Ventas Financial Model

• Senior Housing Operating Portfolio (SHOP)
• Revenue driver formula: Available Rooms x Occupancy Percentage x Revenue per Occupied Room (RevPOR) x 12.
• Historical growth rate: 10% to 15% Same-Store Cash NOI growth over the last two years.
• Key growth levers and headwinds: Driven by occupancy recovery (up 270 to 300 basis points year-over-year) and strong RevPOR growth (4.7% to 5.0%), offset by nursing labour shortages and wage inflation.
• Pricing dynamics: Spot pricing with annual in-house rent increases targeting approximately 8% for 2026.
• Revenue recognition notes: Recognised over time as resident services are provided.
• Seasonality: Q1 and Q4 typically experience higher utility and flu-related labour costs, while Q2 and Q3 show stronger leasing velocity.

• Outpatient Medical & Research (OM&R)
• Revenue driver formula: Rentable Square Feet x Occupancy Percentage x Annualised Base Rent per Square Foot.
• Historical growth rate: 2% to 4% Same-Store Cash NOI growth.
• Key growth levers and headwinds: High tenant retention (occupancy near 91%) and strategic affiliations with major health systems and universities.
• Pricing dynamics: Contractual, long-term leases with embedded annual escalators.
• Revenue recognition notes: Straight-line rent recognition over the lease term.
• Seasonality: Minimal seasonality due to long-term lease structures.

• Triple-Net Leased Properties (NNN)
• Revenue driver formula: Prior Year Rent x (1 + Blended Escalator Percentage).
• Historical growth rate: Flat to low single digits (declined 1.3% in Q4 2025, projected 3.75% to 4.75% for 2026).
• Key growth levers and headwinds: Operator credit health, lease renewals, and transition of underperforming NNN assets to the SHOP portfolio.
• Pricing dynamics: Contractual with CPI-linked or fixed annual escalators.
• Revenue recognition notes: Straight-line rent recognition.
• Seasonality: None.

• Total assets: Approximately $26.9 billion as of late 2025.
• Key asset categories: Real Estate Investments (Gross) less Accumulated Depreciation represents the physical properties and forms the core of the balance sheet.
• Goodwill & intangibles: Minor relative to hard assets, primarily consisting of lease intangibles from acquisitions.
• Working capital profile:
• Days Sales Outstanding (DSO): Very low (under 15 days) as rent is typically paid in advance.
• Days Inventory Outstanding (DIO): Not applicable.
• Days Payable Outstanding (DPO): Standard 30 to 45 days for property operating expenses.
• Net working capital as % of revenue: Negligible. REITs fund growth through debt and equity capital markets, not working capital.
• PP&E: Useful lives range from 10 to 40 years for buildings and improvements.
• Right-of-use assets: Material only for ground leases on certain medical office buildings.

• Capex as % of revenue: Total capex is highly variable due to acquisitions, but maintenance capex typically runs at 8% to 12% of NOI.
• Maintenance capex vs. growth capex: Maintenance capex is deducted to calculate AFFO. Growth capex includes major redevelopments and acquisitions.
• Major capex programmes: Continuous redevelopment of older senior housing assets to maintain competitive positioning.
• M&A pattern: Transformational and bolt-on acquirer. Closed $2.5 billion in senior housing investments in 2025 and targets another $2.5 billion for 2026.

• Total debt: Drives a Net Debt to Further Adjusted EBITDA ratio of 5.2x, which improved from higher levels in 2024.
• Credit rating: Investment grade (typically BBB+ / Baa1 range).
• Key debt instruments: $2.6 billion in mortgages, unsecured senior notes (including 5.00% and 5.10% notes issued in 2025), and a large unsecured revolving credit facility.
• Maturity profile: Staggered maturities to avoid refinancing cliffs.
• Interest rate profile: Predominantly fixed-rate debt, with floating exposure managed via interest rate swaps.
• Share repurchase programme: Inactive. Ventas is an active issuer of equity via Forward Sales Agreements and ATM (At-The-Market) programmes to fund acquisitions (raised $7 billion in total capital in 2025).
• Dividend policy: $0.52 per share quarterly ($2.08 annualised), representing an 8% increase in early 2026.

• Operating cash flow conversion: High, as real estate depreciation is a massive non-cash charge that bridges Net Income to OCF.
• Free cash flow margin: FFO and AFFO are the primary cash flow proxies for REITs, not standard Free Cash Flow.
• Major non-cash items: Real estate depreciation, straight-line rent adjustments, and stock-based compensation.
• Working capital cash flow impact: Minimal impact on long-term cash generation.
• Capex intensity: High for acquisitions, moderate for maintenance.
• Cash tax rate: Near 0% effective tax rate because Ventas operates as a REIT and distributes at least 90% of taxable income to shareholders.

1. Assumptions: Hardcoded drivers for occupancy, RevPOR, rent escalators, margins, and capital allocation.
2. Property Portfolio: Unit counts, square footage, and occupancy rates for SHOP, OM&R, and NNN.
3. Segment Revenue & NOI: Detailed build of revenue and property-level expenses for the three main segments.
4. Income Statement: Consolidated GAAP income statement ending in Net Income.
5. FFO & AFFO Reconciliation: The most critical sheet, bridging Net Income to Nareit FFO, Normalised FFO, and AFFO.
6. Balance Sheet: Assets, liabilities, and equity, highlighting Real Estate Investments and Debt.
7. Debt & Interest Schedule: Tranches of mortgages, senior notes, revolver, and interest expense calculations.
8. Cash Flow Statement: GAAP cash flows linking Net Income, working capital, capex, and financing activities.
9. Equity & Dividends: Share count roll-forward (including ATM issuances) and dividend payout calculations.
10. Valuation: Net Asset Value (NAV) build applying cap rates to segment NOI, plus a Dividend Discount Model.

1. SHOP Revenue = SHOP Available Rooms x SHOP Occupancy Percentage x RevPOR x 12
2. SHOP NOI = SHOP Revenue - SHOP Property-Level Operating Expenses
3. OM&R Revenue = OM&R Rentable Square Feet x OM&R Occupancy Percentage x Annualised Base Rent per Square Foot
4. NNN Revenue = Prior Year NNN Revenue x (1 + Blended Rent Escalator Percentage)
5. Total Consolidated NOI = SHOP NOI + OM&R NOI + NNN NOI
6. Nareit FFO = Net Income Attributable to Common Stockholders + Real Estate Depreciation and Amortisation - Gains on Real Estate Dispositions
7. Normalised FFO = Nareit FFO + Deal Costs + Debt Extinguishment Costs
8. AFFO = Normalised FFO - Maintenance Capital Expenditures - Straight-Line Rent Adjustments
9. Net Debt = Total Debt - Cash and Cash Equivalents
10. Net Debt to Adjusted EBITDA = Net Debt / Annualised Adjusted EBITDA
11. Dividend Payout Ratio = Annualised Dividend per Share / Normalised FFO per Share
12. Implied Cap Rate = Total Consolidated NOI / (Market Capitalisation + Net Debt)

The Property Portfolio sheet feeds the Segment Revenue & NOI sheet to calculate top-line and property expenses. The Segment Revenue & NOI sheet feeds the Income Statement (Total Revenues and Property Operating Expenses). The Income Statement feeds the FFO & AFFO Reconciliation by providing Net Income and D&A. The FFO & AFFO Reconciliation feeds the Valuation sheet for FFO multiples and the Equity & Dividends sheet to check payout ratios. The Cash Flow Statement feeds the Balance Sheet (Cash balance) and the Debt & Interest Schedule (revolver drawdowns to fund shortfalls). Finally, the Debt & Interest Schedule feeds back into the Income Statement (Interest Expense), creating a circular reference that requires a toggle or iterative calculation.

• Revenue, NOI, FFO, and Asset balances are entered as positive numbers.
• Expenses, Capex, and Dividends Paid are entered as negative numbers.
• Debt paydown is negative; Debt issuance is positive.
• Accumulated Depreciation is negative (contra-asset).

1. Failing to add back real estate depreciation when calculating FFO, which is the standard profitability metric for REITs.
2. Applying operating expenses to the NNN segment; NNN tenants pay property taxes, insurance, and maintenance directly.
3. Ignoring share dilution; Ventas frequently issues equity to fund acquisitions, meaning absolute FFO growth does not equal per-share FFO growth.
4. Confusing Total NOI with Same-Store NOI; the model must account for acquired properties contributing to Total NOI but excluded from Same-Store metrics.
5. Miscalculating straight-line rent; GAAP requires averaging rent over the lease term, but AFFO requires deducting this non-cash revenue.
6. Underestimating interest expense sensitivity; a large portion of the capital structure is debt, and refinancing at higher rates severely impacts FFO.
7. Overlooking maintenance capex; failing to deduct this from FFO artificially inflates the AFFO and dividend coverage ratio.
8. Incorrectly modelling the SHOP margin; a 100 basis point error in SHOP margin assumptions drastically swings consolidated NOI due to the segment's size.

1. Total Assets must equal Total Liabilities plus Equity in all periods.
2. Net Debt to Adjusted EBITDA should remain near the target of 5.2x; flag if it exceeds 6.0x.
3. SHOP NOI Margin should be in the 27% to 29% range based on 2025 performance; flag if outside this band.
4. Normalised FFO per share should align with management guidance of $3.78 to $3.88 for 2026.
5. Dividend payout ratio must be less than 100% of AFFO to ensure dividend sustainability.
6. Effective tax rate should be near 0% due to REIT status.
7. Total Consolidated NOI must exactly equal the sum of SHOP, OM&R, and NNN NOI.
8. Cash balance should not drop below $200 million without triggering a revolver drawdown.

• SEC EDGAR: Ventas (VTR) 10-K, 10-Q, and 8-K filings.
• Investor Relations: Ventas quarterly earnings supplements and investor presentations (e.g., March 2026 Citi Global Property CEO Conference).
• Key Peers: Welltower (WELL), Healthpeak Properties (DOC), Omega Healthcare Investors (OHI).
• Industry Data: National Investment Center for Seniors Housing & Care (NIC) for occupancy and rent growth benchmarks.
• Consensus Estimates: FactSet or Bloomberg for FFO and NAV consensus.

• Ventas Q4 2025 Earnings Release and Financial Supplement (February 2026)
• Ventas 2025 Annual Report on Form 10-K
• Ventas March 2026 Investor Presentation
• Seeking Alpha Q4 2025 Earnings Call Transcript