SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 12, 2001
VENTAS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10989 61-1055020
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
4360 Brownsboro Road, Suite 115, Louisville, Kentucky 40207-1642
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(Address of principal executive offices) (Zip Code)
(502) 357-9000
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(Registrant's telephone number, including area code)
Item 5. Other Events.
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On December 17, 2001, Ventas, Inc. ("Ventas" or the "Company")
announced that it had raised $225 million from the completion of its commercial
mortgage backed securitization ("CMBS") transaction. The Company announced that
net proceeds of $213 million were used to pay down a portion of the outstanding
balance under its existing Amended Credit Agreement. The outstanding principal
balance on the Company's Amended Credit Agreement is currently $634 million.
The floating rate, 5-year CMBS certificates, secured by 40 skilled
nursing facilities, carry an average interest rate spread of 146 basis points
over the one-month LIBOR rate, for an initial nominal interest rate of 3.4
percent per year. With fees of approximately 3 percent, the all-in rate is 206
basis points over one-month LIBOR. Because of the Company's existing interest
rate swap that fixes LIBOR at 5.985 percent, the all-in effective swapped rate
on the CMBS loan is approximately 8 percent. The CMBS loan is non-recourse to
the Company and the principal balance will amortize on a 25-year schedule. The
transaction will add approximately $0.038 per share to the Company's 2002 Funds
from Operation ("FFO").
With the successful completion of the CMBS transaction, Ventas has
removed the dividend restriction in its Amended Credit Agreement, which had
limited its dividend payout to 90 percent of taxable net income. In addition,
the Company will now have no debt maturities prior to December 2005.
Merrill Lynch was the lead manager on the CMBS transaction and Morgan
Stanley was the co-manager.
Copies of the core documents for the CMBS transaction are attached as
exhibits to this filing and are incorporated herein by reference.
The Company also announced that it expects to report FFO of $1.24 to
$1.26 per share for 2002, assuming no additional debt reduction, no sale of any
of its equity stake in its primary tenant, Kindred Healthcare, Inc. ("Kindred")
and no refinancing transactions.
With the lifting of the dividend payout restriction contained in its
Amended Credit Agreement, the Company said that it expects its 2002 dividend
will be $0.95 per share, which is an 8 percent increase over the 2001 annual
rate of $0.88 per share (excluding the one-time adjustment of $0.04 per share
declared in the fourth quarter). Ventas further expects that 2002 dividends will
be paid quarterly, in cash, although the Company reserves the right to pay
dividends in whole or in part by distribution of shares of common stock of
Kindred, or other securities or property. Earlier this month, the Company
announced that it will likely distribute up to 350,000 shares of Kindred common
stock to satisfy all or part of the fourth quarter 2001 dividend, which will be
paid to stockholders on January 7, 2002.
There can be no assurances regarding the Company's ability to pay
future dividends. The Company may from time to time update its publicly
announced expectations regarding future dividends, but it is not obligated to do
so.
The Company also discussed the various assumptions underlying its
expectations for 2002 FFO.
A copy of a press release issued by the Company on December 17, 2001 is
included as exhibit 99.1 to this filing and is incorporated herein by reference.
Ventas is a real estate investment trust ("REIT") whose properties
include 44 hospitals, 216 nursing centers and eight personal care facilities
operating in 36 states. Ventas is headquartered at 4360 Brownsboro Road, Suite
115, Louisville, Kentucky 40207-1642. Its website can be found at
www.ventasreit.com.
This Form 8-K includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All statements regarding Ventas and its subsidiaries' expected future
financial position, results of operations, cash flows, funds from operations,
dividends and dividend plans, financing plans, business strategy, budgets,
projected costs, capital expenditures, competitive positions, growth
opportunities, expected lease income, continued qualification as a REIT, plans
and objectives of management for future operations and statements that include
words such as "if, " "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "may," "could," "should", "will" and other similar expressions are
forward-looking statements. Such forward-looking statements are inherently
uncertain and stockholders must recognize that actual results may differ from
the Company's expectations. The Company does not undertake a duty to update such
forward-looking statements.
Actual future results and trends for the Company may differ materially
depending on a variety of factors discussed in the Company's filings with the
Securities and Exchange Commission. Factors that may affect the plans or results
of the Company include, without limitation, (a) the ability and willingness of
Kindred and certain of its affiliates to continue to meet and/or honor its
obligations under its contractual arrangements with the Company and the
Company's wholly owned operating partnership, Ventas Realty, Limited Partnership
("Ventas Realty"), including without limitation the various agreements (the
"Spin Agreements") entered into by the Company and Kindred at the time of the
corporate reorganization on May 1, 1998 (the "1998 Spin Off") pursuant to which
the Company was separated into two publicly held corporations, (b) the ability
and willingness of Kindred to continue to meet and/or honor its obligation to
indemnify and defend the Company for all litigation and other claims relating to
the health care operations and other assets and liabilities transferred to
Kindred in the 1998 Spin Off, (c) the ability of Kindred and the Company's other
operators to maintain the financial strength and liquidity necessary to satisfy
their respective obligations and duties under the leases and other agreements
with the Company, and their existing credit agreements, (d) the Company's
success in implementing its business strategy, (e) the nature and extent of
future competition, (f) the extent of future health care reform and regulation,
including cost containment measures and changes in reimbursement policies and
procedures, (g) increases in the cost of borrowing for the Company, (h) the
ability of the Company's operators to deliver high quality care and to attract
patients, (i) the results of litigation affecting the Company, (j) changes in
general economic conditions and/or economic conditions in the markets in which
the Company may, from time to time, compete, (k) the ability of the Company to
pay down, refinance, restructure, and/or extend its indebtedness as it becomes
due, (l) the movement of interest rates and the resulting impact on the value of
the Company's interest rate swap agreement and the ability of the Company to
satisfy its obligation to post cash collateral if required to do so under such
interest rate swap agreement, (m) the ability and willingness of Atria, Inc.
("Atria") to continue to meet and honor its contractual arrangements with the
Company and Ventas Realty entered into connection with the Company's spin off of
its assisted living operations and related assets and liabilities to Atria in
August 1996, (n) the ability and willingness of the Company to maintain its
qualification as a REIT due to economic, market, legal, tax or other
considerations including, without limitation, the Company's failure to qualify
as a REIT due to its ownership of Kindred common stock, (o) the outcome of the
audit being conducted by the Internal Revenue Service for the Company's tax
years ended December 31, 1997 and 1998, (p) final determination of the Company's
net taxable income for the tax year ending December 31, 2001, (q) the ability
and willingness of the Company's tenants to renew their leases with the Company
upon expiration of the leases and the Company's ability to relet its properties
on the same or better terms in the event such leases expire and are not renewed
by the existing tenants, and (r) the limitations on the ability of the Company
to sell, transfer or otherwise dispose of its common stock in Kindred arising
out of the securities laws and the registration rights agreement the Company
entered into with Kindred and certain of the holders of the Kindred common
stock. Many of such factors are beyond the control of the Company and its
management.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits:
4.1 Loan and Security Agreement, dated as of December 12, 2001,
between Ventas Finance I, LLC, as Borrower, and Merrill Lynch
Mortgage Lending, Inc., as Lender.
4.2 Form of Assignment of Leases and Rents, dated as of December
12, 2001, by Ventas Finance I, LLC, as Assignor, to Merrill Lynch
Mortgage Lending, Inc., as Assignee.
4.3 Form of Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, dated as of December 12,
2001, by Ventas Finance I, LLC, as Trustor, to First American
Title Insurance Company, as Trustee, for the benefit of Merrill
Lynch Mortgage Lending, Inc., as Beneficiary.
4.4 Form of Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated as of December 12, 2001, by
Ventas Finance I, LLC, as Mortgagor, to Merrill Lynch Mortgage
Lending, Inc., as Mortgagee.
4.5 Letter Agreement, dated December 12, 2001, from Merrill Lynch
Mortgage Lending, Inc. to Ventas, Inc. and Ventas Finance I, LLC,
regarding the use of certain insurance proceeds received in
connection with a casualty to a collateral property under the
Loan and Security Agreement.
4.6 Letter Agreement, dated as of December 12, 2001, from Merrill
Lynch Mortgage Lending, Inc. to JP Morgan Chase Bank, as Senior
Collateral Agent and Junior Collateral Agent under various credit
agreements with Kindred Healthcare, Inc., and Ventas Finance I,
LLC, as Landlord, concerning various notice requirements
regarding the collateral property under the Loan and Security
Agreement.
4.7 Letter Agreement, dated as of December 12, 2001, from Merrill
Lynch Mortgage Lending, Inc. to Ventas Realty, Limited
Partnership and Ventas Finance I, LLC concerning various rent
reset rights under the Master Lease Agreement among Ventas
Finance I, LLC, as Landlord, and Kindred Healthcare, Inc. and
Kindred Healthcare Operating, Inc., as Tenants.
4.8 Collateral Assignment of Interest Rate Protection Agreement,
dated as of December 12, 2001, by Ventas Finance I, LLC, as
Assignor, to Merrill Lynch Mortgage Lending, Inc., as Assignee.
4.9 Mortgage Loan Purchase Agreement, dated as of December 12,
2001, between Ventas Specialty I, LLC, as Purchaser, and Merrill
Lynch Mortgage Lending, Inc., as Seller.
4.10 Promissory Note, dated as of December 12, 2001, from Ventas
Finance I, LLC, as Borrower, to Merrill Lynch Mortgage Lending,
Inc., as Lender.
4.11 Form of Subordination, Non-Disturbance and Attornment
Agreement, dated as of December 12, 2001, by and among Kindred
Healthcare, Inc. and Kindred Healthcare Operating, Inc., as
Tenant, Ventas Finance I, LLC, as Landlord, and Merrill Lynch
Mortgage Lending, Inc., as Lender.
4.12 Trust and Servicing Agreement, dated as of December 12,
2001, among Ventas Specialty I, LLC, as Depositor, First Union
National Bank, as Servicer and Special Servicer, LaSalle Bank
National Association, as Trustee and as Tax Administrator, and
ABN Amro Bank N.V., as Fiscal Agent.
4.13 Cash Management Agreement, dated as of December 12, 2001,
among Ventas Finance I, LLC, as Borrower, Merrill Lynch Mortgage
Lending, Inc., as Lender, and First Union National Bank, as
Agent.
4.14 Environmental Indemnity Agreement, dated as of December 12,
2001, by Ventas Finance I, LLC, as Borrower, and Ventas, Inc., as
Guarantor, in favor of Merrill Lynch Mortgage Lending, Inc., as
Lender.
4.15 Exceptions to Non-recourse Guaranty, dated as of December
12, 2001, by Ventas, Inc., as Guarantor, for the benefit of
Merrill Lynch Mortgage Lending, Inc., as Lender.
4.16 Certificate Purchase Agreement, dated as of December 4, 2001
by Ventas Specialty I, LLC and Ventas, Inc. to Merrill Lynch
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated.
10.1 Lease Severance and Amendment Agreement, dated as of
December 12, 2001, by and among Kindred Healthcare, Inc., as
Tenant, Kindred Healthcare Operating, Inc., as Operator and
Tenant, and Ventas Realty, Limited Partnership, as Lessor.
10.2 Master Lease Agreement, dated as of December 12, 2001, by
and among Ventas Realty, Limited Partnership, as Lessor, and
Kindred Healthcare, Inc. and Kindred Healthcare Operating, Inc.,
at Tenants.
10.3 Amendment No. 2 and Waiver, dated as of September 26, 2001,
to the Credit Agreement, among Ventas Realty, Limited
Partnership, as Borrower, the Guarantors referred to in the
Credit Agreement, Bank of America, N.A., as Lender, Issuing Bank
and Administrative Agent for the Lenders under the Credit
Agreement, Morgan Guaranty Trust Company of New York, as a Lender
and as Documentation Agent for Lenders under the Credit
Agreement, and the Consenting Lenders.
99.1 Press Release dated December 17, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VENTAS, INC.
(Registrant)
Date: January 2, 2002
By:/s/ T. Richard Riney
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Name: T. Richard Riney
Title: Executive Vice President and
General Counsel
EXHIBIT INDEX
Exhibit Description
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4.1 Loan and Security Agreement, dated as of December 12, 2001, between Ventas
Finance I, LLC, as Borrower, and Merrill Lynch Mortgage Lending, Inc., as
Lender.
4.2 Form of Assignment of Leases and Rents, dated as of December 12, 2001, by
Ventas Finance I, LLC, as Assignor, to Merrill Lynch Mortgage Lending,
Inc., as Assignee.
4.3 Form of Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing, dated as of December 12, 2001, by Ventas Finance I,
LLC, as Trustor, to First American Title Insurance Company, as Trustee, for
the benefit of Merrill Lynch Mortgage Lending, Inc., as Beneficiary.
4.4 Form of Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, dated as of December 12, 2001, by Ventas Finance I, LLC, as
Mortgagor, to Merrill Lynch Mortgage Lending, Inc., as Mortgagee.
4.5 Letter Agreement, dated December 12, 2001, from Merrill Lynch Mortgage
Lending, Inc. to Ventas, Inc. and Ventas Finance I, LLC, regarding the use
of certain insurance proceeds received in connection with a casualty to a
collateral property under the Loan and Security Agreement.
4.6 Letter Agreement, dated as of December 12, 2001, from Merrill Lynch
Mortgage Lending, Inc. to JP Morgan Chase Bank, as Senior Collateral Agent
and Junior Collateral Agent under various credit agreements with Kindred
Healthcare, Inc., and Ventas Finance I, LLC, as Landlord, concerning
various notice requirements regarding the collateral property under the
Loan and Security Agreement.
4.7 Letter Agreement, dated as of December 12, 2001, from Merrill Lynch
Mortgage Lending, Inc. to Ventas Realty, Limited Partnership and Ventas
Finance I, LLC concerning various rent reset rights under the Master Lease
Agreement among Ventas Finance I, LLC, as Landlord, and Kindred Healthcare,
Inc. and Kindred Healthcare Operating, Inc., as Tenants.
4.8 Collateral Assignment of Interest Rate Protection Agreement, dated as of
December 12, 2001, by Ventas Finance I, LLC, as Assignor, to Merrill Lynch
Mortgage Lending, Inc., as Assignee.
4.9 Mortgage Loan Purchase Agreement, dated as of December 12, 2001, between
Ventas Specialty I, LLC, as Purchaser, and Merrill Lynch Mortgage Lending,
Inc., as Seller.
4.10 Promissory Note, dated as of December 12, 2001, from Ventas Finance I, LLC,
as Borrower, to Merrill Lynch Mortgage Lending, Inc., as Lender.
4.11 Form of Subordination, Non-Disturbance and Attornment Agreement, dated as
of December 12, 2001, by and among Kindred Healthcare, Inc. and Kindred
Healthcare Operating, Inc., as Tenant, Ventas Finance I, LLC, as Landlord,
and Merrill Lynch Mortgage Lending, Inc., as Lender.
4.12 Trust and Servicing Agreement, dated as of December 12, 2001, among Ventas
Specialty I, LLC, as Depositor, First Union National Bank, as Servicer and
Special Servicer, LaSalle Bank National Association, as Trustee and as Tax
Administrator, and ABN Amro Bank N.V., as Fiscal Agent.
4.13 Cash Management Agreement, dated as of December 12, 2001, among Ventas
Finance I, LLC, as Borrower, Merrill Lynch Mortgage Lending, Inc., as
Lender, and First Union National Bank, as Agent.
4.14 Environmental Indemnity Agreement, dated as of December 12, 2001, by Ventas
Finance I, LLC, as Borrower, and Ventas, Inc., as Guarantor, in favor of
Merrill Lynch Mortgage Lending, Inc., as Lender.
4.15 Exceptions to Non-recourse Guaranty, dated as of December 12, 2001, by
Ventas, Inc., as Guarantor, for the benefit of Merrill Lynch Mortgage
Lending, Inc., as Lender.
4.16 Certificate Purchase Agreement, dated as of December 4, 2001 by Ventas
Specialty I, LLC and Ventas, Inc. to Merrill Lynch Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated.
10.1 Lease Severance and Amendment Agreement, dated as of December 12, 2001, by
and among Kindred Healthcare, Inc., as Tenant, Kindred Healthcare
Operating, Inc., as Operator and Tenant, and Ventas Realty, Limited
Partnership, as Lessor.
10.2 Master Lease Agreement, dated as of December 12, 2001, by and among Ventas
Realty, Limited Partnership, as Lessor, and Kindred Healthcare, Inc. and
Kindred Healthcare Operating, Inc., at Tenants.
10.3 Amendment No. 2 and Waiver, dated as of September 26, 2001, to the Credit
Agreement, among Ventas Realty, Limited Partnership, as Borrower, the
Guarantors referred to in the Credit Agreement, Bank of America, N.A., as
Lender, Issuing Bank and Administrative Agent for the Lenders under the
Credit Agreement, Morgan Guaranty Trust Company of New York, as a Lender
and as Documentation Agent for Lenders under the Credit Agreement, and the
Consenting Lenders.
99.1 Press Release dated December 17, 2001