June 2020 Update
June 19, 2020
Table of Contents | |
Executive Summary | 3-5 |
June COVID-19 Business Update | 6 - 13 |
Cost, Capital, Dividend & Liquidity | 14 |
Disclosures | 15 |
Chairman & CEO Remarks
"To further our commitment to maintaining a strong balance sheet, liquidity and financial flexibility, the Ventas Board has declared a second quarter dividend of 45 cents per share. Today's announcement continues the proactive, prudent and transparent actions the Company has taken, including conserving capital and reducing organizational costs, in response to the COVID-19 pandemic and associated macro uncertainty.
"In our Senior Housing Operating Portfolio, leading indicators are improving, including move-ins and leads, and certain senior housing operators are planning to open many of our communities to a more robust resident experience by early July. However, as a result of COVID-19, our Senior Housing Operating Portfolio occupancy continues to decline, and costs are higher, the combination of which is having a material effect on our financial results. Ventas continues to benefit from its diverse portfolio, with ongoing strength in our Triple-Net Healthcare and Office segments, and we remain well positioned to manage through current conditions and build on our long track record of shareholder value creation."
Debra A. Cafaro, Ventas Chairman and CEO
Proactive, Prudent & Transparent Steps in the Context of the COVID-19 Pandemic
2Q Dividend:The Ventas Board has declared a second quarter 2020 dividend of $0.45/share, enabling the Company, as a prudent measure, to conserve approximately $130M of cash per quarter compared to the prior dividend level. This action is responsive to the impact the COVID-19 pandemic is having on the Company's business, particularly senior housing, and continued macro uncertainty.
Advocating for the Industry:The Company is engaging in evidence-based advocacy for senior living residents with federal policymakers. In a key development: HHS Provider Relief Fund for COVID-19 is now providing grants to licensed senior living providers that bill Medicaid, with eligible providers to receive payments of at least 2% of ALL annual gross patient care revenues. If HHS funding is ultimately expanded to all licensed senior living providers, most US SHOP communities and NNN leased communities would benefit.
Communicating Periodically & Transparently:The Company is providing a June Business Update including COVID-19 impacts on each business line:
•June 2020 rent payments continue to be strong in the Office and NNN segments
•All payments on material loan investments are current
•SHOP leading indicators are trending positively but occupancy is still declining and IHME model "COVID-19 peak dates" have been extended
Liquidity & Cash Management:Due to improved capital market conditions and further clarity on second quarter expectations, the Company intends to pay down ~$2.3B under its $3.0B revolving credit facility by June 30th. Pro forma for the revolver paydown, the Company will maintain a strong liquidity position of $3.3B of cash and undrawn revolver capacity.
Supporting Tenants & Operators:Providing COVID-19 testing kits and analysis from Mayo Clinic Laboratories free of charge to certain of its senior living operators to enhance the safety of Ventas's senior living communities by accelerating employee testing and to facilitate a thoughtful reopening strategy
Continuing Productive & Seamless Business Operations:Business continuity plans and execution have been outstanding
Enhancing Best in Class Leadership Team:Two highly experienced senior leaders joined the Company on March 4, 2020: J. Justin Hutchens as leader of Senior Housing and Carey S. Roberts as General Counsel
Cost and Capital Conservation:Reducing corporate cost structure resulting in $25 - $30M annualized savings in Q3 2020 while proactively reducing 2020 capital expenditures by $0.3B through pausing certain ground-up developments
Ventas's Portfolio: The Power of Diversification
Research & Innovation | Supporting critical research focused on the detection, prevention and cure of COVID-19 |
Medical Office | Demographic demand driven from the growth of 65+ population
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Health Systems | During the crisis, hospitals have re-asserted their primacy in health care delivery |
LTACs / IRFs | "LTACs play a crucial role in restoring severely ill patients' health and relieving pressure on hospitals' critical care units."
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Senior Housing | Senior housing demand drivers remain compelling |
NOT A SIGNIFICANT VENTAS PORTFOLIO EXPOSURE:
Skilled Nursing |
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Source: Q1 Company earnings materials as of 4/26/2020.
1.COVID-19 patients are recovering, but with nowhere to go, 5/19/2020.
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Ventas Inc. published this content on 19 June 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 June 2020 12:01:09 UTC