VTR
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I think it is ---+ I am glad you asked the question because what has not changed if we look full-year is $500 million of dispositions and $350 million of acquisitions, that is the same from our last guidance.
We expressed the acquisitions in the press release as $200 million incremental, which is from here as we did $150 million in the first quarter.
And so, that $350 million is just kind of a timing issue of when that money is being spent.
The balance is fungible in that we can talk about either redevelopment or we can talk about debt reduction.
It is simple to understand that we have approximately $300 million of gross debt reduction inherent in that forecast if we have $500 million of dispose, $200 million of incremental acquisition the balance will be debt reduction.
So that is the math, but redevelopment hasn't changed either.
Yes, and the key point is that we also generate cash flow which is fungible as a source as well, and so ---+.
Right.
Which is a partner to that.
You should feel we are very consistent with what we said before.
Absolutely.
Right.
Well, first of all it is important to highlight that that real estate tax charge, which I identified, is in the reported results through the expense line in the quarter.
And therefore you need to adjust that out if you are looking at a more underlying performance.
And that is in line with revenue and roughly in that 4% range as you highlight.
Within that clearly there have been wage pressures, whether of minimum wage or as we have shortages of nurses or whatever else.
But that comes right back to the need to drive our rate in part and parcel.
Yes, and it is consistent with the guidance that we gave at the beginning of the year.
Very consistent with the guidance.
And so holding margins through rate, covering that expense pressure and at the same time driving cost productivity importantly as part of that through operational excellence is inherent in holding that margin for the full year.
Well, it is nice that we were able to acquire the Atria portfolio when we did which had as its largest component the New York MSA, which has been a great market for us.
And as you point out, we do have two high-quality developments ongoing, both will be operated by Atria, one in Foster City in the San Francisco MSA and one in Palm Beach County, obviously both attractive areas.
And we continue to look at development and redevelopment opportunities with Atria and others in all of these markets.
And would feel positive, frankly, about if we found a good site in any of these dense markets to do a development that we had confidence in.
Our bar on ground up development, however, is very high.
And so, we want to make sure that we are really underwriting it carefully and have confidence in the outcome.
And that is why we have just kind of the MOB in downtown San Francisco with Sutter and these two senior housing developments in these great areas with Atria ongoing right now.
Well, thank you for the compliment.
It didn't always feel like it at the time, but hopefully in retrospect it is a very good track record of disciplined capital allocation by our team.
Look, I mean what gets us excited at Ventas is making money for our stakeholders.
And that has come and will come in many different forms, but that is what gets us excited.
And that is what we are going to continue to drive towards.
Well, we think we have a high-quality diverse portfolio with leading operators in our industry, the Brookdales, the Holidays and so on.
And the portfolios are well underwritten with credit support and the assets, as <UNK> said, are growing EBITDARM.
And so, we feel we are at good level of coverage that is market-based or above market base.
And with a reasonable CapEx imputed we are above a 1.0.
Probably closer to a 1.1.
And so we feel good about it.
Yes, yes.
I think that is a really good comment because over the years there has been I think a lot of misperception amongst investors that one type of investment, call it SHOP, has risk and one, call it triple net, doesn't have risk and so on and so forth.
When we do underwriting of any asset that we are acquiring, at the end of the day those assets have to produce cash flow.
And so that is what we are focused on always first and foremost.
And then along with it in all these areas, is it a leading operator, what is the asset and the management team's position in the marketplace.
Can we provide additional structural support in the case of triple net and like guarantees and security deposits and so on.
But at the end of the day we are looking for good assets that are going to perform through good operating partners and that is true regardless of structure.
So you make a good point.
And I think we have done that successfully.
Yes, good question.
Look, I think bundled payments are going to help hospitals, let's start there.
And that was of course one underpinning of our hospital thesis and investment as hospitals control more of these dollars and patients.
In so far, again, these just started in the 67 markets on hips and knees in April of this year.
Kindred has said that as far as this project goes it is going to have minimal impact they believe.
And in part I think they are using this new project to prove out that they are the best positioned post-acute provider in the country who can deliver really good post-acute care, limit readmissions and do so for a reasonable cost.
And that is of course the providers in post-acute who are going to thrive in the future.
So ---+ but there is ---+ there can be as part of these trends some evidence that some patients will go directly from the hospital either to senior living frankly or to home health.
And that is a trend that has been going on for some time and will continue.
But again, the skilled nursing guys have a role to play in the post-acute delivery of care and there are plenty of these patients, believe me.
Plenty of people are having hips and knees replaced.
And so, hopefully there are enough patients for everyone.
Yes.
I mean I think there will be winners and thrivers and consolidators like Ardent and others like HCA.
But again, they are sort of getting the payment in the bundled payment and they are paying the post-acute providers.
And so, we believe that the hospitals will do well and the post-acute providers who can deliver quality and do so at a low cost and limit readmissions are going to get more market share.
I am so ---+ thank you for asking that because that is something we talked about and we are happy to answer.
Which I am assuming is why is it lower.
And it is really timing if you look at it.
We had a number of things, particularly in the accounts payable line that in prior years ---+ if you compare to prior year we had the Kindred fee and other fees we have referred to in the first quarter which benefited cash flow in the first quarter of roughly $40 million.
Of last year.
Of last year.
To bring it back, typically Q1 is an outflow just seasonally from a timing point of view on the payable line.
So, last year it was really more of an anomaly as far as that goes.
And the other one is really timing around interest payments on bonds that are flowing to interest payables.
So they are really timing issues, <UNK>, but it is a good catch, absolutely.
So you should see that turn around to the balance of the year.
We always pay attention to cash flow.
Yes, I don't think you should be so focused on flu solely because there is a number of factors.
Clearly that, as we have said, all else equal is a tailwind.
You have a number of factors that are impacting occupancy this quarter.
We talked a lot about rate.
Certainly the rate is intentional and is driving the majority of that.
There is also an impact of the new units coming online and affecting occupancy, as I said in my prepared remarks.
So that is coming through that line as well.
And again, in line with our expectation.
So it is really a combination of factors where it is really hard to pull out any one.
Well, I would say that obviously when we look at rents we are looking at it on an effective rent basis.
There are targeted markets, for example, Brookdale has talked about it where they are providing concessions in some cases that they used after the Emeritus merger.
And a lot of those Brookdale has said are ---+ they expect to burn off and not be replaced during 2016.
So that would be one example.
No, we are driving rates.
No, quite the contrary, we are going the other way.
As I said, we are driving rate, not discounting.
And the NIC data would suggest in terms of rate growth that similarly across the industry there is good great growth.
So hopefully others are seeing the same which is a great value proposition in senior housing.
Right, I would describe it as a modest sequential decline.
We talked about 10 basis points in terms of units under construction ---+ so we are certainly not doing the touchdown dance yet on that.
I think where is it headed from here is a good question.
We don't have a lot more information than you do.
I think everybody is starting to understand what is out there, there has been a lot of talk about supply clearly.
And so, lenders and developers and everybody else taking note we hope is what is going to happen but only time will tell.
We have no evidence to suggest that is true.
Okay, so, most of the change in coverage is due to the fact that rent went up significantly in the fourth quarter of last year.
So we think that is a good thing.
You want to have good coverage but you don't want to have excess good coverage.
You want to hit that optimal point.
And yes, most of our 4% of skilled nursing is with Kindred, we have some with Genesis as well.
And look, I think what you are going to see, as we have talked about over time, is we have very strong coverage at 2 times.
You are going to see I think some continued pressures on the SNFs business.
And we are in a great spot with our partners who have credit and who are leading operators to work through those changes.
And we deliberately retained this portfolio because we believe in it.
Yes, good observation.
And again, happy that we acquired our MOB portfolio, which is very high-quality, again, in that 2010-2011 time period.
I think what drives people to really like MOB is that they are a low-cost setting, you see the demographics and the utilization statistics with the baby boomers and again the 10,000 turning 65 every day.
You see the Affordable Care Act which is improving the insured population in many states.
And then what you are getting as an investor is you are really getting above ---+ even at relatively low cap rates you are getting above core returns with core like characteristics.
Very reliable, consistent, steady, financial assets.
And in this global thirst for yield where we talked about why people like US real estate assets, that is a very attractive value proposition and I think that is why you are seeing all these new entrants and a lot of interest in this asset class.
Well, in the UK I think what ---+ we have a small senior living portfolio and then a very nice public partner in Spire who is in the hospital business (technical difficulty) triple net lease.
And we have triple net leases frankly on both segments in the UK.
I think what we are seeing there in the private pay as well as the more long-term care business is that there are changes in rules and regulations that affect staffing.
And that is in fact putting some pressures on the operators there.
Our portfolio has been doing well, it is a small portfolio that we have grown and we like.
But I think on a larger scale basis for both the government reimbursed and the private pay there are some trends there that are compressing margins.
Yes, well thank you very much.
I will thank all my colleagues at Ventas for contributing to delivering great results.
And I thank all of you for your interest in our Company and your support of our Company which we appreciate greatly and we look forward to seeing everybody at NAREIT in June.
Thank you.
