Borrowing Arrangements

The following is a summary of our senior notes payable and other debt as of December 31, 2013 and 2012:



	2013			2012
	(In thousands)
Unsecured revolving credit facilities	$	376,343		$	540,727
6.25% Senior Notes due 2013	—			269,850
Unsecured term loan due 2015 (1)	—			130,336
3.125% Senior Notes due 2015	400,000			400,000
6% Senior Notes due 2015	234,420			234,420
1.55% Senior Notes due 2016	550,000			—
Unsecured term loan due 2017 (1)	—			375,000
Unsecured term loan due 2018	—			180,000
2.00% Senior Notes due 2018	700,000			700,000
Unsecured term loan due 2018 (2)	200,000			—
Unsecured term loan due 2019 (2)	800,702			—
4.00% Senior Notes due 2019	600,000			600,000
2.700% Senior Notes due 2020	500,000			—
4.750% Senior Notes due 2021	700,000			700,000
4.25% Senior Notes due 2022	600,000			600,000
3.25% Senior Notes due 2022	500,000			500,000
6.90% Senior Notes due 2037	52,400			52,400
6.59% Senior Notes due 2038	22,973			22,973
5.45% Senior Notes due 2043	258,750			—
5.70% Senior Notes due 2043	300,000			—
Mortgage loans and other (3) (4)	2,524,889			2,880,609
Total	9,320,477			8,186,315
Capital lease obligations	—			142,412
Unamortized fair value adjustment	69,611			111,623
Unamortized discounts	(25,096		)	(26,704		)
Senior notes payable and other debt	$	9,364,992		$	8,413,646

_______


(1)	These amounts represent in aggregate the approximate $500.0 million of borrowings outstanding under our previous unsecured term loan facility. Certain amounts included in the 2015 tranche were in the form of Canadian dollar borrowings.


(2)	These amounts represent in aggregate the approximate $1.0 billion of unsecured term loan borrowings under our new unsecured credit facility. Certain amounts included in the 2019 tranche are in the form of Canadian dollar borrowings.


(3)	Excludes debt related to real estate assets classified as held for sale as of December 31, 2013 and 2012, respectively. The total mortgage debt for these properties as of December 31, 2013 and 2012 was $13.1 million and $23.2 million, respectively, and is included in accounts payable and other liabilities on our Consolidated Balance Sheets.


(4)	Subsequent to December 31, 2013, we repaid in full approximately $42.7 million of the mortgage loans outstanding as of December 31, 2013.

Unsecured Revolving Credit Facility and Unsecured Term Loans

On December 9, 2013, we entered into a new $3.0 billion unsecured credit facility that replaced our previous $2.0 billion unsecured revolving credit facility, as well as our $125 million term loan that was scheduled to mature in 2015, our $375 million term loan that was scheduled to mature in 2017 and our $180 million term loan that was scheduled to mature in 2018. The new unsecured credit facility is comprised of a $2.0 billion revolving credit facility initially priced at LIBOR plus 1.0%, and a $200.0 million four-year term loan and an $800.0 million five-year term loan, each initially priced at LIBOR plus 1.05%. The new revolving credit facility matures in January 2018, but may be extended, at our option subject to the satisfaction of certain conditions, for an additional period of one year. The new $200.0 million and $800.0 million term loans mature in January 2018 and January 2019, respectively. The new unsecured credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.5 billion.

Proceeds of the new term loans were used to repay amounts outstanding under our previous revolving credit facility and approximately $680 million outstanding under our previous term loans.

Our unsecured credit facility imposes certain customary restrictions on us, including restrictions pertaining to: (i) liens; (ii) investments; (iii) the incurrence of additional indebtedness; (iv) mergers and dissolutions; (v) certain dividend, distribution and other payments; (vi) permitted businesses; (vii) transactions with affiliates; (viii) agreements limiting certain liens; and (ix) the maintenance of certain consolidated total leverage, secured debt leverage, unsecured debt leverage and fixed charge coverage ratios and minimum consolidated adjusted net worth, and contains customary events of default.

As of December 31, 2013, we had $376.3 million of borrowings outstanding, $14.9 million of letters of credit outstanding and $1.6 billion of unused borrowing capacity available under our unsecured revolving credit facility.

We recognized a loss on extinguishment of debt of $1.5 million and $2.4 million for the years ended December 31, 2013 and 2011, respectively, representing the write-off of unamortized deferred financing fees as a result of amending our previous unsecured revolving credit facilities.

Senior Notes

As of December 31, 2013, we had outstanding $5.1 billion aggregate principal amount of senior notes issued by our subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”) ($4.3 billion of which was co-issued by Ventas Realty’s wholly owned subsidiary, Ventas Capital Corporation), and approximately $309.8 million aggregate principal amount of senior notes that were issued by NHP and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with the NHP acquisition.

In September 2013, we issued and sold: $550.0 million aggregate principal amount of 1.55% senior notes due 2016 at a public offering price equal to 99.910% of par, for total proceeds of $549.5 million before the underwriting discount and expenses; and $300.0 million aggregate principal amount of 5.70% senior notes due 2043 at a public offering price equal to 99.628% of par, for total proceeds of $298.9 million before the underwriting discount and expenses.

In March 2013, we issued and sold: $258.8 million aggregate principal amount of 5.45% senior notes due 2043 at a public offering price equal to par, for total proceeds of $258.8 million before the underwriting discounts and expenses; and $500.0 million aggregate principal amount of 2.700% senior notes due 2020 at a public offering price equal to 99.942% of par, for total proceeds of $499.7 million before the underwriting discount and expenses.

In February 2013, we repaid in full, at par, $270.0 million principal amount then outstanding of our 6.25% senior notes due 2013 upon maturity.

In December 2012, we issued and sold $700.0 million aggregate principal amount of 2.00% senior notes due 2018 at a public offering price equal to 99.739% of par, for total proceeds of $698.2 million before the underwriting discount and expenses.

In August 2012, we initially issued and sold $275.0 million aggregate principal amount of 3.25% senior notes due 2022 (the “2022 Notes”) at a public offering price equal to 99.027% of par, for total proceeds of $272.3 million before the underwriting discount and expenses. In December 2012, we issued and sold an additional $225.0 million principal amount of 2022 Notes at a public offering price equal to 98.509% of par, for total proceeds of $221.6 million before the underwriting discount and expenses.

In April 2012, we issued and sold $600.0 million aggregate principal amount of 4.00% senior notes due 2019 at a public offering price equal to 99.489% of par, for total proceeds of $596.9 million before the underwriting discount and expenses.

In February 2012, we issued and sold $600.0 million aggregate principal amount of 4.25% senior notes due 2022 at a public offering price equal to 99.214% of par, for total proceeds of $595.3 million before the underwriting discount and expenses.

During 2012, we repaid in full, at par, $155.4 million aggregate principal amount then outstanding of our 9% senior notes due 2012 and our 8.25% senior notes due 2012 upon maturity, and we redeemed: all $225.0 million principal amount then outstanding of our 6¾% senior notes due 2017 at a redemption price equal to 103.375% of par, plus accrued and unpaid interest to the redemption date; and all $200.0 million principal amount then outstanding of our 6½% senior notes due 2016 at a redemption price equal to 103.25% of par, plus accrued and unpaid interest to the redemption date, in each case pursuant to the terms of the applicable indenture governing the notes. As a result of these redemptions, we recognized a total loss on extinguishment of debt of $39.7 million.

In May 2011, we issued and sold $700.0 million aggregate principal amount of 4.750% senior notes due 2021 at a public offering price equal to 99.132% of par, for total proceeds of $693.9 million before the underwriting discount and expenses.

During 2011, we repaid in full, at par, $339.0 million principal amount then outstanding of our 6.50% senior notes due 2011 upon maturity, and we redeemed $200.0 million principal amount outstanding of our 6½% senior notes due 2016 at a redemption price equal to 103.25% of par, plus accrued and unpaid interest to the redemption date, pursuant to the terms of the indenture governing the notes. As a result of this redemption, we recognized a loss on extinguishment of debt of $8.7 million.

All of Ventas Realty’s senior notes are unconditionally guaranteed by Ventas. Ventas Realty’s senior notes are part of our and Ventas Realty’s general unsecured obligations, ranking equal in right of payment with all of our and Ventas Realty’s existing and future senior obligations and ranking senior in right of payment to all of our and Ventas Realty’s existing and future subordinated indebtedness. However, Ventas Realty’s senior notes are effectively subordinated to our and Ventas Realty’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. Ventas Realty’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of our subsidiaries (other than Ventas Realty and, with respect to those senior notes co-issued by Ventas Capital Corporation, Ventas Capital Corporation).

NHP LLC’s senior notes are part of NHP LLC’s general unsecured obligations, ranking equal in right of payment with all of NHP LLC’s existing and future senior obligations and ranking senior to all of NHP LLC’s existing and future subordinated indebtedness. However, NHP LLC’s senior notes are effectively subordinated to NHP LLC’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. NHP LLC’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of its subsidiaries.

Ventas Realty may redeem each series of its senior notes and NHP LLC may redeem each series of its senior notes (other than our 6.90% senior notes due 2037 and our 6.59% senior notes due 2038), in whole at any time or in part from time to time, prior to maturity at the redemption prices set forth in the applicable indenture (which include, in many instances, a make-whole premium), plus, in each case, accrued and unpaid interest thereon to the redemption date.

Our 6.90% senior notes due 2037 are subject to repurchase at the option of the holders, at par, on October 1 in each of 2017 and 2027, and our 6.59% senior notes due 2038 are subject to repurchase at the option of the holders, at par, on July 7 in each of 2018, 2023 and 2028.

Mortgages

At December 31, 2013, we had 201 mortgage loans outstanding in the aggregate principal amount of $2.5 billion and secured by 209 of our properties. Of these loans, 184 loans in the aggregate principal amount of $2.2 billion bear interest at fixed rates ranging from 3.9% to 8.6% per annum, and 17 loans in the aggregate principal amount of $369.7 million bear interest at variable rates ranging from 0.7% to 2.6% per annum as of December 31, 2013. At December 31, 2013, the weighted average annual rate on our fixed rate mortgage loans was 6.0%, and the weighted average annual rate on our variable rate mortgage loans was 1.7%. Our mortgage loans had a weighted average maturity of 5.5 years as of December 31, 2013.

During 2013, we assumed or originated mortgage debt of $178.8 million and repaid in full mortgage loans outstanding in the aggregate principal amount of $493.7 million, and recognized a net gain on extinguishment of debt of $0.5 million in connection with these repayments.

During 2012, we assumed mortgage debt of $380.3 million and repaid in full mortgage loans outstanding in the aggregate principal amount of $344.2 million, and recognized a gain on extinguishment of debt of $2.1 million in connection with these repayments.

Scheduled Maturities of Borrowing Arrangements and Other Provisions

As of December 31, 2013, our indebtedness had the following maturities:



	Principal Amount Due at Maturity		Unsecured Credit Facility(1)		Scheduled Periodic Amortization		Total Maturities
	(In thousands)
2014	$	95,657	$	—	$	45,952	$	141,609
2015	929,941		—		40,730		970,671
2016	960,917		—		33,708		994,625
2017 (2)	540,072		—		21,964		562,036
2018	1,082,496		376,343		15,446		1,474,285
Thereafter (3)	5,030,288		—		146,963		5,177,251
Total maturities	$	8,639,371	$	376,343	$	304,763	$	9,320,477


(1)	At December 31, 2013, we had $94.8 million of unrestricted cash and cash equivalents, for $281.5 million of net borrowings outstanding under our unsecured revolving credit facility.


(2)	Excludes $13.1 million of mortgage debt related to a real estate asset classified as held for sale as of December 31, 2013 that is scheduled to mature in 2017.


(3)	Includes $52.4 million aggregate principal amount of our 6.90% senior notes due 2037 that is subject to repurchase, at the option of the holders, on October 1 in each of 2017 and 2027, and $23.0 million aggregate principal amount of 6.59% senior notes due 2038 that is subject to repurchase, at the option of the holders, on July 7 in each of 2018, 2023 and 2028.

The instruments governing our outstanding indebtedness contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things: (i) incur debt; (ii) make certain dividends, distributions and investments; (iii) enter into certain transactions; and/or (iv) merge, consolidate or sell certain assets. Ventas Realty’s senior notes also require us and our subsidiaries to maintain total unencumbered assets of at least 150% of our unsecured debt. Our unsecured credit facility also requires us to maintain certain financial covenants pertaining to, among other things, our consolidated total leverage, secured debt, unsecured debt, fixed charge coverage and net worth.

As of December 31, 2013, we were in compliance with all of these covenants.

Derivatives and Hedging

In the normal course of our business, we are exposed to the effects of interest rate movements on future cash flows under our variable rate debt obligations, loans receivable and marketable debt securities and foreign currency exchange rate movements on our senior living operations. We follow established risk management policies and procedures, including the use of derivative instruments, to mitigate these risks.

For interest rate exposures, we use derivatives primarily to fix the rate on our variable rate debt and to manage our borrowing costs. We do not use derivative instruments for trading or speculative purposes, and we have a policy of entering into contracts only with major financial institutions based upon their credit ratings and other factors. When considered together with the underlying exposure that the derivative is designed to hedge, we do not expect that the use of derivatives in this manner would have any material adverse effect on our future financial condition or results of operations.

As of December 31, 2013, our variable rate debt obligations of $1.7 billion reflect, in part, the effect of $153.7 million notional amount of interest rate swaps with a maturity of March 21, 2016 that effectively convert fixed rate debt to variable rate debt. As of December 31, 2013, our fixed rate debt obligations of $7.6 billion reflect, in part, the effect of $60.0 million notional amount of interest rate swaps with maturities ranging from March 2, 2015 to April 1, 2019, in each case that effectively convert variable rate debt to fixed rate debt.

Capital Leases

As of December 31, 2012, we leased eight seniors housing communities pursuant to arrangements that were accounted for as capital leases. In January 2013, we acquired these facilities for aggregate consideration of $145.0 million, thereby eliminating our capital lease obligation.

Unamortized Fair Value Adjustment

As of December 31, 2013, the unamortized fair value adjustment related to the long-term debt we assumed in connection with various acquisitions was $69.6 million and will be recognized as effective yield adjustments over the remaining terms of the instruments. The estimated aggregate amortization of the fair value adjustment related to long-term debt (which is reflected as a reduction of interest expense) was $33.5 million for the year ended December 31, 2013 and for each of the next five years will be as follows: 2014—$25.4 million; 2015—$15.7 million; 2016—$9.6 million; 2017—$5.6 million; and 2018—$2.0 million.