interest in Atria, which entitles us to customary minority rights and protections, including the right to appoint two members to the Atria Board of Directors.
Information provided for “non-segment” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in “non-segment” consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable.
Information provided for “non-segment” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable.
We also earn revenues directly from individual residents in our senior housing communities that are managed by independent operators, such as Atria and Sunrise, and tenants in our office buildings. The concentration of our triple-net leased properties segment revenues and operating income that are attributed to Brookdale Senior Living, Ardent and Kindred creates credit risk.
We also earn revenues directly from individual residents in our senior housing communities that are managed by operators, such as Atria and Sunrise, and tenants in our outpatient medical buildings. The concentration of our triple-net leased properties segment revenues and operating income that are attributed to Brookdale, Ardent and Kindred creates credit risk.
(2) Results exclude nine senior housing communities, which are included in the SHOP reportable business segment. (3) Ratios are based on total revenues (including amounts related to assets classified as held for sale) for each period presented.
(2) Results exclude ten senior housing communities, which are included in the SHOP segment. (3) Ratios are based on total revenues (including amounts related to assets classified as held for sale) for each period presented.
Total consolidated debt does not include our portion of unconsolidated debt related to investments in unconsolidated real estate entities, which was $454.4 million and $338.1 million as of December 31, 2022 and 2021, respectively. The fair value of our fixed rate debt is based on current market interest rates at which we could obtain similar borrowings.
Total consolidated debt does not include our portion of unconsolidated debt related to investments in unconsolidated real estate entities, which was $575.3 million and $454.4 million as of December 31, 2023 and 2022, respectively. The fair value of our fixed rate debt is based on current market interest rates at which we could obtain similar borrowings.
The notes are sold under customary terms in the U. S. commercial paper note market and are ranked pari passu with all of Ventas Realty’s other unsecured senior indebtedness. The notes are fully and unconditionally guaranteed by Ventas, Inc. As of December 31, 2022, we had $403.0 million in borrowings outstanding under our commercial paper program.
The notes are sold under customary terms in the U.S. commercial paper note market and are ranked pari passu with all of Ventas Realty’s other unsecured senior indebtedness. The notes are fully and unconditionally guaranteed by Ventas, Inc. As of December 31, 2023, we had no borrowings outstanding under our commercial paper program.
We define Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction expenses and deal costs, including transaction, integration and severance-related costs and expenses, and amortization of intangibles, in each case net of noncontrolling interests’ share of these items and including Ventas’ share of these items from unconsolidated entities; (b) the impact of expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to our executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income and non-cash charges related to leases; (d) the financial impact of contingent consideration; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other items related to unconsolidated entities; (g) net expenses or recoveries related to materially disruptive events; and (h) other items set forth in the Normalized FFO reconciliation included herein. 54 The following table summarizes our FFO and Normalized FFO for the three years ended December 31, 2022 (dollars in thousands).
We define Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction, transition and restructuring costs and amortization of intangibles; (b) the impact of expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to our executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income and non-cash charges related to leases; (d) the financial impact of contingent consideration; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other items related to unconsolidated entities and noncontrolling interests; (g) net expenses or recoveries related to materially disruptive events; and (h) other items set forth in the Normalized FFO reconciliation included herein. 58 The following table summarizes our FFO and Normalized FFO for the three years ended December 31, 2023 (dollars in thousands).
Estimates of fair value used in our evaluation of investments in real estate are based upon discounted future cash flow projections, if necessary, or other acceptable valuation techniques that are based, in turn, upon all available evidence including level three inputs, such as revenue and expense growth rates, estimates of future cash flows, capitalization rates, discount rates, general economic conditions and trends, or other available market data such as replacement cost or comparable sales.
Estimates of fair value used in our evaluation of investments in real estate are based upon an income approach, if necessary, or other acceptable valuation techniques that are based, in turn, upon all available evidence including level three inputs, such as net operating income, revenue and expense growth rates, estimates of future cash flows, capitalization rates, discount rates, general economic conditions and trends, or other available market data such as replacement cost or comparable sales.
(“NHP”) and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with our acquisition of NHP, and C$1.9 billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Canada Finance Limited (“Ventas Canada”). All of the senior notes issued by Ventas Realty and Ventas Canada are unconditionally guaranteed by Ventas, Inc.
(“NHP”) and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with our acquisition of NHP, and C$1.6 billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Canada. All of the senior notes issued by Ventas Realty and Ventas Canada are unconditionally guaranteed by Ventas, Inc.
Income Tax Benefit (Expense) The 2022 income tax benefit is primarily due to a $7.5 million income tax benefit from operating losses at certain TRS entities and an income tax benefit of $11.9 million from an internal restructuring of foreign TRS entities.
The 2022 income tax benefit is primarily due to income tax benefit from operating losses at certain TRS entities and an income tax benefit of $11.9 million from an internal restructuring of foreign TRS entities.
As of December 31, 2022 and 2021, our joint venture partners’ aggregate share of total consolidated debt was $279.0 million and $278.0 million, respectively, with respect to certain properties we owned through consolidated joint ventures.
As of December 31, 2023 and 2022, our joint venture partners’ aggregate share of total consolidated debt was $297.5 million and $279.0 million, respectively, with respect to certain properties we owned through consolidated joint ventures.
We primarily invest in a diversified portfolio of healthcare real estate assets through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior housing operating portfolio, which we also refer to as “SHOP” and which was formerly known as senior living operations, and office operations.
We primarily invest in our portfolio of real estate assets through wholly-owned subsidiaries and other co-investment entities. We operate through three reportable business segments: senior housing operating portfolio, which we also refer to as “SHOP”, outpatient medical and research portfolio, which was formerly known as office operations, and triple-net leased properties.
Critical Accounting Policies and Estimates Our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”).
Critical Accounting Policies and Estimates Our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report have been prepared in accordance with GAAP set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”).
Assuming a 100 basis point increase in the weighted average interest rate related to our variable rate debt and assuming no change in our variable rate debt outstanding as of December 31, 2022, interest expense on an annualized basis would increase by approximately $15.0 million, or $0.04 per diluted common share.
Assuming a 100 basis point increase in the weighted average interest rate related to our variable rate debt and assuming no change in our variable rate debt outstanding as of December 31, 2023 of $1.1 billion, interest expense on an annualized basis would increase by approximately $11.1 million, or $0.03 per diluted common share.
Recently developed or redeveloped properties in our office operations and triple-net leased properties reportable business segment segments will be included in same-store once substantial completion of work has occurred for the full period in both periods presented.
Recently developed or redeveloped properties in our outpatient medical and research portfolio and triple-net leased properties reportable business segments will be included in same-store once substantial completion of work has occurred for the full period in both periods presented.
You should read this discussion in conjunction with our Consolidated Financial Statements and the notes thereto included in Part II, Item 8 of this Annual Report and our Risk Factors included in Part I, Item 1A of this Annual Report. Business Summary and Overview of 2022 Ventas, Inc.
You should read this discussion in conjunction with our Consolidated Financial Statements and the notes thereto included in Part II, Item 8 of this Annual Report and our Risk Factors included in Part I, Item 1A of this Annual Report.
See our Consolidated Financial Statements and the related notes, including “Note 2 – Accounting Policies” and “Note 18 – Segment Information,” included in Part II, Item 8 of this Annual Report.
See our Consolidated Financial Statements and the related notes, including “Note 2 – Accounting Policies” and “Note 18 – Segment Information,” included in Part II, Item 8 of this Annual Report on Form 10-K (the “Annual Report”).
We have a third-party institutional capital management business, Ventas Investment Management (“VIM”), which includes our open-ended investment vehicle, the Ventas Life Science & Healthcare Real Estate Fund (the “Ventas Fund”). Through VIM, we partner with third-party institutional investors to invest in healthcare real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner.
Through VIM, we partner with third-party institutional investors to invest in real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner, including our open-ended investment vehicle, the Ventas Life Science & Healthcare Real Estate Fund (the “Ventas Fund”).
Ventas, Inc. has also fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Canada Finance Limited (“Ventas Canada”).
None of our other subsidiaries is obligated with respect to Ventas Realty’s outstanding senior notes. Ventas, Inc. has also fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Canada Finance Limited (“Ventas Canada”).
(“NHP”), our 100% owned subsidiary Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, assumed the obligation to pay principal and interest with respect to the outstanding senior notes issued by NHP. Neither we nor any of our subsidiaries (other than NHP LLC) is obligated with respect to any of NHP LLC’s outstanding senior notes.
In connection with the acquisition of NHP, our 100% owned subsidiary NHP LLC, as successor to NHP, assumed the obligation to pay principal and interest with respect to the outstanding senior notes issued by NHP. Neither we nor any of our subsidiaries (other than NHP LLC) is obligated with respect to any of NHP LLC’s outstanding senior notes.
See “Risk Factors—We are exposed to increases in interest rates, which could reduce our profitability and adversely impact our ability to refinance existing debt, sell assets or engage in acquisition, investment, development and redevelopment activity, and our decision to hedge against interest rate risk might not be effective.” included in Part I, Item 1A of this Annual Report. 57 The table below sets forth certain information with respect to our debt, excluding premiums and discounts (dollars in thousands): As of December 31, 2022 2021 2020 Balance: Fixed rate: Senior notes $ 8,627,540 $ 8,729,102 $ 8,869,036 Unsecured term loans 200,000 200,000 200,000 Mortgage loans and other 2,035,896 2,061,880 1,389,227 Subtotal fixed rate 10,863,436 10,990,982 10,458,263 Variable rate: Senior notes — — 235,664 Unsecured revolving credit facility 25,230 56,448 39,395 Unsecured term loans 669,031 395,757 392,773 Commercial paper notes 403,000 280,000 — Secured revolving construction credit facility — — 154,098 Mortgage loans and other 400,547 369,951 702,878 Subtotal variable rate 1,497,808 1,102,156 1,524,808 Total $ 12,361,244 $ 12,093,138 $ 11,983,071 Percent of total debt: Fixed rate: Senior notes 69.8 % 72.2 % 74.0 % Unsecured term loans 1.6 1.7 1.7 Secured revolving construction credit facility — — — Mortgage loans and other 16.5 17.0 11.6 Variable rate: Senior notes — — 2.0 Unsecured revolving credit facility 0.2 0.5 0.3 Unsecured term loans 5.4 3.3 3.3 Commercial paper notes 3.3 2.3 — Secured revolving construction credit facility — — 1.3 Mortgage loans and other 3.2 3.0 5.8 Total 100.0 % 100.0 % 100.0 % Weighted average interest rate at end of period: Fixed rate: Senior notes 3.7 % 3.7 % 3.7 % Unsecured term loans 3.6 3.6 3.6 Mortgage loans and other 3.7 3.6 3.5 Variable rate: Senior notes — — 1.0 Unsecured revolving credit facility 4.5 1.1 1.0 Unsecured term loans 5.5 1.4 1.4 Commercial paper notes 4.7 0.3 — Secured revolving construction credit facility — — 1.9 Mortgage loans and other 5.1 1.7 1.9 Total 3.9 3.4 3.4 The variable rate debt in the table above reflects, in part, the effect of $144.2 million notional amount of interest rate swaps maturing on March 22, 2027, in each case that effectively convert fixed rate debt to variable rate debt.
See “Risk Factors—We are exposed to increases in interest rates, which could reduce our profitability and adversely impact our ability to refinance existing debt, sell assets or engage in acquisition, investment, development and redevelopment activity, and our decision to hedge against interest rate risk might not be effective.” included in Part I, Item 1A of this Annual Report. 61 The table below sets forth certain information with respect to our debt, excluding premiums and discounts (dollars in thousands): As of December 31, 2023 2022 2021 Balance: Fixed rate: Senior notes/Exchangeable senior notes $ 9,302,840 $ 8,627,540 $ 8,729,102 Unsecured term loans 400,000 200,000 200,000 Mortgage loans and other 2,755,988 2,035,896 2,061,880 Subtotal fixed rate 12,458,828 10,863,436 10,990,982 Variable rate: Unsecured revolving credit facility 14,006 25,230 56,448 Unsecured term loans 677,501 669,031 395,757 Commercial paper notes — 403,000 280,000 Mortgage loans and other 418,263 400,547 369,951 Subtotal variable rate 1,109,770 1,497,808 1,102,156 Total $ 13,568,598 $ 12,361,244 $ 12,093,138 Percent of total debt: Fixed rate: Senior notes/Exchangeable senior notes 68.6 % 69.8 % 72.2 % Unsecured term loans 2.9 1.6 1.7 Mortgage loans and other 20.3 16.5 17.0 Variable rate: Unsecured revolving credit facility 0.1 0.2 0.5 Unsecured term loans 5.0 5.4 3.3 Commercial paper notes — 3.3 2.3 Mortgage loans and other 3.1 3.2 3.0 Total 100.0 % 100.0 % 100.0 % Weighted average interest rate at end of period: Fixed rate: Senior notes/Exchangeable senior notes 3.8 % 3.7 % 3.7 % Unsecured term loans 4.7 3.6 3.6 Mortgage loans and other 4.2 3.7 3.6 Variable rate: Unsecured revolving credit facility 6.1 4.5 1.1 Unsecured term loans 6.3 5.5 1.4 Commercial paper notes — 4.7 0.3 Mortgage loans and other 6.1 5.1 1.7 Total 4.1 3.9 3.4 The variable rate debt in the table above reflects, in part, the effect of $142.7 million notional amount of interest rate swaps maturing on March 22, 2027, in each case that effectively convert fixed rate debt to variable rate debt.
None of our other subsidiaries is obligated with respect to Ventas Canada’s outstanding senior notes, all of which were issued on a private placement basis in Canada. In connection with the acquisition of Nationwide Health Properties, Inc.
None of our other subsidiaries is obligated with respect to Ventas Canada’s outstanding senior notes, all of which were issued on a private placement basis in Canada.
Property-level operating expenses related to our SHOP reportable business segment include labor, food, utilities, marketing, management and other costs of operating the properties. For senior housing communities in our SHOP reportable business segment, occupancy generally reflects average operator-reported unit occupancy for the reporting period.
Property-level operating expenses related to our SHOP segment include labor, food, utilities, marketing, management and other costs of operating the properties. For senior housing communities in our SHOP segment, occupancy generally reflects average operator-reported unit occupancy for the reporting period. Average monthly revenue per occupied room reflects average resident fees and services per operator-reported occupied unit for the reporting period.
See “Note 10 – Senior Notes Payable and Other Debt” and “Note 14 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for amounts outstanding as of December 31, 2022 relating to our long-term debt obligations and operating obligations, respectively.
See “Note 10 – Senior Notes Payable and Other Debt” and “Note 14 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further information regarding our long-term debt obligations and operating obligations, respectively.
For properties in our office operations reportable business segment, occupancy generally reflects occupied square footage divided by net rentable square footage as of the end of the reporting period.
For properties in our outpatient medical and research portfolio reportable business segment, occupancy generally reflects occupied square footage divided by net rentable square footage as of the end of the reporting period.
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a balanced, diversified portfolio of high-quality assets and (3) preserving our financial strength, flexibility and liquidity.
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a portfolio of high-quality assets that are unified in serving the large and growing aging population and (3) preserving our financial strength, flexibility and liquidity.
In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income attributable to common stockholders as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report.
In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with the most directly comparable GAAP measures as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report.
To highlight the sensitivity of our fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points in interest rates (dollars in thousands): As of December 31, 2022 2021 Gross book value $ 10,863,436 $ 10,990,982 Fair value 10,010,935 11,766,336 Fair value reflecting change in interest rates: -100 basis points 10,449,991 12,437,306 +100 basis points 9,607,787 11,164,150 As of December 31, 2022 and 2021, the fair value of our secured and non-mortgage loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $517.0 million and $498.0 million, respectively.
To highlight the sensitivity of our fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points in interest rates (dollars in thousands): As of December 31, 2023 2022 Gross book value $ 12,458,828 $ 10,863,436 Fair value 11,994,321 10,010,935 Fair value reflecting change in interest rates: -100 basis points 12,457,648 10,449,991 +100 basis points 11,568,461 9,607,787 As of December 31, 2023 and 2022, the fair value of our secured and non-mortgage loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $53.1 million and $517.0 million, respectively.
We calculate the fair value of long-term assumed debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument. 46 Impairment of Long-Lived and Intangible Assets We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators.
We calculate the fair value of long-term assumed debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a materially disruptive redevelopment; (iv) for our office operations and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.
Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a materially disruptive redevelopment; (iv) for our outpatient medical and research portfolio and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased properties reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period. 60 To eliminate the impact of exchange rate movements, all portfolio performance-based disclosures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.
Senior Notes As of December 31, 2022, we had outstanding $7.2 billion aggregate principal amount of senior notes issued by Ventas Realty, approximately $75.2 million aggregate principal amount of senior notes issued by Nationwide Health Properties, Inc.
Senior Notes As of December 31, 2023, we had outstanding $8.0 billion aggregate principal amount of senior notes issued by Ventas Realty, approximately $73.8 million aggregate principal amount of senior notes issued by Nationwide Health Properties, Inc.
We also expect to fund capital expenditures related to our SHOP and office operations reportable business segments with the cash flows from the properties or through additional borrowings.
We also expect to fund capital expenditures related to our SHOP and outpatient medical and research portfolio segments with the cash flows from the properties or through additional borrowings.
If we do not have sufficient cash on hand or other liquid assets to enable us to satisfy the 90% distribution requirement, or if we desire to retain cash, we may borrow funds, issue additional equity securities, pay taxable stock dividends, if possible, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements or any combination of the foregoing. 65 Capital Expenditures The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties.
If we do not have sufficient cash on hand or other liquid assets to enable us to satisfy the 90% distribution requirement, or if we desire to retain cash, we may borrow funds, issue additional equity securities, pay taxable stock dividends, if possible, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements or any combination of the foregoing.
The non-GAAP financial measures we present in this Annual Report may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions.
The non-GAAP financial measures we present in this Annual Report may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures as alternatives for, or superior to, financial measures calculated in accordance with GAAP.
In addition, the fixed rate debt in the table above reflects, in part, the effect of $338.0 million and C$267.8 million notional amount of interest 58 rate swaps with maturities ranging from January 2023 to April 2031, in each case that effectively convert variable rate debt to fixed rate debt.
In addition, the fixed rate debt in the table above reflects, in part, the effect of $527.3 million and C$651.5 million notional amount of interest rate swaps with maturities ranging from February 2025 to April 2031, in each case that effectively convert variable rate debt to fixed rate debt.
Years Ended December 31, 2021 and 2020 Our Annual Report for the year ended December 31, 2021, filed with the SEC on February 18, 2022, contains information regarding our results of operations for the years ended December 31, 2021 and 2020 and the effect of changes in those results from period to period on our net income attributable to common stockholders. 53 Non-GAAP Financial Measures We consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance.
Years Ended December 31, 2022 and 2021 Our Annual Report for the year ended December 31, 2022, filed with the SEC on February 10, 2023, contains information regarding our results of operations for the years ended December 31, 2022 and 2021 and the effect of changes in those results from period to period on our net income attributable to common stockholders.
For that reason, we generally attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt.
For that reason, we generally attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt. 2024 Market Trends Our operations have been and are expected to continue to be impacted by economic and market conditions.
The following table sets forth a reconciliation of net income attributable to common stockholders to NOI (dollars in thousands): For the Years Ended December 31, 2022 2021 2020 Net (loss) income attributable to common stockholders $ (47,447) $ 49,008 $ 439,149 Adjustments: Interest and other income (3,635) (14,809) (7,609) Interest expense 467,557 440,089 469,541 Depreciation and amortization 1,197,798 1,197,403 1,109,763 General, administrative and professional fees 144,874 129,758 130,158 Loss on extinguishment of debt, net 581 59,299 10,791 Transaction expenses and deal costs 51,577 47,318 29,812 Allowance on loans receivable and investments 19,757 (9,082) 24,238 Other 58,268 37,110 707 Net income attributable to noncontrolling interests 6,516 7,551 2,036 Income from unconsolidated entities (28,500) (4,983) (1,844) Income tax (benefit) expense (16,926) 4,827 (96,534) Gain on real estate dispositions (7,780) (218,788) (262,218) NOI $ 1,842,640 $ 1,724,701 $ 1,847,990 See “Results of Operations” for discussions regarding both NOI and same-store NOI.
The following table sets forth a reconciliation of net income attributable to common stockholders to NOI (dollars in thousands): For the Years Ended December 31, 2023 2022 2021 Net (loss) income attributable to common stockholders $ (40,973) $ (47,447) $ 49,008 Adjustments: Interest and other income (11,414) (3,635) (14,809) Interest expense 574,112 467,557 440,089 Depreciation and amortization 1,392,461 1,197,798 1,197,403 General, administrative and professional fees 148,876 144,874 129,758 (Gain) loss on extinguishment of debt, net (6,104) 581 59,299 Transaction, transition and restructuring costs 15,215 30,884 47,318 Allowance on loans receivable and investments (20,270) 19,757 (9,082) Gain on foreclosure of real estate (29,127) — — Shareholder relations matters — 20,693 — Other (income) expense (23,001) 58,268 37,110 Net income attributable to noncontrolling interests 10,676 6,516 7,551 Income from unconsolidated entities (13,626) (28,500) (4,983) Income tax (benefit) expense (9,539) (16,926) 4,827 Gain on real estate dispositions (62,119) (7,780) (218,788) NOI $ 1,925,167 $ 1,842,640 $ 1,724,701 See “Results of Operations” for discussions regarding both NOI and same-store NOI.
During 2022 and 2021, we received $40.5 million and $9.1 million, respectively, of HHS grants, which reduced property-level operating expenses in the applicable period. 49 NOI—Office Operations The following table summarizes results of operations in our office operations reportable business segment, including assets sold or classified as held for sale as of December 31, 2022 (dollars in thousands).
During 2022, HHS grants received reduced property-level operating expenses by $46.8 million. 53 NOI—Outpatient Medical and Research Portfolio The following table summarizes results of operations in our outpatient medical and research portfolio reportable business segment, including assets sold or classified as held for sale as of December 31, 2023 (dollars in thousands).
The New Credit Agreement also includes an accordion feature that permits us to increase our aggregate borrowings thereunder to up to $1.25 billion, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.
It 67 matures in June 2027 and includes an accordion feature that permits Ventas Realty to increase the aggregate borrowings thereunder to up to $1.25 billion, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.
During the years ended December 31, 2021 and 2020, we sold 10.9 million and 1.5 million shares of our common stock under our previous ATM program for gross proceeds of $626.4 million and $66.6 million, respectively, at an average gross price of $57.71 and $44.88 per share, respectively.
During the year ended December 31, 2021, we sold 10.9 million shares of our common stock under our previous ATM program for gross proceeds of $626.4 million at an average gross price of $57.71 per share. As of December 31, 2023, the remaining amount available under our ATM program for future sales of common stock was $889.6 million.
(3) Includes 23 LTACs leased by Kindred and 121 senior living properties leased by Brookdale. Kindred may extend the term for 5 years by delivering a renewal notice to the Company 12 to 18 months prior to expiration.
Kindred may extend the term for 5 years by delivering a renewal notice to the Company 12 to 18 months prior to expiration. Brookdale may extend the term for 10 years by delivering a renewal notice to the Company 13 to 18 months prior to expiration.
See “Non-GAAP Financial Measures — NOI” included elsewhere in this Annual Report on Form 10-K for additional disclosure regarding same-store NOI for each of our reportable business segments.
The following table compares results of operations for our 456 same-store SHOP communities (dollars in thousands). See “Non-GAAP Financial Measures — NOI” included elsewhere in this Annual Report for additional disclosure regarding same-store NOI for each of our reportable business segments.
In our SHOP reportable business segment, we invest in senior housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations reportable business segment, we primarily acquire, own, develop, lease and manage MOBs and life science, research and innovation centers throughout the United States.
In our SHOP segment, we invest in senior housing communities throughout the United States and Canada and engage operators to operate those communities. In our outpatient medical and research portfolio segment, we primarily acquire, own, develop, lease and manage outpatient medical buildings and research centers throughout the United States.
See “Note 3 – Concentration of Credit Risk” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
See “Note 7 – Investments in Unconsolidated Entities” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Regardless of whether an acquisition is considered a business combination or an asset acquisition, we record the cost of the businesses or assets acquired as tangible and intangible assets and liabilities based upon their estimated fair values as of the acquisition date.
We record the cost of the assets acquired as tangible and intangible assets and liabilities based upon their relative fair values as of the acquisition date.
NOI — Non-Segment Information provided for non-segment NOI includes management fees and promote revenues, net of expenses, related to our third-party institutional capital management business, income from loans and investments and various corporate-level expenses not directly attributable to any of our three reportable business segments.
See “Non-GAAP Financial Measures” included elsewhere in this Annual Report for additional disclosure and a reconciliation of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI. 45 (2) NOI for non-segment includes management fees and promote revenues, net of expenses related to our third-party institutional capital management business, income from loans and investments and various corporate-level expenses not directly attributable to any of our three reportable business segments.
(together with its consolidated subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us,” “our,” “Company” and other similar terms), an S&P 500 company, is a real estate investment trust (“REIT”) operating at the intersection of healthcare and real estate.
Business Summary and Overview of 2023 Ventas, Inc., (together with its consolidated subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us,” “our,” “Company” and other similar terms) an S&P 500 company, is a real estate investment trust (“REIT”) focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population.
We are party to certain agreements that obligate us to develop senior housing or healthcare properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As of December 31, 2022, we had 17 properties under development pursuant to these agreements, including five properties that are owned by an unconsolidated real estate entity.
We are party to certain agreements that obligate us to develop senior housing communities, outpatient medical buildings or research centers funded through capital that we and, in certain circumstances, our joint venture partners provide. As of December 31, 2023, we had six active and committed projects pursuant to these agreements, including three projects that are unconsolidated.
Interest Expense The $27.5 million increase in total interest expense in 2022 over the prior year was primarily attributable to an increase of $16.8 million due to higher debt balances as a result of acquisitions and an increase of $9.4 million due to a higher effective interest rate.
Interest Expense The $106.6 million increase in total interest expense in 2023 over the prior year was primarily attributable to an increase of $69.9 million due to a higher effective interest rate and $29.3 million due to higher average debt balances. Our GAAP weighted average effective interest rate was 4.23% for 2023, compared to 3.66% for 2022.
The increase in our outstanding variable rate debt at December 31, 2022 compared to December 31, 2021 is primarily attributable to borrowings under our unsecured term loan and commercial paper program.
The decrease in our outstanding variable rate debt at December 31, 2023 compared to December 31, 2022 is primarily attributable to pay downs on commercial paper.
We derive a significant portion of our revenues by leasing assets under long-term triple-net leases in which the rental rate is generally fixed with escalators, subject to certain limitations. Some of our triple-net lease escalators are contingent upon the satisfaction of specified facility revenue parameters or based on increases in the Consumer Price Index (“CPI”), with caps, floors or collars.
Some of our triple-net lease escalators are contingent upon the satisfaction of specified facility revenue parameters or based on increases in the Consumer Price Index (“CPI”), with caps, floors or collars.
In our triple-net leased properties reportable business segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses.
In our triple-net leased properties segment, we invest in and own senior housing communities, skilled nursing facilities (“SNFs”), long-term acute care facilities (“LTACs”), freestanding inpatient rehabilitation facilities (“IRFs”) and other healthcare facilities throughout the United States and the United Kingdom and lease those properties to tenants under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures.
The following table compares results of operations for our 330 same-store office buildings (dollars in thousands): For the Years Ended December 31, Increase (Decrease) to NOI 2022 2021 $ % Same-Store NOI—Office Operations: Rental income $ 750,060 $ 724,015 $ 26,045 3.6 % Less: Property-level operating expenses (238,914) (229,707) (9,207) (4.0) NOI $ 511,146 $ 494,308 $ 16,838 3.4 % Number of Properties at December 31, Occupancy at December 31, Annualized Average Rent Per Occupied Square Foot for the Years Ended December 31, 2022 2021 2022 2021 2022 2021 Same-store office buildings 330 330 92.1 % 91.9 % $ 36 $ 35 The increase in our same-store office operations NOI in 2022 over the prior year is primarily due to leasing activity, high tenant retention and improved parking revenues. 50 NOI—Triple-Net Leased Properties The following table summarizes results of operations in our triple-net leased properties reportable business segment, including assets sold or classified as held for sale as of December 31, 2022 (dollars in thousands): For the Years Ended December 31, (Decrease) Increase to NOI 2022 2021 $ % NOI—Triple-Net Leased Properties: Rental income $ 598,154 $ 653,823 $ (55,669) (8.5 %) Less: Property-level operating expenses (15,301) (15,335) 34 0.2 NOI $ 582,853 $ 638,488 $ (55,635) (8.7) % In our triple-net leased properties reportable business segment, our revenues generally consist of fixed rental amounts (subject to contractual escalations) received from our tenants in accordance with the applicable lease terms.
The following table compares results of operations for our 320 same-store outpatient medical and research portfolio (dollars in thousands): For the Years Ended December 31, Increase (Decrease) to NOI 2023 2022 $ % Same-Store NOI—Outpatient Medical and Research Portfolio: Rental income $ 736,669 $ 711,769 $ 24,900 3.5 % Less: Property-level operating expenses (239,282) (224,212) (15,070) (6.7) NOI $ 497,387 $ 487,557 $ 9,830 2.0 % Number of Properties at December 31, Occupancy at December 31, Annualized Average Rent Per Occupied Square Foot for the Years Ended December 31, 2023 2022 2023 2022 2023 2022 Same-store outpatient medical and research portfolio 320 320 91.4 % 91.6 % $ 38 $ 37 The increase in our same-store outpatient medical and research portfolio segment NOI in 2023 over the prior year is primarily due to leasing activity and high tenant retention, partially offset by higher operating expense. 54 NOI—Triple-Net Leased Properties The following table summarizes results of operations in our 331 triple-net leased properties segment, including assets sold or classified as held for sale as of December 31, 2023 (dollars in thousands): For the Years Ended December 31, Increase to NOI 2023 2022 $ % NOI—Triple-Net Leased Properties: Rental income $ 619,208 $ 598,154 $ 21,054 3.5 % Less: Property-level operating expenses (14,557) (15,301) 744 4.9 NOI $ 604,651 $ 582,853 $ 21,798 3.7 % In our triple-net leased properties segment, our revenues generally consist of fixed rental amounts (subject to contractual escalations) received from our tenants in accordance with the applicable lease terms.
If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset.
Impairment of Long-Lived and Intangible Assets We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations.
Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including our payment guarantees with respect to Ventas Realty’s and Ventas Canada’s senior notes. 67 The following summarizes the balance sheet information for the years ended December 31, 2022 and 2021 and statement of income information as of December 31, 2022, 2021 and 2020 (dollars in thousands) for each of Ventas Realty, LP, as issuer of certain notes registered under the Exchange Act, and Ventas, Inc., on an unconsolidated basis, as guarantor of such notes: Balance Sheet Information As of December 31, 2022 Guarantor Issuer Assets Investment in and advances to affiliates $ 17,691,107 $ 3,049,374 Total assets 17,752,892 3,155,014 Liabilities and equity Intercompany loans 11,704,160 (3,825,402) Total liabilities 11,925,997 4,263,316 Redeemable OP unitholder and noncontrolling interests 102,148 — Total equity (deficit) 5,724,747 (1,108,302) Total liabilities and equity 17,752,892 3,155,014 Balance Sheet Information As of December 31, 2021 Guarantor Issuer Assets Investment in and advances to affiliates $ 17,448,874 $ 3,045,738 Total assets 17,561,305 3,156,840 Liabilities and equity Intercompany loans 10,742,915 (3,563,060) Total liabilities 10,972,521 4,097,362 Redeemable OP unitholder and noncontrolling interests 98,356 — Total equity (deficit) 6,490,428 (940,522) Total liabilities and equity 17,561,305 3,156,840 Statement of Income Information For the Year Ended December 31, 2022 Guarantor Issuer Equity earnings in affiliates $ 43,317 $ — Total revenues 45,037 145,560 Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests (45,383) (173,407) Net loss (47,447) (173,407) Net loss attributable to common stockholders (47,447) (173,407) 68 Statement of Income Information For the Year Ended December 31, 2021 Guarantor Issuer Equity earnings in affiliates $ 133,143 $ — Total revenues 137,348 158,255 Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests 49,694 (215,773) Net income (loss) 49,008 (215,777) Net income (loss) attributable to common stockholders 49,008 (215,777) For the Year Ended December 31, 2020 Guarantor Issuer Equity earnings in affiliates $ 469,311 $ — Total revenues 474,392 143,259 Income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests 440,210 215,406 Net income (loss) 439,149 (202,845) Net income (loss) attributable to common stockholders 439,149 (202,845)
The following summarizes our guarantor and issuer the balance sheet information for the years ended December 31, 2023 and 2022 and statement of income information as of December 31, 2023, 2022 and 2021 (dollars in thousands) for each of Ventas Realty, as issuer of certain notes registered under the Exchange Act, and Ventas, Inc., on an unconsolidated basis, as guarantor of such notes: Balance Sheet Information As of December 31, 2023 Guarantor Issuer Assets Investment in and advances to affiliates $ 17,534,658 $ 3,049,374 Total assets 17,845,979 3,152,334 Liabilities and equity Intercompany loans 12,437,182 (4,278,847) Total liabilities 12,660,012 4,467,637 Redeemable OP unitholder and noncontrolling interests 129,346 — Total equity (deficit) 5,056,621 (1,315,303) Total liabilities and equity 17,845,979 3,152,334 72 As of December 31, 2022 Guarantor Issuer Assets Investment in and advances to affiliates $ 17,691,107 $ 3,049,374 Total assets 17,752,892 3,155,014 Liabilities and equity Intercompany loans 11,704,160 (3,825,402) Total liabilities 11,925,997 4,263,316 Redeemable OP unitholder and noncontrolling interests 102,148 — Total equity (deficit) 5,724,747 (1,108,302) Total liabilities and equity 17,752,892 3,155,014 Statement of Income Information For the Year Ended December 31, 2023 Guarantor Issuer Equity earnings in affiliates $ 31,025 $ — Total revenues 37,515 145,269 Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests (38,639) (213,851) Net loss (40,973) (213,851) Net loss attributable to common stockholders (40,973) (213,851) For the Year Ended December 31, 2022 Guarantor Issuer Equity earnings in affiliates $ 43,317 $ — Total revenues 45,037 145,560 Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests (45,383) (173,407) Net loss (47,447) (173,407) Net loss attributable to common stockholders (47,447) (173,407) For the Year Ended December 31, 2021 Guarantor Issuer Equity earnings in affiliates $ 133,143 $ — Total revenues 137,348 158,255 Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests 49,694 (215,773) Net income (loss) 49,008 (215,777) Net income (loss) attributable to common stockholders 49,008 (215,777)
We adjust the net book value of real estate properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.
In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of real estate properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value.
The decrease in our triple-net leased properties NOI in 2022 over the prior year was primarily driven by a $41.9 million reduction in rental income from communities that were transitioned to our senior housing operating portfolio and a $8.4 million reduction attributable to rental income from communities that were sold, partially offset by contractual rent escalators.
The increase in our triple-net leased properties NOI in 2023 over the prior year was primarily driven by a $29.0 million increase in rental income from properties acquired in connection with our equitization of the Santerre Mezzanine Loan, a $5.1 million increase in contractual rent escalators and $4.5 million of additional rental income received, partially offset by $12.6 million decrease in rental income from communities that converted business model to our senior housing operating portfolio and dispositions.
For the Years Ended December 31, Increase (Decrease) to NOI 2022 2021 $ % NOI—Office Operations: Rental income $ 801,159 $ 794,297 $ 6,862 0.9 % Third party capital management revenues 2,448 8,384 (5,936) (70.8) Total revenues 803,607 802,681 926 0.1 Less: Property-level operating expenses (257,003) (257,001) (2) — Third party capital management expenses — (1,798) 1,798 100.0 NOI $ 546,604 $ 543,882 $ 2,722 0.5 % Number of Properties at December 31, Occupancy at December 31, Annualized Average Rent Per Occupied Square Foot for the Years Ended December 31, 2022 2021 2022 2021 2022 2021 Total office buildings 359 342 90.0 % 90.8 % $ 36 $ 35 The increase in our office operations NOI in 2022 over the prior year was primarily due to acquisitions, leasing activity, high tenant retention, favorable expense controls and improved parking revenues, partially offset by dispositions of non-core assets.
For the Years Ended December 31, Increase (Decrease) to NOI 2023 2022 $ % NOI—Outpatient Medical and Research Portfolio: Rental income $ 867,193 $ 801,159 $ 66,034 8.2 % Third party capital management revenues 2,515 2,448 67 2.7 Total revenues 869,708 803,607 66,101 8.2 Less: Property-level operating expenses (292,776) (257,003) (35,773) (13.9) NOI $ 576,932 $ 546,604 $ 30,328 5.5 % Number of Properties at December 31, Occupancy at December 31, Annualized Average Rent Per Occupied Square Foot for the Years Ended December 31, 2023 2022 2023 2022 2023 2022 Total outpatient medical and research portfolio 437 359 87.7 % 90.0 % $ 37 $ 36 The increase in our outpatient medical and research portfolio segment NOI in 2023 over the prior year was primarily due to properties acquired in connection with our equitization of the Santerre Mezzanine Loan, leasing activity and high tenant retention, partially offset by higher operating expense and dispositions.
We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized amounts of lease-related intangibles associated with that lease in operations over the shortened lease term.
We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods.
In addition, from time to time, we engage in redevelopment projects with respect to our existing senior housing communities to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.
In addition, from time to time, we engage in redevelopment projects with respect to our existing senior housing communities, outpatient medical buildings and research centers to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property. 70 Equity Offerings We participate in an “at-the-market” equity offering program (“ATM program”), pursuant to which we may, from time to time, sell up to $1.0 billion aggregate gross sales price of shares of our common stock.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk The information set forth in Part II, Item 7 of this Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asset/Liability Management” is incorporated by reference into this Item 7A. 69
Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk The information set forth in Part II, Item 7 of this Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asset/Liability Management” is incorporated by reference into this Item 7A. 73

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