Ventas, Inc. (VTR, NYSE)
Industry: REIT - Healthcare Facilities
Annual report, fiscal year 2010


## 2010 CHAIRMAN'S LETTER TO INVESTORS

## VENTAS \( ^{®} \)



Ventas, Inc., an S&P 500 company, is a leading healthcare real estate investment trust. Its diverse, high-quality portfolio of more than 600 assets in 43 U.S. states, the District of Columbia and two Canadian provinces includes seniors housing communities, medical office buildings, skilled nursing facilities, hospitals and other healthcare properties. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.

## Ventas at a Glance 2010

▲ Total Shareholder Return 25%

▲ Five-Year Total Shareholder Return 111%

▲ Normalized FFO Per Share Growth 7.5%

▲ Annual Dividend Per Share Growth 4.4%

Total Announced Acquisitions $3.7 billion

Ventas Delivers Outstanding Compound Annual Total Shareholder Return






## Financial Highlights \( ^{*} $ 

2010

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>(in thousands, except per share amounts)</td><td></td><td></td><td></td></tr><tr><td>Operating Data:</td><td></td><td></td><td></td></tr><tr><td>Rental Income</td><td>$ 539,572</td><td>$ 496,568</td><td>$ 476,815</td></tr><tr><td>Resident Fees and Services</td><td>446,301</td><td>421,058</td><td>429,257</td></tr><tr><td>Total Revenues</td><td>1,016,867</td><td>931,575</td><td>919,145</td></tr><tr><td>Adjusted EBITDA \( ^{\dagger} \)</td><td>659,862</td><td>613,507</td><td>615,466</td></tr><tr><td>Income from Continuing Operations</td><td></td><td></td><td></td></tr><tr><td>Attributable to Common Stockholders</td><td>218,370</td><td>193,120</td><td>174,054</td></tr><tr><td>Net Income Attributable to Common Stockholders</td><td>246,167</td><td>266,495</td><td>222,603</td></tr><tr><td>Share Data:</td><td></td><td></td><td></td></tr><tr><td>FFO \( ^{\dagger} \) , Diluted</td><td>$ 2.67</td><td>$ 2.58</td><td>$ 2.95</td></tr><tr><td>Normalized FFO \( ^{\dagger} \) , Diluted</td><td>$ 2.88</td><td>$ 2.68</td><td>$ 2.71</td></tr><tr><td>Income from Continuing Operations</td><td></td><td></td><td></td></tr><tr><td>Attributable to Common Stockholders, Diluted</td><td>$ 1.38</td><td>$ 1.26</td><td>$ 1.24</td></tr><tr><td>Net Income Attributable to</td><td></td><td></td><td></td></tr><tr><td>Common Stockholders, Diluted</td><td>$ 1.56</td><td>$ 1.74</td><td>$ 1.59</td></tr><tr><td>Dividends Paid for Year</td><td>$ 2.14</td><td>$ 2.05</td><td>$ 2.05</td></tr><tr><td>Weighted Average Shares Outstanding, Diluted</td><td>157,657</td><td>152,758</td><td>139,912</td></tr><tr><td>Closing Stock Price as of December 31</td><td>$ 52.48</td><td>$ 43.74</td><td>$ 33.57</td></tr><tr><td>Shares Outstanding as of December 31</td><td>157,265</td><td>156,612</td><td>143,287</td></tr><tr><td>Other Data as of December 31:</td><td></td><td></td><td></td></tr><tr><td>Equity Market Capitalization</td><td>$ 8,253,267</td><td>$6,850,209</td><td>$4,810,145</td></tr><tr><td>Total Capitalization</td><td>$11,153,311</td><td>$9,520,310</td><td>$7,947,143</td></tr><tr><td>Debt/Total Capitalization</td><td>26.0%</td><td>28.0%</td><td>39.5%</td></tr></table>

1 Earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation), excluding merger-related expenses and deal costs, gains and losses on real estate disposals and asset impairments and/or valuation allowances (including amounts in discontinued operations).

2 Funds From Operations.

3 FFO excluding: (a) merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (c) the non-cash effect of income tax benefits or expenses; and (d) the reversal or incurrence of contingent liabilities.

* On January 1, 2009, we adopted Financial Accounting Standards Board guidance relating to convertible debt instruments that specifies that issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. See "Note 2 – Accounting Policies" of the Notes to Consolidated Financial Statements included in our 2010 Annual Report on Form 10-K for detail regarding the impact of this guidance on our Consolidated Financial Statements for the years ended December 31, 2010, 2009 and 2008.

For non-GAAP reconciliation, see “Supplemental Data” on page 8.








## Ventas's Diversified Portfolio of Seniors Housing, Hospitals, Medical Office Buildings and Post-Acute Care Properties



● Seniors Housing Communities (Total: 240)

☑ Skilled Nursing Facilities (Total: 187)

☐ Hospitals (Total: 40)

▲ Medical Office Buildings and Other Properties (Total: 135)

## Diversification Drives Growth, Stability and Performance








Powered by TCPDF (www.tcpdf.org)



## Dear Fellow Shareholder,

2010 was the year that Ventas seized the upside. With our balance sheet in pristine condition, our position as a collaborative capital partner established, a strong sense of value creation firmly in place, and our reputation for hard work and consistent outstanding performance well earned, we moved the Company forward to flourish and prosper.

We launched the new decade on news that Ventas had been named the best performing publicly traded financial stock for the ten years ended December 31, 2009, with total shareholder return of over 2,000 percent. That honor brought tremendous visibility and accolades from the wide business community, validating our solitary focus on delivering superior results year after year. And it has served to reinforce the value of our hard work, commitment to our shareholders and the importance of operating with integrity.

## Capitalizing on
Investment Opportunities

• $7.4 billion acquisition of Nationwide Health Properties, Inc. (NHP) and its more than 600 healthcare properties

• $3.1 billion acquisition of 118 Atria Senior Living Group (Atria) seniors housing properties

• $186 million acquisition of minority interests in 58 seniors housing properties managed by Sunrise Senior Living, Inc. (Sunrise)

• $381 million acquisition of Lillibridge Healthcare Services, Inc. (Lillibridge) and its 96 medical office buildings

The imperative of delivering another decade of excellence for our shareholders led us to announce $11 billion of acquisitions in 2010 and early 2011, positioning our Company as the leading healthcare REIT and one of the top companies in the REIT sector. It was the groundwork we laid in earlier years to strengthen our balance sheet, reduce our borrowing costs, refine our portfolio, strengthen our management team and sharpen our strategy that enabled us to move quickly and decisively to take Ventas to the next level as we emerged opportunistically from the financial crisis and Great Recession. The result will be a Company with an unmatched profile and a laser focus on excellent performance.

When the acquisitions are all completed, we will be the same Company, but bigger, better and more formidable:

• A $23 billion highly diversified enterprise

- Over 1,300 highly productive properties spanning 47 U.S. states, the District of Columbia and two Canadian provinces

• Proprietary relationships with over 100 regional and national care providers

• 70 percent of Net Operating Income (NOI) derived from private pay sources

- A truly national medical office building (MOB) footprint of 14 million square feet located almost entirely on hospital campuses

• Two leading MOB platforms with over 50 leading hospital relationships

- A great balance sheet, low cost of debt capital, unique growth opportunities and growing dividend prospects

- The leading healthcare REIT, well positioned to continue delivering superior risk-adjusted returns to shareholders

We expect these transactions to be financially accretive to Ventas shareholders. The most compelling outcome of our activities is that Ventas will be beautifully situated to capture opportunities in the large, growing and rapidly changing landscape of healthcare real estate that already totals over $700 billion.

With the finalization of these transactions, Ventas will have completed seven major acquisitions in as many years, building a faster growing, more diversified and lower risk enterprise. We will be in a prime position to capitalize on the incredible changes we expect to occur in healthcare real estate for the benefit of our shareholders.



2010 Review – Delivering Excellent Results as We Build for the Future

Our success in 2010 derived from three major areas:

• Value-enhancing investments to grow the Company without excessive risk

• Significant growth in normalized Funds From Operations (FFO), balanced with prudent balance sheet management and liquidity

- Cultivation of our senior management team with important promotions, new executive hires and the addition of vital expertise to our Board of Directors

We remain consistent with our goal of creating a portfolio of diverse, highly productive, cash-flowing assets as we delivered our eighth consecutive year of growth in our normalized FFO, which increased 11 percent to 454 million. Our normalized FFO per share for the year rose 7.5 percent to 2.88, despite a stronger capital base containing 3 percent more outstanding shares.

Total shareholder return was exceptional at 25.4 percent for 2010 and 1,569 percent for the ten years ended December 31, 2010. At year-end, we maintained 1 billion in liquidity, which serves a dual role of safeguarding shareholder capital and providing firepower to lock up acquisition opportunities.

Strong Financial Performance and Consistent Growth





Debra A. Cafaro
Chairman and Chief Executive Officer

Ventas also raised its dividend by 4.4 percent to $2.14 in 2010, resulting in a 9 percent compound annual growth rate since 2004. We believe that dividends are an important component of delivering consistent superior total returns to our shareholders, and we are pleased to share our success.

Our 2010 Transactions: Adding Value through Continued Growth and Diversification
The three major transactions announced in 2010 were notable for their size and importance and also their contribution to the Company’s ongoing strategic growth and diversification plan that has been in place for almost ten years.

Ventas’s dividend has had a compounded annual growth rate of 9 percent since 2004, reflecting the strength of our productive and cash-flowing properties.



Each of these transactions is attractive and valuable, but when these deals are combined with each other inside the Ventas framework, there is an exponential increase in their value and the benefits that will be passed on to shareholders.

When the acquisition of the 118 high-quality, private pay Atria communities is completed, Ventas will become the largest owner of seniors housing communities in the country. The Atria acquisition gives our shareholders access to a higher growth profile and significantly enhances our private pay revenue stream by adding excellent senior living communities in high-income, densely populated, desirable coastal markets to our portfolio. Atria is the fourth largest provider of assisted living housing in the country, and its long-tenured and successful management team will continue to manage these communities for us after the closing. Ventas shareholders should benefit from earnings growth that will result from the combination of an economic recovery, Atria’s strong operating model, the limited supply of high-quality competitive assets in the major metropolitan markets where Atria operates, and increased NOI at newly renovated communities.

In a collaborative transaction with Sunrise, Ventas acquired Sunrise’s minority interests in 58 seniors housing communities. This transaction used a small amount of shareholder capital – $41 million – but provided major benefits to Ventas and Sunrise, a signature win-win outcome for both companies. The transaction gave us 100 percent ownership of our 79 Sunrise-managed assets and an excellent, accretive return. Sunrise used the proceeds to make itself a stronger company. And our new management contracts with Sunrise created a shared focus on future growth in NOI and solidified a treasured relationship with the global leader in seniors housing.

With baby boomers becoming Medicare eligible and 32 million newly insured Americans, visits to physicians in medical office buildings will increase as cost containment measures drive patients to the lowest cost, most clinically appropriate setting.

# LILLBRIDGE \( ^{SM} \) 

## A VENTAS COMPANY

With our acquisition of Lillibridge we became the leading national integrated healthcare real estate company in the MOB and outpatient sector. Lillibridge is unique in its ability to bridge the complex worlds of healthcare real estate and healthcare delivery. We are committed to this space because visits to MOBs are expected to grow by 30 percent in the coming decade, driven by baby boomers who become Medicare eligible starting this year, newly insured patients under healthcare reform, and healthcare cost containment measures that will drive more patients to lower cost settings. Hospitals, facing constrained capital sources, will seek to sell their real estate to more efficient owners like Ventas in order to raise funds to support their core business of delivering healthcare and to fund consolidation opportunities.

Combining Lillibridge’s expertise and reputation with Ventas’s cost of capital advantage should create outstanding opportunities in this $175 billion fragmented market as we strive to scale the Lillibridge platform with accretive MOB acquisitions.

Outpatient Visits to Significantly Outpace
Inpatient Visits by 2020






All of our work will create a lasting enterprise poised for growth and success and strong enough to thrive in any external environment. Going forward we intend to continue making smart, creative acquisitions as we maintain our role as an industry thought leader.

## More, More and More

Our healthcare real estate and seniors housing portfolio benefits from three big trends: more individuals using healthcare services, more individuals aging, and more patients being treated in the lowest cost, most clinically appropriate setting.

If healthcare reform will create access to the healthcare system for more individuals, then healthcare real estate should experience increased demand, particularly in low-cost settings like MOBs and skilled nursing facilities (SNFs). Medicare and Medicaid reimbursements will ebb and flow, but our senior position as a triple-net landlord for our high-quality, post-acute care portfolio of SNFs and long-term acute care hospitals (LTACs) should insulate our rent from those changes. Recent comparable market transactions at very high prices have demonstrated significant underappreciated value in our post-acute care assets, the structured protected downside from our pooled multi-facility master leases and their predictable and growing cash flows.
Healthcare reform should add about 32 million newly insured Americans to the healthcare system who will receive care from physicians who occupy our MOBs rather than costly emergency rooms. Additionally, as 79 million baby boomers begin to turn 65 and qualify for Medicare, they are likely to become more frequent users of healthcare services, much of it provided outside hospital walls in our buildings.

Our bias in favor of seniors housing is profound because we know the demand for this communal senior living setting is indisputable. The fundamental driver of a move to seniors housing is the need for seniors and elderly residents to reside in communities that provide assistance at varying levels. The over-85 age cohort is growing at three times the population overall, and that is projected to be true for the next 25 years. Nearly six million people over the age of 85 live in the U.S. and currently about one in seven lives in seniors housing. That penetration rate is expected to increase as seniors realize the benefits of living in high-quality settings with daily activities and opportunities for engagement.

As the economy and housing market inch forward in their recovery, we have seen noteworthy improvements in the occupancy rates of our Sunrise portfolio, which increased by an incredible 2 percentage points in the second half of 2010 to over 90 percent at year-end.

79 Million Baby Boomers Start to Become Medicare Eligible in 2011



Per Capita Healthcare Spending Increases
Exponentially with Age



Source: Centers for Medicare & Medicaid Services



While demand is growing, supply in the seniors housing segment has remained constrained since new construction peaked in 2007. New development essentially stopped when the financial crisis took hold and, even as financing has loosened this year, the near- and intermediate-term supply and demand fundamentals for seniors housing remain extremely positive.

Both our Sunrise and Atria assets are high-quality senior living communities located in affluent zip codes in major metropolitan markets with barriers to new construction, managed by excellent and dedicated care providers who have sophisticated reporting and compliance systems. These important competencies should give our shareholders confidence in our seniors housing operating portfolio.

Moreover, we believe that investors will come to value seniors housing operating assets as they do multi-family properties, which are prized for their granular multi-site cash flows, demographically driven demand and residential characteristics. Indeed, data show that seniors housing cash flows performed the best of any asset class during the recent downturn.



* Major sectors include office, apartments, malls, industrial, and strip centers.

Source: Green Street Advisors

## The Art of Excellence: Increase Cash Flow and Manage Risk

We continued to manage our balance sheet conservatively in a way that enabled us to protect shareholder value and remain highly profitable during the financial crisis. While the financial markets are now favorable and the economy shows signs of recovery, we will never forget that our main obligation is to not take excessive risk with our shareholders' capital. History proves that firms create the greatest value for their shareholders by coupling moderate leverage and risk with growth in cash flow and dividends. These are also our core principles for decision making that have been essential elements in our success.

During 2010, we worked arduously to capitalize on financing opportunities that would optimize our capital structure and fund the Atria acquisition. In November we were overwhelmed by investor demand for our planned $300 million offering of five-year unsecured bonds. We increased the offering to $400 million and priced the deal to yield 3.23 percent – the lowest five-year coupon outstanding in the REIT sector.

Our bondholders understand that Ventas cash flows are reliable and that we care about maintaining a strong credit profile. We ended 2010 with lower levels of mortgage debt, fantastic liquidity, a lower cost of capital and an enviable 26 percent debt-to-enterprise value ratio. And we began 2011 with positive rating actions from all three nationally recognized credit rating agencies that demonstrate our momentum and strength, and signal improving borrowing conditions ahead for Ventas.

The need-based nature of seniors housing and powerful demographic demand make it a compelling investment.



## Strong Leadership Drives Performance

The heart of our Company’s success is our tenured, talented and collaborative team that has been enhanced with key additions over the years. All of us are driven by a unified commitment to build shareholder value. One of the highlights of the year for me was promoting Raymond J. Lewis to President of Ventas, with oversight of investments and asset management of our soon to be $23 billion portfolio. To fill Ray’s role as Chief Investment Officer, we hired John D. Cobb, who brings great experience in healthcare and seniors housing investment and operations, a stellar reputation and terrific industry relationships.

We are also fortunate that well-respected MOB leader Todd W. Lillibridge will run our combined medical office and outpatient segment. Ventas veteran Vince Cozzi has joined Todd as our MOB Chief Investment Officer. And other members of our senior management team bring incredible intellect, integrity and work ethic to Ventas, enabling us to continue our strong record of accomplishment: Rick Riney, Rick Schweinhart, Brian Wood, Tim Doman, Rob Brehl and Julie Dreixler remain our stalwarts.

In 2010, our Board of Directors was delighted to welcome Cushman & Wakefield President and Chief Executive Officer Glenn J. Rufrano, who is known and respected internationally for his accomplishments, his integrity and his breadth of experience in public and private real estate. Glenn’s appointment reinforces the excellence and independence of our Board of Directors.

## Next Steps

Ventas is at the forefront of healthcare real estate, which is the fastest growing sector within the REIT world. No other area is changing so dramatically so quickly. I marvel at the shifting dynamics benefiting Ventas: changing demographics, the movement of assets from owner-operators to more efficient REIT holders, changes in the healthcare delivery system which are spurring integration of hospital and post-acute care services, evolving investment guidelines for healthcare REITs and industry consolidation. Change creates opportunities for those strong, nimble and hardworking enough to take advantage of it. Ventas is well prepared to prosper from a dynamic environment just as we have done in the past.

We are ready and energized about the opportunities we expect to see in 2011 and beyond. We are positioned for reliability and growth, as the national leader of seniors housing and MOBs and the landlord of a highly diversified portfolio of cash-flowing, productive, high-quality healthcare assets. We have the assets, a clear strategic growth and diversification plan, a significant cost of capital advantage, strong relationships with industry participants and a track record for doing what we say and creating value. But the best thing we have is our people who believe, as I do, that working for Ventas is a privilege. I continue to value enormously the respect, trust, support and encouragement I receive from Ventas employees. I am also grateful to – and draw strength from – our dedicated and expert Board of Directors, whose members are equally committed to our success and our guiding principles of value creation and excellent governance.

Now, as in the past, we are all about our shareholders. We exist to provide consistent superior risk-adjusted returns to you with integrity and transparency. We look forward to completing our pending acquisitions quickly and successfully and to delivering an outstanding year and decade. Nothing short of sustained excellence will do.

Sincerely,



Debra A. Cafaro

Chairman and Chief Executive Officer

March 9, 2011



## Supplemental Data \( ^{*} \) 

## Funds From Operations (FFO) and Normalized FFO

<table><tr><td rowspan="2">For the Years Ended December 31,</td><td rowspan="2">2010</td><td rowspan="2">2009</td><td rowspan="2">2008</td><td colspan="3">Per diluted share \( ^{1} \)</td></tr><tr><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>(in thousands, except per share amounts)</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net income attributable to common stockholders</td><td>$246,167</td><td>$266,495</td><td>$222,603</td><td>$ 1.56</td><td>$ 1.74</td><td>$ 1.59</td></tr><tr><td>Adjustments:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Real estate depreciation and amortization</td><td>203,966</td><td>198,841</td><td>228,778</td><td>1.29</td><td>1.30</td><td>1.64</td></tr><tr><td>Real estate depreciation related to noncontrolling interest</td><td>(6,217)</td><td>(6,349)</td><td>(6,251)</td><td>(0.04)</td><td>(0.04)</td><td>(0.04)</td></tr><tr><td>Real estate depreciation related to unconsolidated entities</td><td>2,367</td><td>-</td><td>-</td><td>0.02</td><td>-</td><td>-</td></tr><tr><td>Discontinued operations:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Gain on sale of real estate assets</td><td>(25,241)</td><td>(67,305)</td><td>(39,026)</td><td>(0.16)</td><td>(0.44)</td><td>(0.28)</td></tr><tr><td>Depreciation on real estate assets</td><td>464</td><td>1,727</td><td>6,253</td><td>0.00</td><td>0.01</td><td>0.04</td></tr><tr><td>FFO</td><td>421,506</td><td>393,409</td><td>412,357</td><td>2.67</td><td>2.58</td><td>2.95</td></tr><tr><td>Merger-related expenses and deal costs</td><td>19,243</td><td>13,015</td><td>4,460</td><td>0.12</td><td>0.09</td><td>0.03</td></tr><tr><td>Loss (gain) on extinguishment of debt</td><td>9,791</td><td>6,080</td><td>(2,398)</td><td>0.06</td><td>0.04</td><td>(0.02)</td></tr><tr><td>Income tax expense (benefit)</td><td>2,930</td><td>(3,459)</td><td>(17,616)</td><td>0.02</td><td>(0.02)</td><td>(0.13)</td></tr><tr><td>Amortization of other intangibles</td><td>511</td><td>-</td><td>-</td><td>0.00</td><td>-</td><td>-</td></tr><tr><td>Reversal of contingent liability</td><td>-</td><td>-</td><td>(23,328)</td><td>-</td><td>-</td><td>(0.17)</td></tr><tr><td>Provision for loan losses</td><td>-</td><td>-</td><td>5,994</td><td>-</td><td>-</td><td>0.04</td></tr><tr><td>Normalized FFO</td><td>$453,981</td><td>$409,045</td><td>$379,469</td><td>$ 2.88</td><td>$ 2.68</td><td>$ 2.71</td></tr></table>

1 Per share amounts may not add due to rounding.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values, instead, have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. To overcome this problem, we consider FFO and normalized FFO appropriate measures of operating performance of an equity REIT. Moreover, we believe that normalized FFO provides useful information because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items. We use the National Association of Real Estate Investment Trusts (NAREIT) definition of FFO. NAREIT defines FFO as net income (computed in accordance with generally accepted accounting principles (GAAP)), excluding gains or losses from sales of real estate property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

## Adjusted EBITDA

<table><tr><td>For the Years Ended December 31,</td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>(in thousands)</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>$ 249,729</td><td>$269,360</td><td>$225,287</td></tr><tr><td>Adjustments:</td><td></td><td></td><td></td></tr><tr><td>Interest</td><td>179,918</td><td>179,736</td><td>213,132</td></tr><tr><td>Loss (gain) on extinguishment of debt</td><td>9,791</td><td>6,080</td><td>(2,398)</td></tr><tr><td>Taxes (including amounts in general, administrative and professional fees)</td><td>6,280</td><td>(519)</td><td>(14,385)</td></tr><tr><td>Reversal of contingent liability</td><td>-</td><td>-</td><td>(23,328)</td></tr><tr><td>Depreciation and amortization</td><td>206,064</td><td>201,258</td><td>235,754</td></tr><tr><td>Non-cash stock-based compensation expense</td><td>14,078</td><td>11,882</td><td>9,976</td></tr><tr><td>Merger-related expenses and deal costs</td><td>19,243</td><td>13,015</td><td>4,460</td></tr><tr><td>Gain on sale of real estate assets</td><td>(25,241)</td><td>(67,305)</td><td>(39,026)</td></tr><tr><td>Provision for loan losses</td><td>-</td><td>-</td><td>5,994</td></tr><tr><td>Adjusted EBITDA</td><td>$659,862</td><td>$613,507</td><td>$615,466</td></tr></table>

We consider Adjusted EBITDA an important supplemental measure to net income because it provides additional information with which to evaluate the performance of our operations and serves as another indication of our ability to service debt.

FFO, normalized FFO and Adjusted EBITDA presented herein are not necessarily identical to similar measures presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO and Adjusted EBITDA should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are FFO, normalized FFO and Adjusted EBITDA necessarily indicative of sufficient cash flow to fund all of our needs. We believe that in order to facilitate a clear understanding of our consolidated historical operating results, FFO, normalized FFO and Adjusted EBITDA should be examined in conjunction with net income as presented in our Consolidated Financial Statements.

* On January 1, 2009, we adopted Financial Accounting Standards Board guidance relating to convertible debt instruments that specifies that issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. See "Note 2 – Accounting Policies" of the Notes to Consolidated Financial Statements included in our 2010 Annual Report on Form 10-K for detail regarding the impact of this guidance on our Consolidated Financial Statements for the years ended December 31, 2010, 2009 and 2008.



## Directors and Officers

## Directors

Debra A. Cafaro
Chairman and Chief Executive Officer
Ventas, Inc.

Douglas Crocker II
Presiding Director of Ventas, Inc.
Retired, Vice Chairman and
Chief Executive Officer
Equity Residential Properties Trust

Ronald G. Geary
Retired, Chairman and
Chief Executive Officer
Res-Care, Inc.

Jay M. Gellert
President and Chief Executive Officer
Health Net, Inc.

Robert D. Reed
Senior Vice President and
Chief Financial Officer
Sutter Health

Sheli Z. Rosenberg
Retired, Vice Chairman
Equity Group Investments, LLC

## Investor Information

## Corporate Offices

111 South Wacker Drive
Suite 4800
Chicago, IL 60606
312-660-3800

10350 Ormsby Park Place
Suite 300
Louisville, KY 40223
502-357-9000

## Annual Meeting

The Annual Meeting of Stockholders will convene May 12, 2011, at 8:00 a.m. (Central time) at 111 S. Wacker Drive, 29th Floor, Chicago, IL 60606

## Corporate Data

Glenn J. Rufrano
President and Chief Executive Officer
Cushman & Wakefield, Inc.

James D. Shelton
Chairman
Legacy Hospital Partners, Inc.

Thomas C. Theobald
Senior Advisor
Chicago Growth Partners

## Committees of the Board

Audit and Compliance Committee
Geary (Chair), Reed, Rosenberg

Executive Compensation Committee
Gellert (Chair), Shelton, Theobald

Nominating and Governance Committee
Rosenberg (Chair), Crocker, Geary

Executive Committee
Theobald (Chair), Cafaro, Crocker,
Rosenberg

Investment Committee
Crocker (Chair), Cafaro, Shelton

## Stock Information

Ventas, Inc. is traded on the NYSE under the ticker symbol "VTR."

As of March 1, 2011, Ventas had 162,943,236 outstanding shares.

## Transfer Agent and Registrar

Wells Fargo Shareowner Services
P.O. Box 64874
St. Paul, MN 55164-0874
1-800-468-8716
www.shareowneronline.com

## Executive Officers

Debra A. Cafaro
Chairman and Chief Executive Officer

Raymond J. Lewis
President

Todd W. Lillibridge
Executive Vice President,
Medical Property Operations and
Chief Executive Officer,
Lillibridge Healthcare Services, Inc.

T. Richard Riney
Executive Vice President,
Chief Administrative Officer,
General Counsel and Corporate Secretary

Richard A. Schweinhart
Executive Vice President and
Chief Financial Officer

## Independent Auditors

Ernst & Young LLP

## Information

Copies of our 2010 Form 10-K and other filings with the Securities and Exchange Commission may be obtained without charge by contacting the Louisville corporate office or through our website at www.ventasreit.com.

## Member

National Association of Real Estate Investment Trusts, Inc.



## AVENTAS \( ^{®} \) 

www.ventasreit.com
1-877-4VENTAS