UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-10989

 

Ventas, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware (State or Other Jurisdiction of Incorporation or Organization)		61-1055020 (I.R.S. Employer Identification No.)

60606
(Zip Code)

Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class of Common Stock:		Outstanding at May 2, 2011:
Common Stock, $0.25 par value		163,121,427

 

 

VENTAS, INC.
FORM 10-Q

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			3
Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010			3
Consolidated Statements of Income for the Three Months Ended March 31, 2011 and 2010			4
Consolidated Statements of Equity for the Three Months Ended March 31, 2011 and the Year Ended December 31, 2010			5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			41
Item 4. Controls and Procedures			43
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45
Item 6. Exhibits			46
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I—FINANCIAL INFORMATION

ITEM 1.		FINANCIAL STATEMENTS

VENTAS, INC.

		March 31,				December 31,
		2011				2010
		(Unaudited)				(Audited)
Assets
Real estate investments:
Land		$	560,086			$	559,072
Buildings and improvements			6,051,148				6,035,295
Construction in progress			5,848				6,519
Acquired lease intangibles			147,381				146,813
			6,764,463				6,747,699
Accumulated depreciation and amortization			(1,521,039	)			(1,468,180	)
Net real estate property			5,243,424				5,279,519
Loans receivable, net			130,608				149,263
Investments in unconsolidated entities			15,011				15,332
Net real estate investments			5,389,043				5,444,114
Cash and cash equivalents			41,899				21,812
Escrow deposits and restricted cash			35,399				38,940
Deferred financing costs, net			17,141				19,533
Other			210,616				233,622
Total assets		$	5,694,098			$	5,758,021
Liabilities and equity
Liabilities:
Senior notes payable and other debt		$	2,571,368			$	2,900,044
Accrued interest			34,543				19,296
Accounts payable and other liabilities			203,594				207,143
Deferred income taxes			238,146				241,333
Total liabilities			3,047,651				3,367,816
Commitments and contingencies
Equity:
Ventas stockholders’ equity:
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued			—				—
Common stock, $0.25 par value; 300,000 shares authorized; 163,118 and 157,279 shares issued at March 31, 2011 and December 31, 2010, respectively			40,818				39,391
Capital in excess of par value			2,874,879				2,576,843
Accumulated other comprehensive income			28,097				26,868
Retained earnings (deficit)			(300,382	)			(255,628	)
Treasury stock, 0 and 14 shares at March 31, 2011 and December 31, 2010, respectively			(8	)			(748	)
Total Ventas stockholders’ equity			2,643,404				2,386,726
Noncontrolling interest			3,043				3,479
Total equity			2,646,447				2,390,205
Total liabilities and equity		$	5,694,098			$	5,758,021

See accompanying notes.

VENTAS, INC.

		For the Three Months
		Ended March 31,
		2011				2010
Revenues:
Rental income:
Triple-net leased		$	118,603			$	116,333
Medical office buildings			24,236				12,189
			142,839				128,522
Resident fees and services			114,502				108,486
Medical office building services revenue			6,957				—
Income from loans and investments			6,085				3,617
Interest and other income			78				263
Total revenues			270,461				240,888
Expenses:
Interest			42,558				44,090
Depreciation and amortization			51,759				52,314
Property-level operating expenses:
Senior living			78,111				74,677
Medical office buildings			8,676				4,202
			86,787				78,879
Medical office building services costs			5,536				—
General, administrative and professional fees (including non-cash stock-based compensation expense of $4,016 and $3,032 for the three months ended March 31, 2011 and 2010, respectively)			14,832				10,683
Foreign currency loss (gain)			1				(106	)
Loss on extinguishment of debt			16,520				—
Merger-related expenses and deal costs			6,449				2,319
Total expenses			224,442				188,179
Income before loss from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest			46,019				52,709
Loss from unconsolidated entities			(170	)			—
Income tax benefit (expense)			3,197				(286	)
Income from continuing operations			49,046				52,423
Discontinued operations			—				745
Net income			49,046				53,168
Net income attributable to noncontrolling interest (net of tax of $0 and $419 for the three months ended March 31, 2011 and 2010, respectively)			62				549
Net income attributable to common stockholders		$	48,984			$	52,619
Earnings per common share:
Basic:
Income from continuing operations attributable to common stockholders		$	0.31			$	0.34
Discontinued operations			—				0.00
Net income attributable to common stockholders		$	0.31			$	0.34
Diluted:
Income from continuing operations attributable to common stockholders		$	0.30			$	0.34
Discontinued operations			—				0.00
Net income attributable to common stockholders		$	0.30			$	0.34
Weighted average shares used in computing earnings per common share:
Basic			160,420				156,453
Diluted			162,023				156,967
Dividends declared per common share		$	0.575			$	0.535

See accompanying notes.

VENTAS, INC.

										Accumulated
		Common				Capital in				Other				Retained								Total Ventas
		Stock Par				Excess of				Comprehensive				Earnings				Treasury				Stockholders’				Noncontrolling
		Value				Par Value				Income				(Deficit)				Stock				Equity				Interest				Total Equity
Balance at January 1, 2010		$	39,160			$	2,573,039			$	19,669			$	(165,710	)		$	(647	)		$	2,465,511			$	18,549			$	2,484,060
Comprehensive Income:
Net income			—				—				—				246,167				—				246,167				3,562				249,729
Foreign currency translation			—				—				6,951				—				—				6,951				—				6,951
Change in unrealized gain on marketable debt securities			—				—				354				—				—				354				—				354
Other			—				—				(106	)			—				—				(106	)			—				(106	)
Comprehensive income			—				—				—				—				—				253,366				3,562				256,928
Net change in noncontrolling interest			—				(18,503	)			—				—				—				(18,503	)			(18,632	)			(37,135	)
Dividends to common stockholders — $2.14 per share			—				—				—				(336,085	)			—				(336,085	)			—				(336,085	)
Issuance of common stock for stock plans			197				21,076				—				—				3,371				24,644				—				24,644
Grant of restricted stock, net of forfeitures			34				1,231				—				—				(3,472	)			(2,207	)			—				(2,207	)
Balance at December 31, 2010			39,391				2,576,843				26,868				(255,628	)			(748	)			2,386,726				3,479				2,390,205
Comprehensive Income:
Net income			—				—				—				48,984				—				48,984				62				49,046
Foreign currency translation			—				—				2,499				—				—				2,499				—				2,499
Change in unrealized gain on marketable debt securities			—				—				(1,257	)			—				—				(1,257	)			—				(1,257	)
Other			—				—				(13	)			—				—				(13	)			—				(13	)
Comprehensive income			—				—				—				—				—				50,213				62				50,275
Net change in noncontrolling interest			—				(3,170	)			—				—				—				(3,170	)			(498	)			(3,668	)
Dividends to common stockholders — $0.575 per share			—				—				—				(93,738	)			—				(93,738	)			—				(93,738	)
Issuance of common stock			1,391				298,535				—				—				—				299,926				—				299,926
Issuance of common stock for stock plans			4				3,815				—				—				215				4,034				—				4,034
Grant of restricted stock, net of forfeitures			32				(1,144	)			—				—				525				(587	)			—				(587	)
Balance at March 31, 2011		$	40,818			$	2,874,879			$	28,097			$	(300,382	)		$	(8	)		$	2,643,404			$	3,043			$	2,646,447

See accompanying notes.

VENTAS, INC.

		For the Three Months Ended March 31,
		2011				2010
Cash flows from operating activities:
Net income		$	49,046			$	53,168
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations)			51,759				52,537
Amortization of deferred revenue and lease intangibles, net			(1,799	)			(1,549	)
Other amortization expenses			2,436				2,154
Stock-based compensation			4,016				3,032
Straight-lining of rental income			(1,772	)			(2,449	)
Loss on extinguishment of debt			16,520				—
Net gain on sale of real estate assets (including amounts in discontinued operations)			—				(184	)
Gain on sale of real estate loan investments			(177	)			—
Gain on sale of marketable securities			(733	)			—
Income tax (benefit) expense			(3,197	)			286
Loss from unconsolidated entities			170				—
Other			398				53
Changes in operating assets and liabilities:
Increase in other assets			(1,540	)			(3,772	)
Increase in accrued interest			15,253				17,799
Increase (decrease) in accounts payable and other liabilities			389				(5,514	)
Net cash provided by operating activities			130,769				115,561
Cash flows from investing activities:
Net investment in real estate property			—				(11,860	)
Purchase of noncontrolling interest			(3,319	)			—
Investment in loans receivable			—				(15,796	)
Proceeds from real estate disposals			—				754
Proceeds from loans receivable			19,950				1,192
Proceeds from sale of marketable securities			23,050				—
Capital expenditures			(7,963	)			(4,295	)
Other			(37	)			—
Net cash provided by (used in) investing activities			31,681				(30,005	)
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities			(32,000	)			29,089
Proceeds from debt			14,630				196
Repayment of debt			(331,069	)			(7,807	)
Payment of deferred financing costs			(314	)			(1,113	)
Issuance of common stock, net			299,926				—
Cash distribution to common stockholders			(93,738	)			(83,881	)
Contributions from noncontrolling interest			—				265
Distributions to noncontrolling interest			(349	)			(1,989	)
Other			458				4,169
Net cash used in financing activities			(142,456	)			(61,071	)
Net increase in cash and cash equivalents			19,994				24,485
Effect of foreign currency translation on cash and cash equivalents			93				847
Cash and cash equivalents at beginning of period			21,812				107,397
Cash and cash equivalents at end of period		$	41,899			$	132,729
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments		$	—			$	496
Other assets acquired			—				(355	)
Other liabilities			—				141

See accompanying notes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS

Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”) is a real estate investment trust (“REIT”) with a geographically diverse portfolio of seniors housing and healthcare properties in the United States and Canada. As of March 31, 2011, this portfolio consisted of 602 assets: 240 seniors housing communities, 187 skilled nursing facilities, 40 hospitals and 135 medical office buildings (“MOBs”) and other properties in 43 states, the District of Columbia and two Canadian provinces. With the exception of our seniors housing communities that are managed by independent third parties, such as Sunrise Senior Living, Inc. (together with its subsidiaries, “Sunrise”), pursuant to long-term management agreements and certain of our MOBs, including those acquired during 2010 in connection with our Lillibridge Healthcare Services, Inc. (“Lillibridge”) acquisition, we lease our properties to healthcare operating companies under “triple-net” or “absolute-net” leases, which require the tenants to pay all property-related expenses. We also had real estate loan and other investments relating to seniors housing and healthcare companies or properties as of March 31, 2011.

Our primary business consists of acquiring, financing and owning seniors housing and healthcare properties and leasing those properties to third parties or operating those properties through independent third party managers. Through our Lillibridge subsidiary, we also provide management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.

NOTE 2 — ACCOUNTING POLICIES

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the three months ended March 31, 2011 are not necessarily an indication of the results that may be expected for the year ending December 31, 2011. The accompanying Consolidated Financial Statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 18, 2011. Certain prior period amounts have been reclassified to conform to the current period presentation.

Revenue Recognition

Certain of our leases, including the majority of our leases with Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and the majority of our MOB leases, provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the term of the applicable lease. Income on our straight-line revenue is recognized when collectibility is reasonably assured, and in the event we determine that collectibility of straight-line revenue is not reasonably assured, we establish an allowance for estimated losses. Recognizing rental income on a straight-line basis results in recognized revenue exceeding cash amounts contractually due from our tenants during the first half of the term for leases that have straight-line treatment. The cumulative excess is included in other assets, net of allowances, on our Consolidated Balance Sheets and totaled $88.1 million and $86.3 million at March 31, 2011 and December 31, 2010, respectively.

Our master lease agreements with Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) (the “Kindred Master Leases”) and certain of our other leases provide for an annual increase in rental payments only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases only if such parameters or contingencies are met, rather than on a straight-line basis over the term of the applicable lease.

We recognize income from rent, lease termination fees, management advisory services and all other income when all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.

We recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay. Lease agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice.

Fair Values of Financial Instruments

We use the following methods and assumptions in estimating fair value disclosures for financial instruments.

•

Cash and cash equivalents: The carrying amount of unrestricted cash and cash equivalents reported in our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.

•

Loans receivable: The fair value of loans receivable is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings.

•

Marketable debt securities: The fair value of marketable debt securities is estimated using quoted prices in active markets for similar assets or liabilities that we have the ability to access.

•

Senior notes payable and other debt: The fair value of borrowings is estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us.

Recently Adopted Accounting Standards

On January 1, 2011, we adopted Accounting Standards Update (“ASU”) 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations. ASU 2010-29 impacts any public entity that enters into business combinations that are material on an individual or aggregate basis. The guidance specifies that if a public entity presents comparative financial statements, the entity should disclose revenues and earnings of the combined entity as though the business combination(s) that occurred during the year had occurred at the beginning of the prior annual period when preparing the pro forma financial information for both the current and prior reporting periods. The guidance also requires that pro forma disclosures be accompanied by a narrative description regarding the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in reported pro forma revenues and earnings. This guidance is effective for business combinations consummated in periods beginning after December 15, 2010. The adoption of ASU 2010-29 did not impact our Consolidated Financial Statements.

NOTE 3 — CONCENTRATION OF CREDIT RISK

As of March 31, 2011, based on the gross book value of our properties, Sunrise, Brookdale Senior Living and Kindred managed or operated approximately 38.1%, 19.7% and 13.1% of our properties, respectively, and seniors housing communities and skilled nursing facilities constituted approximately 70.4% and 11.7%, respectively, of our portfolio, with hospitals, MOBs and other healthcare assets collectively comprising the remaining 17.9%. As of March 31, 2011, our properties were located in 43 states, the District of Columbia and two Canadian provinces, with properties in only one state (California) accounting for 10% or more of our total revenues for the three months ended March 31, 2011.

Approximately 23.0% and 25.2% of our total revenues and 35.0% and 37.4% of our total net operating income (“NOI,” which is defined as total revenues, less interest and other income, property-level operating expenses and medical office building services costs) (including amounts in discontinued operations) for the three months ended March 31, 2011 and 2010, respectively, were derived from our four Kindred Master Leases. Approximately 10.9% and 12.5% of our total revenues and 16.5% and 18.7% of our total NOI (including amounts in discontinued operations) for the three months ended March 31, 2011 and 2010, respectively, were derived from our lease agreements with Brookdale Senior Living. Each of the Kindred Master Leases and our leases with Brookdale Senior Living is a triple-net lease pursuant to which the tenant is required to pay all insurance, taxes, utilities and maintenance and repairs related to the properties and to comply with the terms of the mortgage financing documents, if any, affecting the properties.

In view of the fact that Kindred and Brookdale Senior Living lease a substantial portion of our triple-net leased properties and each contributes a significant portion of our total revenues and NOI, Kindred’s and Brookdale Senior Living’s financial condition and ability and willingness to satisfy their obligations under their respective leases and other agreements with us, and their willingness to renew those leases upon expiration of the terms thereof, significantly impact our results of operations and ability to service our indebtedness and to make distributions to our stockholders. We cannot assure you that either Kindred or Brookdale Senior Living will have sufficient assets, income and access to financing to enable it to satisfy its obligations, and any inability or unwillingness on its part to do so would have a material adverse effect on our business, financial condition, results of operations and liquidity, on our ability to service our indebtedness and other obligations and on our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a “Material Adverse Effect”). We also cannot assure you that either Kindred or Brookdale Senior Living will elect to renew its leases with us upon expiration of the initial base terms or any renewal terms thereof or that, if some or all of those leases are not renewed, we will be able to reposition the affected properties on a timely basis or on the same or better terms, if at all.

Sunrise provides comprehensive property management and accounting services with respect to 79 of our seniors housing communities pursuant to long-term management agreements. Each management agreement has a term of 30 years from its effective date, the earliest of which began in 2004. Approximately 41.9% and 44.7% of our total revenues and 21.3% and 20.9% of our total earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding merger-related expenses and deal costs, gains and losses on real estate disposals and asset impairments and/or valuation allowances (“Adjusted EBITDA”) (including amounts in discontinued operations) for the three months ended March 31, 2011 and 2010, respectively, were attributable to senior living operations managed by Sunrise.

Unlike Kindred and Brookdale Senior Living, Sunrise does not lease properties from us, but rather acts as a property manager for 79 of our seniors housing communities. Therefore, while we are not directly exposed to credit risk with respect to Sunrise, Sunrise’s inability to efficiently and effectively manage our properties and to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. Although we have various rights as owner under the Sunrise management agreements, we rely on Sunrise’s personnel, good faith, expertise, historical performance, technical resources and information systems, proprietary information and judgment to manage our seniors housing communities efficiently and effectively. We also rely on Sunrise to set resident fees and otherwise operate those properties in compliance with our management agreements. Sunrise’s inability or unwillingness to satisfy its obligations under our management agreements, changes in Sunrise’s senior management or any adverse developments in Sunrise’s business and affairs or financial condition could have a Material Adverse Effect on us.

Each of Kindred, Brookdale Senior Living and Sunrise is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Kindred, Brookdale Senior Living and Sunrise contained or referred to in this Quarterly Report on Form 10-Q is derived from filings made by Kindred, Brookdale Senior Living or Sunrise, as the case may be, with the SEC or other publicly available information, or has been provided to us by Kindred, Brookdale Senior Living or Sunrise. We have not verified this information either through an independent investigation or by reviewing Kindred’s, Brookdale Senior Living’s or Sunrise’s public filings. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you that all of this information is accurate. Kindred’s, Brookdale Senior Living’s and Sunrise’s filings with the SEC can be found at the SEC’s website at www.sec.gov. We are providing this data for informational purposes only, and you are encouraged to obtain Kindred’s, Brookdale Senior Living’s and Sunrise’s publicly available filings from the SEC.

NOTE 4 — INVESTMENTS IN UNCONSOLIDATED ENTITIES

We report investments in unconsolidated entities, which we acquired in connection with the 2010 Lillibridge acquisition, over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We serve as the managing member of each unconsolidated entity and provide various services in exchange for fees and reimbursements. Our joint venture partners have significant participating rights, and, therefore, we are not required to consolidate these entities. Additionally, these entities are not considered variable interest entities as they are viable entities controlled by equity holders with sufficient capital. At March 31, 2011, we owned interests in 58 properties that were accounted for under the equity method. Our net investment in these properties as of March 31, 2011 and December 31, 2010 was $15.0 million and $15.3 million, respectively. For the three months ended March 31, 2011 and 2010, we recorded a loss from unconsolidated entities of $0.2 million and $0, respectively.

NOTE 5 — INTANGIBLES

The following is a summary of our intangibles as of March 31, 2011 and December 31, 2010:

		March 31,				December 31,
		2011				2010
		(Dollars in thousands)
Intangible assets:
Above market leases		$	13,331			$	13,232
In-place leases			125,920				125,452
Other intangibles			41,742				41,680
Accumulated amortization			(104,312	)			(100,808	)
Net intangible assets		$	76,681			$	79,556
Remaining weighted average amortization period of lease-related intangible assets in years			17.2				18.5
Intangible liabilities:
Below market leases		$	21,755			$	22,398
Accumulated amortization			(13,149	)			(12,495	)
Net intangible liabilities		$	8,606			$	9,903
Remaining weighted average amortization period of lease-related intangible liabilities in years			6.8				6.9

Lease-related intangible assets are included in net real estate investments on our Consolidated Balance Sheets. Other intangible assets (including goodwill, non-compete agreements and trade names/trademarks) and below market lease intangibles are included in other assets and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

NOTE 6 — SENIOR NOTES PAYABLE AND OTHER DEBT

The following is a summary of our senior notes payable and other debt as of March 31, 2011 and December 31, 2010:

		March 31,				December 31,
		2011				2010
		(In thousands)
Unsecured revolving credit facilities		$	8,000			$	40,000
37/8% Convertible Senior Notes due 2011			230,000				230,000
9% Senior Notes due 2012			82,433				82,433
Unsecured term loan due 2013			200,000				200,000
3.125% Senior Notes due 2015			400,000				400,000
61/2% Senior Notes due 2016			400,000				400,000
63/4% Senior Notes due 2017			225,000				225,000
Mortgage loans			1,053,118				1,349,521
Total			2,598,551				2,926,954
Unamortized fair value adjustment			9,098				11,790
Unamortized commission fees and discounts			(36,281	)			(38,700	)
Senior notes payable and other debt		$	2,571,368			$	2,900,044

As of March 31, 2011, our joint venture partners’ share of total debt was $10.6 million with respect to four of our properties owned through consolidated joint ventures. As of December 31, 2010, our joint venture partners’ share of total debt was $4.8 million with respect to three of our properties owned through consolidated joint ventures. Total debt does not include our portion of debt related to our investments in unconsolidated entities, which was $45.7 million and $45.9 million at March 31, 2011 and December 31, 2010, respectively.

As of March 31, 2011, our indebtedness had the following maturities:

						Unsecured
		Principal Amount				Revolving Credit				Scheduled Periodic
		Due at Maturity				Facilities (1)				Amortization				Total Maturities
		(In thousands)
2011		$	230,000			$	—			$	13,560			$	243,560
2012			123,199				8,000				18,706				149,905
2013			350,962				—				18,144				369,106
2014			53,485				—				15,177				68,662
2015			471,103				—				12,281				483,384
Thereafter			1,230,595				—				53,339				1,283,934
Total maturities		$	2,459,344			$	8,000			$	131,207			$	2,598,551

Unsecured Revolving Credit Facilities

As of March 31, 2011, we had $1.0 billion of aggregate borrowing capacity under our unsecured revolving credit facilities, all of which matures on April 26, 2012. Borrowings under our unsecured revolving credit facilities bear interest at a fluctuating rate per annum (based on U.S. or Canadian LIBOR, the Canadian Bankers’ Acceptance rate, or the U.S. or Canadian Prime rate), plus an applicable percentage based on our consolidated leverage. At March 31, 2011, the applicable percentage was 2.80%. Our unsecured revolving credit facilities also have a 20 basis point facility fee. At March 31, 2011, we had $8.0 million of borrowings outstanding, $3.1 million of outstanding letters of credit and $988.9 million of available borrowing capacity under our unsecured revolving credit facilities.

Mortgages

In February 2011, we repaid in full mortgage loans outstanding in the aggregate principal amount of $307.2 million. As a result, we recognized a loss on extinguishment of debt of $16.5 million for the three months ended March 31, 2011.

NOTE 7 — FAIR VALUES OF FINANCIAL INSTRUMENTS

As of March 31, 2011 and December 31, 2010, the carrying amounts and fair values of our financial instruments were as follows:

		March 31, 2011								December 31, 2010
		Carrying								Carrying
		Amount				Fair Value				Amount				Fair Value
		(In thousands)
Cash and cash equivalents		$	41,899			$	41,899			$	21,812			$	21,812
Loans receivable, net			130,608				134,262				149,263				155,377
Marketable debt securities			43,975				43,975				66,675				66,675
Senior notes payable and other debt, gross			(2,598,551	)			(2,773,156	)			(2,926,954	)			(3,055,435	)

Fair value estimates are subjective in nature and depend upon several important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.

At March 31, 2011, we held corporate marketable debt securities, classified as available-for-sale, with an aggregate amortized cost basis and fair value of $40.4 million and $44.0 million, respectively. At December 31, 2010, our marketable debt securities had an aggregate amortized cost basis and fair value of $61.9 million and $66.7 million, respectively. The contractual maturities of our marketable debt securities range from October 1, 2012 to April 15, 2016. In January and March 2011, we sold certain marketable debt securities and received proceeds of approximately $10.6 million and $12.5 million, respectively. We recognized gains from these sales of approximately $1.8 million in aggregate for the three months ended March 31, 2011.

NOTE 8 — LITIGATION

Legal Proceedings Defended and Indemnified by Third Parties

Kindred, Brookdale Senior Living, Sunrise and our other tenants, operators and managers are parties to certain legal actions and regulatory investigations arising in the normal course of their business. In certain cases, the tenant, operator or manager, as applicable, has agreed to indemnify, defend and hold us harmless against these actions and investigations. However, the resolution of any litigation or investigations, either individually or in the aggregate, could have a material adverse effect on Kindred’s, Brookdale Senior Living’s, Sunrise’s or such other tenants’, operators’ and managers’ liquidity, financial condition or results of operations, which, in turn, could have a Material Adverse Effect on us.

Litigation Related to the Sunrise REIT Acquisition

On May 3, 2007, we filed a lawsuit against HCP, Inc. (“HCP”) in the United States District Court for the Western District of Kentucky, entitled Ventas, Inc. v. HCP, Inc., Case No. 07-cv-238-JGH. We asserted claims of tortious interference with contract and tortious interference with prospective business advantage. Our complaint alleged that HCP interfered with our purchase agreement to acquire the assets and liabilities of Sunrise Senior Living Real Estate Investment Trust (“Sunrise REIT”) and with the process for unitholder consideration of the purchase agreement. The complaint alleged, among other things, that HCP made certain improper and misleading public statements and/or offers to acquire Sunrise REIT and that HCP’s actions caused us to suffer substantial damages, including, among other things, the payment of materially greater consideration to acquire Sunrise REIT resulting from the substantial increase in the purchase price above the original contract price necessary to obtain unitholder approval and increased costs associated with the delay in closing the acquisition, including increased costs to finance the transaction as a result of the delay.

HCP brought counterclaims against us alleging misrepresentation and negligent misrepresentation by Sunrise REIT related to its sale process, claiming that we were responsible for those actions as successor. HCP sought compensatory and punitive damages. On March 25, 2009, the District Court granted us judgment on the pleadings against all counterclaims brought by HCP and dismissed HCP’s counterclaims with prejudice. Thereafter, the District Court confirmed the dismissal of HCP’s counterclaims.

On July 16, 2009, the District Court denied HCP’s summary judgment motion as to our claim for tortious interference with business advantage, permitting us to present that claim against HCP at trial. The District Court granted HCP’s motion for summary judgment as to our claim for tortious interference with contract and dismissed that claim. The District Court also ruled that we could not seek to recover a portion of our alleged damages.

On September 4, 2009, the jury unanimously held that HCP tortiously interfered with our business expectation to acquire Sunrise REIT at the agreed price by employing significantly wrongful means such as fraudulent misrepresentation, deceit and coercion. The jury awarded us $101.6 million in compensatory damages, which is the full amount of damages the District Court permitted us to seek at trial. The District Court entered judgment on the jury’s verdict on September 8, 2009.

On November 16, 2009, the District Court affirmed the jury’s verdict and denied all of HCP’s post-trial motions, including a motion requesting that the District Court overturn the jury’s verdict and enter judgment for HCP or, in the alternative, award HCP a new trial. The District Court also denied our motion for pre-judgment interest and/or to modify the jury award to increase it to reflect the currency rates in effect on September 8, 2009, the date of entry of the judgment.

On November 17, 2009, HCP appealed the District Court’s judgment to the United States Court of Appeals for the Sixth Circuit (the “Sixth Circuit”). HCP argues that the judgment against it should be vacated and the case remanded for a new trial and/or that judgment should be entered in its favor as a matter of law. We are vigorously contesting HCP’s appeal and seek confirmation by the Sixth Circuit of both the jury’s verdict and the various rulings in our favor in the District Court.

On November 24, 2009, we filed a cross-appeal to the Sixth Circuit, which will be heard and decided in conjunction with HCP’s appeal. In addition to maintaining the full benefit of our favorable jury verdict, in our cross-appeal, we have asserted that we are entitled to substantial monetary relief in addition to the jury verdict, including punitive damages, additional compensatory damages and pre-judgment interest. We are vigorously pursuing our cross-appeal and are seeking additional proceedings in the District Court in which a jury may supplement the current judgment.

On December 11, 2009, HCP posted a $102.8 million letter of credit in our favor to serve as security to stay execution of the jury verdict pending the appellate proceedings.

The Sixth Circuit heard oral argument for HCP’s appeal and our cross-appeal on March 10, 2011. We expect that a final decision by the Sixth Circuit will be issued in 2011. We cannot assure you as to the outcome of HCP’s appeal or our cross-appeal or the timing of a decision by the Sixth Circuit.

Litigation Relating to the NHP Acquisition

In the weeks following the announcement of our acquisition of Nationwide Health Properties, Inc. (“NHP”) on February 28, 2011, purported stockholders of NHP filed seven lawsuits against NHP and its directors. Six of these lawsuits also named Ventas, Inc. as a defendant and five named our subsidiary, Needles Acquisition LLC, as a defendant. The purported stockholder plaintiffs commenced these actions in two jurisdictions: the Superior Court of the State of California, Orange County (the “California State Court”); and the Circuit Court for Baltimore City, Maryland (the “Maryland State Court”). All of these actions were brought as putative class actions, and two also purport to assert derivative claims on behalf of NHP. All of these stockholder complaints allege that NHP’s directors breached certain alleged duties to NHP’s stockholders by approving the merger agreement with us, and certain complaints allege that NHP aided and abetted those breaches. Those complaints that name Ventas, Inc. and Needles Acquisition LLC allege that we aided and abetted the purported breaches of certain alleged duties by NHP’s directors. All of the complaints request an injunction of the merger. Certain of the complaints also seek damages.

In the California State Court, the following actions were filed purportedly on behalf of NHP stockholders: on February 28, 2011, a putative class action entitled Palma v. Nationwide Health Properties, Inc., et al.; on March 3, 2011, a putative class action entitled Barker v. Nationwide Health Properties, Inc., et al.; and on March 3, 2011, a putative class action entitled Davis v. Nationwide Health Properties, Inc., et al., which was subsequently amended on March 11, 2011 under the caption Davids v. Nationwide Health Properties, Inc., et al. Each action names NHP and members of the NHP board of directors as defendants. The Barker and Davids actions also name Ventas, Inc. as a defendant, and the Davids action names Needles Acquisition LLC as a defendant. Each complaint alleges, among other things, that NHP’s directors breached certain alleged duties by approving the merger agreement between us and NHP because the proposed transaction purportedly fails to maximize stockholder value and provides the directors personal benefits not shared by NHP stockholders, and the Barker and Davids actions allege that we aided and abetted those purported breaches. Along with other relief, the complaints seek an injunction against the closing of the proposed merger. On April 4, 2011, the defendants demurred and moved to stay the Palma, Barker, and Davids actions in favor of the parallel litigation in the Maryland State Court described below. The plaintiffs opposed the defendants’ motion to stay on April 29, 2011. On April 27, 2011, all three actions were consolidated pursuant to a Stipulation and Proposed Order on Consolidation of Related Actions signed by the parties on March 22, 2011. On April 29, 2011, the plaintiffs filed a notice of intent to file a consolidated amended complaint on or before May 12, 2011.

In the Maryland State Court, the following actions were filed purportedly on behalf of NHP stockholders: on March 7, 2011, a putative class action entitled Crowley v. Nationwide Health Properties, Inc., et al.; on March 10, 2011, a putative class action entitled Taylor v. Nationwide Health Properties, Inc., et. al.; on March 17, 2011, a putative class action entitled Haughey Family Trust v. Pasquale, et al.; and on March 31, 2011, a putative class action entitled Rappoport v. Pasquale, et al. All four actions name NHP, its directors, Ventas, Inc. and Needles Acquisition LLC as defendants. All four actions allege, among other things, that NHP’s directors breached certain alleged duties by approving the merger agreement between us and NHP because the proposed transaction purportedly fails to maximize stockholder value and provides certain directors personal benefits not shared by NHP stockholders and that we aided and abetted those purported breaches. In addition to asserting direct claims on behalf of a putative class of NHP shareholders, the Haughey and Rappoport actions purport to bring derivative claims on behalf of NHP, asserting breaches of certain alleged duties by NHP’s directors in connection with their approval of the proposed transaction. All four actions seek to enjoin the proposed merger, and the Taylor action seeks damages.

On March 30, 2011, pursuant to stipulation of the parties, the Maryland State Court entered an order consolidating the Crowley, Taylor and Haughey actions. The Rappoport action was consolidated with the other actions on April 15, 2011. On April 1, 2011, pursuant to stipulation of the parties, the Maryland State Court entered an order: (i) certifying a class of NHP shareholders; and (ii) providing for the plaintiffs to file a consolidated amended complaint. The plaintiffs filed a consolidated amended complaint on April 19, 2011, which the defendants moved to dismiss on April 29, 2011. Plaintiffs moved for expedited discovery on April 19, 2011, and the defendants simultaneously opposed that motion and moved for a protective order staying discovery on April 26, 2011.

We believe that each of these actions is without merit.

Other Litigation

We are party to various other lawsuits, investigations and claims (some of which may not be insured) arising in the normal course of our business, including without limitation in connection with our senior living and MOB operations. It is the opinion of management that, except as otherwise set forth in this Note 8, the disposition of these actions, investigations and claims will not, individually or in the aggregate, have a Material Adverse Effect on us. However, we are unable to predict the ultimate outcome of pending litigation, investigations and claims, and if management’s assessment of our liability with respect to these actions, investigations and claims is incorrect, such actions, investigations and claims could have a Material Adverse Effect on us.

NOTE 9 — INCOME TAXES

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal and state income taxes. Although the TRS entities were not liable for any cash federal income taxes for the three months ended March 31, 2011, their federal income tax liabilities may increase in future periods as we exhaust net operating loss carryforwards and as our senior living operations and MOB operations segments grow. Such increases could be significant.

Our consolidated provision for income taxes for the three months ended March 31, 2011 and 2010 was a benefit of $3.2 million and an expense of $0.3 million, respectively. These amounts were adjusted by income tax expense of $0 million and $0.4 million, respectively, related to the noncontrolling interest share of net income. Realization of a deferred tax benefit is dependent in part upon generating sufficient taxable income in future periods. Our net operating loss carryforwards begin to expire in 2024 with respect to the TRS entities and in 2020 with respect to our other entities.

Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Net deferred tax liabilities with respect to TRS entities totaled $238.1 million and $241.3 million at March 31, 2011 and December 31, 2010, respectively, and related primarily to differences between the financial reporting and tax bases of fixed and intangible assets and to net operating losses.

Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December 31, 2007 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2006 and subsequent years. We are also subject to audit by the Canada Revenue Agency and provincial authorities generally for periods subsequent to 2004 related to entities acquired or formed in connection with our Sunrise REIT acquisition.

NOTE 10 — STOCKHOLDERS’ EQUITY

In February 2011, we completed the sale of 5,563,000 shares of our common stock in an underwritten public offering pursuant to our existing shelf registration statement. We received $300.0 million in aggregate proceeds from the sale, which we used to repay existing mortgage debt and for working capital and other general corporate purposes.

Accumulated Other Comprehensive Income

The following is a summary of our accumulated other comprehensive income as of March 31, 2011 and December 31, 2010:

		March 31,				December 31,
		2011				2010
		(In thousands)
Foreign currency translation		$	25,509			$	23,010
Unrealized gain on marketable debt securities			3,537				4,794
Other			(949	)			(936	)
Total accumulated other comprehensive income		$	28,097			$	26,868

NOTE 11 — EARNINGS PER COMMON SHARE

The following table shows the amounts used in computing basic and diluted earnings per common share:

		For the Three Months
		Ended March 31,
		2011				2010
		(In thousands, except per share
		amounts)
Numerator for basic and diluted earnings per share:
Income from continuing operations attributable to common stockholders		$	48,984			$	51,874
Discontinued operations			—				745
Net income attributable to common stockholders		$	48,984			$	52,619
Denominator:
Denominator for basic earnings per share — weighted average shares			160,420				156,453
Effect of dilutive securities:
Stock options			478				316
Restricted stock awards			68				42
Convertible notes			1,057				156
Denominator for diluted earnings per share — adjusted weighted average shares			162,023				156,967
Basic earnings per share:
Income from continuing operations attributable to common stockholders		$	0.31			$	0.34
Discontinued operations			—				0.00
Net income attributable to common stockholders		$	0.31			$	0.34
Diluted earnings per share:
Income from continuing operations attributable to common stockholders		$	0.30			$	0.34
Discontinued operations			—				0.00
Net income attributable to common stockholders		$	0.30			$	0.34

NOTE 12 — SEGMENT INFORMATION

As of March 31, 2011, we operated through three reportable business segments: triple-net leased properties, senior living operations and MOB operations. Our triple-net leased properties segment consists of acquiring and owning seniors housing and healthcare properties in the United States and leasing those properties to healthcare operating companies under “triple-net” or “absolute-net” leases, which require the tenants to pay all property-related expenses. Our senior living operations segment consists of investments in seniors housing communities located in the United States and Canada for which we engage independent third parties, such as Sunrise, to manage the operations. Our MOB operations segment primarily consists of acquiring, owning, developing, leasing and managing MOBs. Information provided for “all other” includes revenues such as income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to our three reportable business segments. Assets included in all other consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, notes receivable and miscellaneous accounts receivable.

With the addition of the Lillibridge businesses and properties in July 2010, we believed the segregation of our MOB operations into its own reportable business segment would be useful in assessing the performance of this portion of our business in the same way that management reviews our performance and makes operating decisions. Prior to the Lillibridge acquisition, we operated through two reportable business segments: triple-net leased properties and senior living operations. Prior year amounts have been restated to reflect the segregation of our MOB operations into a reportable business segment.

We evaluate performance of the combined properties in each reportable business segment based on segment profit, which we define as NOI adjusted for gain/loss from unconsolidated entities. We define NOI as total revenues, less interest and other income, property-level operating expenses and medical office building services costs. We believe that net income, as defined by GAAP, is the most appropriate earnings measurement. However, we believe that segment profit serves as a useful supplement to net income because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis. Segment profit should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance. In order to facilitate a clear understanding of our consolidated historical operating results, segment profit should be examined in conjunction with net income as presented in our Consolidated Financial Statements and data included elsewhere in this Quarterly Report on Form 10-Q.

Interest expense, depreciation and amortization, general, administrative and professional fees and non-property specific revenues and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are no intersegment sales or transfers.

Summary information by reportable business segment is as follows:

For the three months ended March 31, 2011:

		Triple-Net				Senior
		Leased				Living				MOB				All
		Properties				Operations				Operations				Other				Total
		(In thousands)
Revenues:
Rental income		$	118,603			$	—			$	24,236			$	—			$	142,839
Resident fees and services			—				114,502				—				—				114,502
Medical office building services revenue			—				—				6,957				—				6,957
Income from loans and investments			—				—				—				6,085				6,085
Interest and other income			—				—				—				78				78
Total revenues		$	118,603			$	114,502			$	31,193			$	6,163			$	270,461
Total revenues		$	118,603			$	114,502			$	31,193			$	6,163			$	270,461
Less:
Interest and other income			—				—				—				78				78
Property-level operating expenses			—				78,111				8,676				—				86,787
Medical office building services costs			—				—				5,536				—				5,536
Segment NOI			118,603				36,391				16,981				6,085				178,060
Loss from unconsolidated entities			—				—				(170	)			—				(170	)
Segment profit		$	118,603			$	36,391			$	16,811			$	6,085				177,890
Interest and other income																			78
Interest expense																			(42,558	)
Depreciation and amortization																			(51,759	)
General, administrative and professional fees																			(14,832	)
Foreign currency loss																			(1	)
Loss on extinguishment of debt																			(16,520	)
Merger-related expenses and deal costs																			(6,449	)
Income tax benefit																			3,197
Net income																		$	49,046

For the three months ended March 31, 2010:

		Triple-Net				Senior
		Leased				Living				MOB				All
		Properties				Operations				Operations				Other				Total
		(In thousands)
Revenues:
Rental income		$	116,333			$	—			$	12,189			$	—			$	128,522
Resident fees and services			—				108,486				—				—				108,486
Income from loans and investments			—				—				—				3,617				3,617
Interest and other income			—				—				—				263				263
Total revenues		$	116,333			$	108,486			$	12,189			$	3,880			$	240,888
Total revenues		$	116,333			$	108,486			$	12,189			$	3,880			$	240,888
Less:
Interest and other income			—				—				—				263				263
Property-level operating expenses			—				74,677				4,202				—				78,879
Segment NOI			116,333				33,809				7,987				3,617				161,746
Loss from unconsolidated entities			—				—				—				—				—
Segment profit		$	116,333			$	33,809			$	7,987			$	3,617				161,746
Interest and other income																			263
Interest expense																			(44,090	)
Depreciation and amortization																			(52,314	)
General, administrative and professional fees																			(10,683	)
Foreign currency gain																			106
Merger-related expenses and deal costs																			(2,319	)
Income tax expense																			(286	)
Discontinued operations																			745
Net income																		$	53,168

Capital expenditures, including investments in real estate property, by reportable business segment are as follows:

		For the Three Months
		Ended March 31,
		2011				2010
		(In thousands)
Capital expenditures:
Triple-net leased properties		$	579			$	11,992
Senior living operations			1,965				1,399
MOB operations			5,419				2,764
Total capital expenditures		$	7,963			$	16,155

Our portfolio of properties and real estate investments are located in the United States and Canada. Revenues are attributed to an individual country based on the location of each property.

Geographic information regarding our operations is as follows:

		For the Three Months
		Ended March 31,
		2011				2010
		(In thousands)
Revenues:
United States		$	247,946			$	220,625
Canada			22,515				20,263
Total revenues		$	270,461			$	240,888

		As of				As of
		March 31,				December 31,
		2011				2010
		(In thousands)
Net real estate property:
United States		$	4,815,860			$	4,857,510
Canada			427,564				422,009
Total net real estate property		$	5,243,424			$	5,279,519

NOTE 13 — PENDING ACQUISITIONS

Atria Transaction

In October 2010, we entered into a definitive agreement to acquire substantially all of the real estate assets of privately-owned Atria Senior Living Group, Inc. (together with its affiliates, “Atria”) for a total purchase price of $3.1 billion, comprised of $1.35 billion of our common stock (a fixed 24.96 million shares), $150 million in cash and the assumption or repayment of $1.6 billion of net debt. As a result of the transaction, we will add to our senior living operating portfolio 118 private pay seniors housing communities located primarily in affluent coastal markets such as the New York metropolitan area, New England and California. Prior to the closing, Atria will spin off its management company, which will continue to operate the acquired assets under long-term management agreements with us. We expect to complete the transaction in the first half of 2011, although we cannot assure you that the transaction will close on such timetable or at all.

NHP Transaction

In February 2011, we entered into a definitive agreement to acquire NHP in a stock-for-stock transaction valued at $7.4 billion. Pursuant to the terms and subject to the conditions set forth in the agreement, at the effective time of the merger, each outstanding share of NHP common stock will be converted into the right to receive 0.7866 shares of our common stock. Upon completion of the transaction, our portfolio will consist of over 1,300 properties in 47 states, the District of Columbia and two Canadian provinces. We expect to complete the transaction in the third quarter of 2011, although we cannot assure you that the transaction will close on such timetable or at all.

NOTE 14 — SUBSEQUENT EVENTS

In April 2011, we received proceeds of $112.4 million in final repayment of a first mortgage loan outstanding. We expect to recognize a gain of approximately $3.3 million in connection with this repayment in the second quarter of 2011.

NOTE 15 — CONDENSED CONSOLIDATING INFORMATION

At the time of initial issuance, we and certain of our direct and indirect wholly owned subsidiaries (the “Wholly Owned Subsidiary Guarantors”) fully and unconditionally guaranteed, on a joint and several basis, the obligation to pay principal and interest with respect to the senior notes of our subsidiaries, Ventas Realty, Limited Partnership (“Ventas Realty”) and Ventas Capital Corporation (collectively, the “Issuers”) (other than our 3.125% senior notes due 2015). Ventas Capital Corporation is a wholly owned direct subsidiary of Ventas Realty that was formed in 2002 to facilitate offerings of the senior notes and has no assets or operations. In addition, Ventas Realty and the Wholly Owned Subsidiary Guarantors fully and unconditionally guaranteed, on a joint and several basis, the obligation to pay principal and interest with respect to our convertible notes. Other subsidiaries (“Non-Guarantor Subsidiaries”) that were not included among the Wholly Owned Subsidiary Guarantors were not obligated with respect to the senior notes or the convertible notes. On September 30, 2010, the Wholly Owned Subsidiary Guarantors were released from their obligations with respect to each series of then outstanding senior notes (other than the 9% senior notes due 2012) of the Issuers and our convertible notes pursuant to the terms of the applicable indentures. Contractual and legal restrictions, including those contained in the instruments governing certain Non-Guarantor Subsidiaries’ outstanding indebtedness, may under certain circumstances restrict our ability to obtain cash from our Non-Guarantor Subsidiaries for the purpose of meeting our debt service obligations, including our guarantee of payment of principal and interest on the senior notes and our primary obligation to pay principal and interest on the convertible notes. Certain of our real estate assets are also subject to mortgages. The following summarizes our condensed consolidating information as of March 31, 2011 and December 31, 2010 and for the three months ended March 31, 2011 and 2010:

CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2011

						Wholly
						Owned								Non-
						Subsidiary								Guarantor				Consolidated
		Ventas, Inc.				Guarantors				Issuers				Subsidiaries				Elimination				Consolidated
		(In thousands)
Assets
Net real estate investments		$	778			$	3,205,250			$	680,330			$	1,502,685			$	—			$	5,389,043
Cash and cash equivalents			23,205				(4,700	)			—				23,394				—				41,899
Escrow deposits and restricted cash			76				17,920				7,906				9,497				—				35,399
Deferred financing costs, net			2,529				1,100				6,547				6,965				—				17,141
Investment in and advances to affiliates			1,413,520				—				1,028,720				—				(2,442,240	)			—
Other			52,616				120,084				7,985				29,931				—				210,616
Total assets		$	1,492,724			$	3,339,654			$	1,731,488			$	1,572,472			$	(2,442,240	)		$	5,694,098
Liabilities and equity
Liabilities:
Senior notes payable and other debt		$	226,865			$	229,151			$	1,282,287			$	833,065			$	—			$	2,571,368
Intercompany loans			(145,698	)			840,239				(694,645	)			104				—				—
Accrued interest			(113	)			794				30,050				3,812				—				34,543
Accounts payable and other liabilities			40,226				139,530				17,859				5,979				—				203,594
Deferred income taxes			238,146				—				—				—				—				238,146
Total liabilities			359,426				1,209,714				635,551				842,960				—				3,047,651
Total equity			1,133,298				2,129,940				1,095,937				729,512				(2,442,240	)			2,646,447
Total liabilities and equity		$	1,492,724			$	3,339,654			$	1,731,488			$	1,572,472			$	(2,442,240	)		$	5,694,098