UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2014
OR
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                        TO
Commission file number: 1-10989
 
Ventas, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
 
61-1055020
(I.R.S. Employer
Identification No.)
353 N. Clark Street, Suite 3300
Chicago, Illinois
(Address of Principal Executive Offices)
60654
(Zip Code)
(877) 483-6827
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x     No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x     No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
  (Do not check if a
smaller reporting company)
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨     No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class of Common Stock:
 
Outstanding at October 22, 2014:
Common Stock, $0.25 par value
 
294,318,374


VENTAS, INC.
FORM 10-Q
INDEX

 
 
 
 
 
 
 
 
 
Page
 
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013
 
 
 
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2014 and 2013
 
 
 
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013
 
 
 
Consolidated Statements of Equity for the Nine Months Ended September 30, 2014 and the Year Ended December 31, 2013
 
 
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I—FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VENTAS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
 
September 30,
2014
 
December 31,
2013
Assets
 
 
 
Real estate investments:
 
 
 
Land and improvements
$
1,937,888

 
$
1,855,968

Buildings and improvements
19,664,973

 
18,457,028

Construction in progress
116,975

 
80,415

Acquired lease intangibles
1,039,949

 
1,010,181

 
22,759,785

 
21,403,592

Accumulated depreciation and amortization
(3,833,974
)
 
(3,328,006
)
Net real estate property
18,925,811

 
18,075,586

Secured loans receivable and investments, net
407,551

 
376,229

Investments in unconsolidated entities
88,175

 
91,656

Net real estate investments
19,421,537

 
18,543,471

Cash and cash equivalents
64,595

 
94,816

Escrow deposits and restricted cash
78,746

 
84,657

Deferred financing costs, net
64,898

 
62,215

Other assets
1,021,389

 
946,335

Total assets
$
20,651,165

 
$
19,731,494

Liabilities and equity
 
 
 
Liabilities:
 
 
 
Senior notes payable and other debt
$
10,469,106

 
$
9,364,992

Accrued interest
69,112

 
54,349

Accounts payable and other liabilities
965,240

 
1,001,515

Deferred income taxes
361,454

 
250,167

Total liabilities
11,864,912

 
10,671,023

Redeemable OP unitholder and noncontrolling interests
163,080

 
156,660

Commitments and contingencies

 

Equity:
 
 
 
Ventas stockholders’ equity:
 
 
 
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued
—

 
—

Common stock, $0.25 par value; 600,000 shares authorized, 294,359 and 297,901 shares issued at September 30, 2014 and December 31, 2013, respectively
73,603

 
74,488

Capital in excess of par value
9,859,490

 
10,078,592

Accumulated other comprehensive income
16,156

 
19,659

Retained earnings (deficit)
(1,398,378
)
 
(1,126,541
)
Treasury stock, 32 and 3,712 shares at September 30, 2014 and December 31, 2013, respectively
(2,075
)
 
(221,917
)
Total Ventas stockholders’ equity
8,548,796

 
8,824,281

Noncontrolling interest
74,377

 
79,530

Total equity
8,623,173

 
8,903,811

Total liabilities and equity
$
20,651,165

 
$
19,731,494

See accompanying notes.

1

VENTAS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Rental income:
 
 
 
 
 
 
 
Triple-net leased
$
244,206

 
$
218,698

 
$
724,778

 
$
644,403

Medical office buildings
116,598

 
114,779

 
346,711

 
335,472

 
360,804

 
333,477

 
1,071,489

 
979,875

Resident fees and services
396,247

 
359,112

 
1,141,781

 
1,039,876

Medical office building and other services revenue
7,573

 
4,146

 
18,240

 
11,331

Income from loans and investments
14,043

 
14,448

 
39,435

 
45,284

Interest and other income
368

 
66

 
814

 
1,901

Total revenues
779,035

 
711,249

 
2,271,759

 
2,078,267

Expenses:
 
 
 
 
 
 
 
Interest
98,469

 
83,764

 
277,811

 
244,635

Depreciation and amortization
201,224

 
177,038

 
585,636

 
524,033

Property-level operating expenses:
 
 
 
 
 
 
 
Senior living
265,274

 
244,316

 
762,993

 
706,561

Medical office buildings
41,147

 
40,566

 
119,827

 
115,010

 
306,421

 
284,882

 
882,820

 
821,571

Medical office building services costs
4,568

 
1,651

 
9,565

 
4,957

General, administrative and professional fees
29,466

 
28,659

 
93,638

 
84,757

Loss (gain) on extinguishment of debt, net
2,414

 
(189
)
 
5,079

 
(909
)
Merger-related expenses and deal costs
16,749

 
6,208

 
37,108

 
17,137

Other
15,229

 
4,353

 
25,321

 
13,325

Total expenses
674,540

 
586,366

 
1,916,978

 
1,709,506

Income before (loss) income from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
104,495

 
124,883

 
354,781

 
368,761

(Loss) income from unconsolidated entities
(47
)
 
110

 
549

 
533

Income tax benefit (expense)
1,887

 
2,780

 
(4,820
)
 
13,100

Income from continuing operations
106,335

 
127,773

 
350,510

 
382,394

Discontinued operations
(259
)
 
(9,174
)
 
2,517

 
(36,164
)
Gain on real estate dispositions
3,625

 
—

 
16,514

 
—

Net income
109,701

 
118,599

 
369,541

 
346,230

Net income attributable to noncontrolling interest
569

 
303

 
964

 
1,161

Net income attributable to common stockholders
$
109,132

 
$
118,296

 
$
368,577

 
$
345,069

Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.37

 
$
0.43

 
$
1.24

 
$
1.30

Discontinued operations
(0.00
)
 
(0.03
)
 
0.01

 
(0.12
)
Net income attributable to common stockholders
$
0.37

 
$
0.40

 
$
1.25

 
$
1.18

Diluted:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.37

 
$
0.43

 
$
1.23

 
$
1.29

Discontinued operations
(0.00
)
 
(0.03
)
 
0.01

 
(0.12
)
Net income attributable to common stockholders
$
0.37

 
$
0.40

 
$
1.24

 
$
1.17

Weighted average shares used in computing earnings per common share:
 
 
 
 
 
 
 
Basic
294,030

 
292,818

 
293,965

 
292,308

Diluted
296,495

 
295,190

 
296,411

 
294,788

Dividends declared per common share
$
0.725

 
$
0.67

 
$
2.175

 
$
2.01

See accompanying notes.

2

VENTAS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Net income
$
109,701

 
$
118,599

 
$
369,541

 
$
346,230

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Foreign currency translation
(2,747
)
 
1,665

 
(3,320
)
 
(3,148
)
Change in unrealized gain on intra-entity currency loan
(10,138
)
 
—

 
(4,586
)
 
—

Change in unrealized gain on marketable securities
(334
)
 
(208
)
 
1,237

 
(1,015
)
Other
3,120

 
84

 
3,166

 
2,102

Total other comprehensive (loss) income
(10,099
)
 
1,541

 
(3,503
)
 
(2,061
)
Comprehensive income
99,602

 
120,140

 
366,038

 
344,169

Comprehensive income attributable to noncontrolling interest
569

 
303

 
964

 
1,161

Comprehensive income attributable to common stockholders
$
99,033

 
$
119,837

 
$
365,074

 
$
343,008

   
See accompanying notes.

3

VENTAS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Nine Months Ended September 30, 2014 and the Year Ended December 31, 2013
(Unaudited)
(In thousands, except per share amounts)
 
Common
Stock Par
Value
 
Capital in
Excess of
Par Value
 
Accumulated
Other
Comprehensive
Income
 
Retained
Earnings
(Deficit)
 
Treasury
Stock
 
Total Ventas
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total Equity
Balance at January 1, 2013
$
73,904

 
$
9,920,962

 
$
23,354

 
$
(777,927
)
 
$
(221,165
)
 
$
9,019,128

 
$
70,235

 
$
9,089,363

Net income
—

 
—

 
—

 
453,509

 
—

 
453,509

 
1,380

 
454,889

Other comprehensive loss
—

 
—

 
(3,695
)
 
—

 
—

 
(3,695
)
 
—

 
(3,695
)
Acquisition-related activity
—

 
(762
)
 
—

 
—

 
—

 
(762
)
 
12,717

 
11,955

Net change in noncontrolling interest
—

 
—

 
—

 
—

 
—

 
—

 
(8,202
)
 
(8,202
)
Dividends to common stockholders—$2.735 per share
—

 
—

 
—

 
(802,123
)
 
—

 
(802,123
)
 
—

 
(802,123
)
Issuance of common stock
517

 
140,826

 
—

 
—

 
—

 
141,343

 
—

 
141,343

Issuance of common stock for stock plans
19

 
5,983

 
—

 
—

 
6,638

 
12,640

 
—

 
12,640

Change in redeemable noncontrolling interest
—

 
(13,751
)
 
—

 
—

 
—

 
(13,751
)
 
3,400

 
(10,351
)
Adjust redeemable OP unitholder interests to current fair value
—

 
8,683

 
—

 
—

 
—

 
8,683

 
—

 
8,683

Purchase of OP units
—

 
(579
)
 
—

 
—

 
502

 
(77
)
 
—

 
(77
)
Grant of restricted stock, net of forfeitures
48

 
17,230

 
—

 
—

 
(7,892
)
 
9,386

 
—

 
9,386

Balance at December 31, 2013
74,488

 
10,078,592

 
19,659

 
(1,126,541
)
 
(221,917
)
 
8,824,281

 
79,530

 
8,903,811

Net income
—

 
—

 
—

 
368,577

 
—

 
368,577

 
964

 
369,541

Other comprehensive income
—

 
—

 
(3,503
)
 
—

 
—

 
(3,503
)
 
—

 
(3,503
)
Retirement of stock
(924
)
 
(220,152
)
 
—

 
—

 
221,076

 
—

 
—

 
—

Net change in noncontrolling interest
—

 
(2,689
)
 
—

 
—

 
—

 
(2,689
)
 
(7,658
)
 
(10,347
)
Dividends to common stockholders—$2.175 per share
—

 
—

 
—

 
(640,414
)
 
—

 
(640,414
)
 
—

 
(640,414
)
Issuance of common stock for stock plans
3

 
4,725

 
—

 
—

 
2,215

 
6,943

 
—

 
6,943

Change in redeemable noncontrolling interest
—

 
(31
)
 
—

 
—

 
—

 
(31
)
 
1,541

 
1,510

Adjust redeemable OP unitholder interests to current fair value
—

 
(12,157
)
 
—

 
—

 
—

 
(12,157
)
 
—

 
(12,157
)
Purchase of OP units
1

 
87

 
—

 
—

 
—

 
88

 
—

 
88

Grant of restricted stock, net of forfeitures
35

 
11,115

 
—

 
—

 
(3,449
)
 
7,701

 
—

 
7,701

Balance at September 30, 2014
$
73,603

 
$
9,859,490

 
$
16,156

 
$
(1,398,378
)
 
$
(2,075
)
 
$
8,548,796

 
$
74,377

 
$
8,623,173

See accompanying notes.

4

VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
For the Nine Months Ended September 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
369,541

 
$
346,230

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including amounts in discontinued operations)
587,176

 
569,325

Amortization of deferred revenue and lease intangibles, net
(14,775
)
 
(11,159
)
Other non-cash amortization
(616
)
 
(13,376
)
Stock-based compensation
16,792

 
15,010

Straight-lining of rental income, net
(29,644
)
 
(21,165
)
Loss (gain) on extinguishment of debt, net
5,079

 
(1,062
)
Gain on real estate dispositions (including amounts in discontinued operations)
(17,726
)
 
(2,241
)
Gain on real estate loan investments
(249
)
 
(3,598
)
Gain on sale of marketable securities
—

 
(856
)
Income tax expense (benefit)
4,420

 
(13,100
)
(Income) loss from unconsolidated entities
(549
)
 
707

Gain on re-measurement of equity interest upon acquisition, net
—

 
(1,241
)
Other
13,599

 
6,133

Changes in operating assets and liabilities:
 
 
 
Increase in other assets
(3,306
)
 
(28,132
)
Increase in accrued interest
14,835

 
14,624

Decrease in accounts payable and other liabilities
(24,605
)
 
(20,670
)
Net cash provided by operating activities
919,972

 
835,429

Cash flows from investing activities:
 
 
 
Net investment in real estate property
(1,184,036
)
 
(1,358,766
)
Purchase of noncontrolling interest
(3,588
)
 
(7,895
)
Investment in loans receivable and other
(66,436
)
 
(34,717
)
Proceeds from real estate disposals
112,746

 
29,191

Proceeds from loans receivable
55,573

 
299,156

Purchase of marketable securities
(46,689
)
 
—

Proceeds from sale or maturity of marketable securities
21,689

 
5,493

Funds held in escrow for future development expenditures
2,602

 
15,189

Development project expenditures
(71,375
)
 
(74,707
)
Capital expenditures
(56,235
)
 
(50,634
)
Other
(421
)
 
(411
)
Net cash used in investing activities
(1,236,170
)
 
(1,178,101
)
Cash flows from financing activities:
 
 
 
Net change in borrowings under credit facilities
(153,684
)
 
(92,586
)
Proceeds from debt
2,007,707

 
1,766,844

Repayment of debt
(905,117
)
 
(840,532
)
Payment of deferred financing costs
(14,946
)
 
(19,977
)
Issuance of common stock, net
—

 
106,002

Cash distribution to common stockholders
(640,414
)
 
(588,770
)
Cash distribution to redeemable OP unitholders
(4,214
)
 
(3,479
)
Purchases of redeemable OP units
—

 
(317
)
Contributions from noncontrolling interest
—

 
2,094

Distributions to noncontrolling interest
(6,760
)
 
(7,614
)
Other
(551
)
 
7,830

Net cash provided by financing activities
282,021

 
329,495

Net decrease in cash and cash equivalents
(34,177
)
 
(13,177
)
Effect of foreign currency translation on cash and cash equivalents
3,956

 
(59
)
Cash and cash equivalents at beginning of period
94,816

 
67,908

Cash and cash equivalents at end of period
$
64,595

 
$
54,672

See accompanying notes.

5


VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
(In thousands)
 
For the Nine Months Ended September 30,
 
2014
 
2013
Supplemental schedule of non-cash activities:
 
 
 
Assets and liabilities assumed from acquisitions:
 
 
 
Real estate investments
$
353,995

 
$
221,447

Other assets acquired
3,683

 
6,526

Debt assumed
228,150

 
183,848

Other liabilities
19,441

 
27,583

Deferred income tax liability
110,087

 
4,849

Noncontrolling interests
—

 
11,693

See accompanying notes.


6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—DESCRIPTION OF BUSINESS
Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”), an S&P 500 company, is a real estate investment trust (“REIT”) with a highly diversified portfolio of seniors housing and healthcare properties located throughout the United States, Canada and the United Kingdom. As of September 30, 2014 , we owned more than 1,500 properties (including properties classified as held for sale), including seniors housing communities, medical office buildings (“MOBs”), skilled nursing and other facilities, and hospitals, and we had two properties under development. Our company is currently headquartered in Chicago, Illinois.
We primarily acquire and own seniors housing and healthcare properties and lease them to unaffiliated tenants or operate them through independent third-party managers. As of September 30, 2014 , we leased a total of 907 properties (excluding MOBs and properties classified as held for sale) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and we engaged independent operators, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage a total of 270 of our seniors housing communities (excluding properties classified as held for sale) for us pursuant to long-term management agreements. Our two largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) leased from us 161 properties (excluding six properties included in investments in unconsolidated entities) and 86 properties, respectively, as of September 30, 2014 .
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and unsecured loans and other investments relating to seniors housing and healthcare operators or properties.
NOTE 2—ACCOUNTING POLICIES
The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 . The accompanying Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 18, 2014, as amended by Amendment No. 1 to our Annual Report on Form 10-K/A, filed with the SEC on September 4, 2014. Certain prior period amounts have been reclassified to conform to the current period presentation.
Principles of Consolidation
The accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

7

We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis.
As it relates to investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess limited partners’ rights and their impact on the presumption of control of the limited partnership by the sole general partner when an investor becomes the sole general partner, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We also apply this guidance to managing member interests in limited liability companies.
Redeemable OP Unitholder and Noncontrolling Interests
We own a majority interest in NHP/PMB L.P. (“NHP/PMB”), a limited partnership formed in 2008 to acquire properties from entities affiliated with Pacific Medical Buildings LLC. We consolidate NHP/PMB, as our wholly owned subsidiary is the general partner and exercises control of the partnership. As of September 30, 2014 , third party investors owned 2,447,878 Class A limited partnership units in NHP/PMB (“OP Units”), which represented 27.1% of the total units then outstanding, and we owned 6,597,865 Class B limited partnership units in NHP/PMB, representing the remaining 72.9% . At any time following the first anniversary of the date of their issuance, the OP Units may be redeemed at the election of the holder for cash or, at our option, 0.7866 shares of our common stock per unit, subject to adjustment in certain circumstances. We are party by assumption to a registration rights agreement with the holders of the OP Units that requires us, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of our common stock upon redemption of OP Units.
As redemption rights are outside of our control, the redeemable OP unitholder interests are classified outside of permanent equity on our Consolidated Balance Sheets. We reflect the redeemable OP unitholder interests at the greater of cost or fair value. As of September 30, 2014 and December 31, 2013 , the fair value of the redeemable OP unitholder interests was $119.5 million and $111.6 million , respectively. We recognize changes in fair value through capital in excess of par value, net of cash distributions paid and purchases by us of any OP Units. Our diluted earnings per share (“EPS”) includes the effect of any potential shares outstanding from redemption of the OP Units.
Certain noncontrolling interests of other consolidated joint ventures were also classified as redeemable at September 30, 2014 and December 31, 2013 . Accordingly, we record the carrying amount of these noncontrolling interests at the greater of their initial carrying amount (increased or decreased for the noncontrolling interest’s share of net income or loss and distributions) or the redemption value. Our joint venture partners have certain redemption rights with respect to their noncontrolling interests in these joint ventures that are outside of our control, and the redeemable noncontrolling interests are classified outside of permanent equity on our Consolidated Balance Sheets. We recognize changes in the carrying value of redeemable noncontrolling interests through capital in excess of par value.
Noncontrolling Interests
Excluding the redeemable noncontrolling interests described above, we present the portion of any equity that we do not own in entities that we control (and thus consolidate) as noncontrolling interests and classify those interests as a component of consolidated equity, separate from total Ventas stockholders’ equity, on our Consolidated Balance Sheets. For consolidated joint ventures with pro rata distribution allocations, net income or loss is allocated between the joint venture partners based on their respective stated ownership percentages. In other cases, net income or loss is allocated between the joint venture partners based on the hypothetical liquidation at book value method (the “HLBV method”). We account for purchases or sales of equity interests that do not result in a change of control as equity transactions, through capital in excess of par value. In addition, we include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Income.
Business Combinations
We account for acquisitions using the acquisition method and allocate the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of in-place leases, acquired lease contracts, tenant and customer relationships, trade names/trademarks and goodwill. We do not amortize goodwill, which represents the excess of the purchase price paid over the fair value of the net assets of the acquired business and is included in other assets on our Consolidated Balance Sheets.
We estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over the estimated remaining life of the building, not to exceed 35 years. We determine the allocated value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the

8

assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio.
The fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above and/or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized amounts of lease-related intangibles associated with that lease in operations at that time.
We estimate the fair value of tenant or other customer relationships acquired, if any, by considering the nature and extent of existing business relationships with the tenant or customer, growth prospects for developing new business with the tenant or customer, the tenant’s credit quality, expectations of lease renewals with the tenant, and the potential for significant, additional future leasing arrangements with the tenant, and we amortize that value over the expected life of the associated arrangements or leases, including the remaining terms of the related leases and any expected renewal periods. We estimate the fair value of trade names and trademarks using a royalty rate methodology and amortize that value over the estimated useful life of the trade name or trademark.
We calculate the fair value of long-term debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
Fair Values of Financial Instruments
Fair value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).
Level one inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level two inputs consist of inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves. Level three inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for that asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
We use the following methods and assumptions in estimating the fair value of our financial instruments.
•
Cash and cash equivalents - The carrying amount of unrestricted and restricted cash and cash equivalents reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
•
Loans receivable - We estimate the fair value of loans receivable using level two and level three inputs: we discount the future cash flows using current interest rates at which similar loans on the same terms and having the same maturities would be made to borrowers with similar credit ratings. Additionally, we determine the valuation allowance for losses, if any, on loans receivable using level three inputs.
•
Marketable debt securities - We estimate the fair value of corporate bonds using level two inputs: we observe quoted prices for similar assets or liabilities in active markets that we have the ability to access. We estimate the

9

fair value of certain government-sponsored pooled loan investments using level three inputs: we consider credit spreads, underlying asset performance and credit quality, default rates and any other applicable criteria.
•
Derivative instruments - With the assistance of a third party, we estimate the fair value of derivative instruments, including interest rate caps and interest rate swaps, using level two inputs: for interest rate caps, we observe forward yield curves and other relevant information; for interest rate swaps, we observe alternative financing rates derived from market-based financing rates, forward yield curves and discount rates.
•
Senior notes payable and other debt - We estimate the fair value of senior notes payable and other debt using level two inputs: we discount the future cash flows using current interest rates at which we could obtain similar borrowings.
•
Redeemable OP unitholder interests - We estimate the fair value of our redeemable OP unitholder interests using level one inputs: we base fair value on the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, 0.7866 shares of our common stock per unit, subject to adjustment in certain circumstances.
Revenue Recognition
Triple-Net Leased Properties and MOB Operations
Certain of our triple-net leases and most of our MOB leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectability is reasonably assured. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our Consolidated Balance Sheets. At September 30, 2014 and December 31, 2013 , this cumulative excess totaled $179.1 million (net of allowances of $138.3 million ) and $150.8 million (net of allowances of $101.4 million ), respectively.
Certain of our leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.
Senior Living Operations
We recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay. Our lease agreements with residents generally have terms of 12 to 18 months and are cancelable by the resident upon 30  days’ notice.
Other
We recognize interest income from loans and investments, including discounts and premiums, using the effective interest method when collectibility is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term. We recognize interest income on an impaired loan to the extent our estimate of the fair value of the collateral is sufficient to support the balance of the loan, other receivables and all related accrued interest. When the balance of the loan, other receivables and all related accrued interest is equal to or less than our estimate of the fair value of the collateral, we recognize interest income on a cash basis. We provide a reserve against an impaired loan to the extent our total investment in the loan exceeds our estimate of the fair value of the loan collateral.
We recognize income from rent, lease termination fees, development services, management advisory services and all other income when all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.
Allowances
We assess the collectibility of our rent receivables, including straight-line rent receivables, and defer recognition of revenue if collectibility is not reasonably assured. We base our assessment of the collectibility of rent receivables (other than straight-line rent receivables) on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. We also base our assessment of the collectibility of straight-line rent receivables on several factors, including, among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the

10

type of property. If our evaluation of these factors indicates it is probable that we will be unable to receive the rent payments due in the future, we defer recognition of the straight-line rental revenue and, in certain circumstances, provide a reserve against the previously recognized straight-line rent receivable asset for the portion, up to its full value, that we estimate may not be recovered. If we change our assumptions or estimates regarding the collectibility of future rent payments required by a lease, we may adjust our reserve to increase or reduce the rental revenue recognized and/or we may increase or reduce our reserve against the previously recognized straight-line rent receivable asset.
Assets Held for Sale and Discontinued Operations
We sell properties from time to time for various reasons, including favorable market conditions or the exercise of purchase options by tenants. We classify certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets meeting this criteria are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.
In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption and applies only to disposals (or new classifications to held for sale) that have not been reported as discontinued operations in our previously issued financial statements. We initially adopted ASU 2014-08 for the quarter ended March 31, 2014.
The results of operations for assets meeting the definition of discontinued operations are reflected in our Consolidated Statements of Income as discontinued operations for all periods presented. We allocate estimated interest expense to discontinued operations based on property values and either our weighted average interest rate or the property’s actual mortgage interest.
Recently Issued or Adopted Accounting Standards
In 2014, the FASB issued Accounting Standards Update 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. ASU 2014-09 is effective for us beginning January 1, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.
NOTE 3—CONCENTRATION OF CREDIT RISK
As of September 30, 2014 , Atria, Sunrise, Brookdale Senior Living and Kindred managed or operated approximately 24.3% , 12.6% , 10.4% and 2.1% , respectively, of our real estate investments based on gross book value (excluding properties classified as held for sale as of September 30, 2014 ). Seniors housing communities constituted approximately 66.4% of our real estate investments based on gross book value (excluding properties classified as held for sale as of September 30, 2014 ), while MOBs, skilled nursing and other facilities, and hospitals collectively comprised the remaining 33.6% . Our properties were located in 46 states, the District of Columbia, seven Canadian provinces and the United Kingdom as of September 30, 2014 , with properties in one state (California) accounting for more than 10% of our total revenues and total net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs) (in each case excluding amounts in discontinued operations) for the three months then ended.
Triple-Net Leased Properties
For the three months ended September 30, 2014 and 2013 , approximately 5.6% and 5.5% , respectively, of our total revenues and 9.4% and 9.2% , respectively, of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Brookdale Senior Living. For the same periods, approximately 5.4% and 7.5% , respectively, of our total revenues and 9.0% and 12.5% , respectively, of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Kindred. Each of our leases with Brookdale Senior

11

Living and Kindred is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties. In addition, each of these leases has guaranty and cross-default provisions tied to other leases with the same tenant or its affiliates, as well as bundled lease renewals.
The properties we lease to Brookdale Senior Living and Kindred currently account for a significant portion of our triple-net leased properties segment revenues and NOI and have a meaningful impact on our total revenues and NOI. If either Brookdale Senior Living or Kindred becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline and our ability to service our indebtedness and to make distributions to our stockholders could be limited. We cannot assure you that Brookdale Senior Living and Kindred will have sufficient assets, income and access to financing to enable them to satisfy their respective obligations to us, and any failure, inability or unwillingness by Brookdale Senior Living or Kindred to do so could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and other obligations and our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a “Material Adverse Effect”). We also cannot assure you that Brookdale Senior Living and Kindred will elect to renew their respective leases with us upon expiration of the leases or that we will be able to reposition any non-renewed properties on a timely basis or on the same or better economic terms, if at all.
In July 2014, Brookdale Senior Living completed its acquisition of Emeritus Corporation (“Emeritus”), which operates 15 of our triple-net leased properties (excluding one property classified as held for sale as of September 30, 2014 ). In connection with the transaction, we entered into favorable arrangements with Brookdale Senior Living and Emeritus regarding the terms of our existing leases.  We do not expect the transaction or those arrangements to have a material impact on our financial condition or results of operations.
Currently, we have re-leased to Kindred, transitioned to new operators or sold 103 of the 108 licensed healthcare assets whose lease terms with Kindred were scheduled to expire on September 30, 2014.  We expect to transition or sell by the end of 2014 the remaining five skilled nursing facilities whose leases were not renewed by Kindred, although these transactions remain subject to regulatory approval and other conditions, and we cannot assure you that we will be able to successfully complete them on a timely basis, if at all, or that expected financial results will be achieved.
With respect to four of the five remaining assets, Kindred must still continue to perform all of its obligations under the applicable master lease, including without limitation, payment of all rental amounts, through December 31, 2014 if the transitions have not yet occurred (and the fifth asset is currently under contract for sale).  Moreover, we own or have the rights to all licenses and certificates of need at the properties, and Kindred has extensive and detailed obligations to cooperate and ensure an orderly transition of the properties to another operator.
Senior Living Operations
As of September 30, 2014 , Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 269 of our seniors housing communities, for which we pay annual management fees pursuant to long-term management agreements.
As managers, Atria and Sunrise do not lease our properties, and, therefore, we are not directly exposed to their credit risk in the same manner or to the same extent as our triple-net tenants. However, we rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees and otherwise operate our seniors housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our management agreements, including various rights to terminate and exercise remedies under the agreements as provided therein, Atria’s or Sunrise’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. In addition, significant changes in Atria’s or Sunrise’s senior management or equity ownership or any adverse developments in their businesses and affairs or financial condition could have a Material Adverse Effect on us.
Our 34% ownership interest in Atria entitles us to certain rights and minority protections, as well as the right to appoint two of five directors to the Atria Board of Directors.
Brookdale Senior Living, Kindred, Atria and Sunrise Information
Each of Brookdale Senior Living and Kindred is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale Senior Living and Kindred contained or referred to in this Quarterly Report

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on Form 10-Q has been derived from SEC filings made by Brookdale Senior Living or Kindred, as the case may be, or other publicly available information, or was provided to us by Brookdale Senior Living or Kindred, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Brookdale Senior Living’s and Kindred’s publicly available filings, which can be found on the SEC’s website at www.sec.gov.
Neither Atria nor Sunrise is currently subject to the reporting requirements of the SEC. The information related to Atria and Sunrise contained or referred to within this Quarterly Report on Form 10-Q has been derived from publicly available information or was provided to us by Atria or Sunrise, as the case may be, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.
NOTE 4—ACQUISITIONS
The following summarizes our acquisition and development activities during the nine months ended September 30, 2014 and the year ended December 31, 2013 . We acquire and invest in seniors housing and healthcare properties primarily to achieve an expected yield on investment, to grow and diversify our portfolio and revenue base, and to reduce our dependence on any single tenant, operator or manager, geographic location, asset type, business model or revenue source.
2014 Acquisitions
Holiday Canada Acquisition
In August 2014, we acquired 29 independent living communities located in Canada from Holiday Retirement (the “Holiday Canada Acquisition”) for a purchase price of CAD 957 million . We also paid CAD 26.9 million in early debt repayment costs relating to debt that was repaid in full at closing. The Holiday Canada Acquisition was funded initially through borrowings under a CAD 791 million unsecured term loan that we entered into in July 2014 and the assumption of CAD 193.7 million of debt.
Other 2014 Acquisitions
During the nine months ended September 30, 2014, we also acquired three triple-net leased private hospitals (located in the United Kingdom), seven triple-net leased seniors housing communities and four seniors housing communities that are being operated by independent third-party managers for aggregate consideration of approximately $519.8 million . We also paid $10.3 million in early debt repayment costs relating to debt that was repaid in full at closing of the applicable transactions.
Completed Developments
During 2014, we completed the development of one MOB. This completed development represents $10.5 million of net real estate property on our Consolidated Balance Sheets as of September 30, 2014 .

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Estimated Fair Value
We are accounting for our 2014 acquisitions under the acquisition method in accordance with ASC Topic 805, Business Combinations (“ASC 805”). We have finalized our initial accounting for all acquisitions completed during the nine months ended September 30, 2013, and the remainder of our 2013 acquisitions is still subject to further adjustment. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed, which we determined using level two and level three inputs:
 
Triple-Net Leased Properties
 
Senior Living Operations
 
Total
 
(In thousands)
Land and improvements
$
25,771

 
$
92,192

 
$
117,963

Buildings and improvements
275,984

 
1,089,295

 
1,365,279

Acquired lease intangibles
18,336

 
36,452

 
54,788

Other assets
—

 
12,387

 
12,387

Total assets acquired
320,091

 
1,230,326

 
1,550,417

Notes payable and other debt
—

 
228,150

 
228,150

Other liabilities

4,630

 
124,897

 
129,527

Total liabilities assumed
4,630

 
353,047

 
357,677

Net assets acquired
315,461

 
877,279

 
1,192,740

Cash acquired
—

 
8,704

 
8,704

Total cash used
$
315,461

 
$
868,575

 
$
1,184,036

Aggregate Revenue and NOI
For the three months ended September 30, 2014, aggregate revenues and NOI derived from our 2014 real estate acquisitions were $25.3 million and $14.1 million , respectively. For the nine months ended September 30, 2014, aggregate revenues and NOI derived from our 2014 real estate acquisitions were $33.1 million and $20.2 million , respectively.
Transaction Costs
As of September 30, 2014 , we had incurred a total of $24.9 million of acquisition-related costs related to our completed 2014 acquisitions, all of which were expensed as incurred and included in merger-related expenses and deal costs in our Consolidated Statements of Income for the applicable periods. For the three and nine months ended September 30, 2014 , we expensed $9.8 million and $22.6 million , respectively, of these acquisition-related costs related to our completed 2014 acquisitions.
2013 Acquisitions
During the year ended December 31, 2013, we acquired 27 triple-net leased seniors housing communities ( eight of which we previously leased pursuant to a capital lease), 24 seniors housing communities that are being operated by independent third-party managers and 11 MOBs for aggregate consideration of approximately $1.8 billion .
Completed Developments
During the year ended December 31, 2013, we completed the development of two seniors housing communities, one MOB, and one hospital. These completed developments represented $65.5 million of net real estate property on our Consolidated Balance Sheets as of December 31, 2013.

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Estimated Fair Value
We are accounting for our 2013 acquisitions under the acquisition method in accordance with ASC Topic 805, and have completed our initial accounting, which is subject to further adjustment. We accounted for the acquisition of the eight seniors housing communities that we previously leased pursuant to a capital lease in accordance with ASC Topic 840, Leases . The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed, which we determined using level two and level three inputs:
 
Triple-Net Leased Properties
 
Senior Living Operations (1)
 
MOB Operations
 
Total
 
(In thousands)
Land and improvements
$
51,419

 
$
45,566

 
$
3,923

 
$
100,908

Buildings and improvements
803,227

 
579,577

 
138,792

 
1,521,596

Acquired lease intangibles
8,945

 
16,920

 
10,362

 
36,227

Other assets
3,285

 
2,607

 
2,453

 
8,345

Total assets acquired
866,876

 
644,670

 
155,530

 
1,667,076

Notes payable and other debt
36,300

 
5,136

 
—

 
41,436

Other liabilities

11,423

 
12,285

 
6,510

 
30,218

Total liabilities assumed
47,723

 
17,421

 
6,510

 
71,654

Noncontrolling interest assumed
10,113

 
—

 
1,672

 
11,785

Net assets acquired
809,040

 
627,249

 
147,348

 
1,583,637

Cash acquired
753

 
—

 
1,397

 
2,150

Total cash used
$
808,287

 
$
627,249

 
$
145,951

 
$
1,581,487

 
 
 
 
 
(1)
Includes settlement of a $142.2 million capital lease obligation related to eight seniors housing communities.
Pending Acquisition
In June 2014, we announced that we had entered into a definitive agreement to acquire American Realty Capital Healthcare Trust, Inc. (“HCT”) in a stock and cash transaction valued at approximately $2.9 billion , or $11.33 per share of HCT common stock, including investments expected to be made by HCT prior to completion of our acquisition, substantially all of which have now been completed.  We expect to fund the transaction through the issuance of our common stock, valued at $67.13 per share (for aggregate consideration of between $1.8 billion and $2.0 billion ), the assumption of debt and cash.  Completion of the transaction is subject to the approval of HCT stockholders and customary closing conditions.  We expect to complete the HCT transaction late in the fourth quarter of 2014, although we cannot provide any assurances as to whether or when the transaction will be completed.
NOTE 5—DISPOSITIONS
2014 Activity
During the nine months ended September 30, 2014 , we sold 15 triple-net leased properties and four properties included in our MOB operations reportable business segment for aggregate consideration of $112.7 million . We recognized a net gain on the sales of these assets of $19.9 million , $1.5 million of which is reported within discontinued operations in our Consolidated Statements of Income.
2013 Activity
During the nine months ended September 30, 2013 , we sold sixteen triple-net leased properties, one seniors housing community included in our senior living operations reportable business segment and two properties included in our MOB operations reportable business segment for aggregate consideration of $28.7 million , including lease termination fees of $0.3 million . We recognized a net gain on the sales of these assets of $2.5 million , all of which is reported within discontinued operations in our Consolidated Statements of Income.

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Discontinued Operations and Assets Held for Sale
We present separately, as discontinued operations in all periods presented, the results of operations for all real estate assets classified as held for sale as of September 30, 2014 , and all real estate assets disposed of during the period from January 1, 2013 through September 30, 2014 , that meet the criteria of discontinued operations.

The table below summarizes our real estate assets classified as held for sale as of September 30, 2014 and December 31, 2013, including the amounts reported within other assets and accounts payable and other liabilities on our Consolidated Balance Sheets.

 
 
September 30, 2014
 
December 31, 2013
 
 
Number of Properties Held for Sale (1)
 
Other Assets
 
Accounts Payable and Other Liabilities
 
Number of Properties Held for Sale (2)
 
Other Assets
 
Accounts Payable and Other Liabilities
 
 
(Dollars in thousands)
Triple-net leased properties
 
10

 
$
17,307

 
$
794

 
15

 
$
125,981

 
$
50,456

Senior living operations
 
2

 
3,709

 
194

 
—

 
—

 
—

MOB operations (3)
 
36

 
179,334

 
50,445

 
4

 
29,359

 
14,044

Total
 
48

 
$
200,350

 
$
51,433

 
19

 
$
155,340

 
$
64,500

 
 
 
 
 
(1)
The operations for three triple-net leased properties and two MOBs are reported in discontinued operations in our Consolidated Statements of Income.
(2)
The operations for all properties listed are reported in discontinued operations in our Consolidated Statements of Income.
(3)
Includes 34 MOBs that are being marketed for sale and were classified as held for sale as of September 30, 2014 . Aggregate NOI for this portfolio of assets was $8.7 million and $10.6 million for the nine months ended September 30, 2014 and 2013 , respectively. The sale of these MOBs does not meet the criteria for reporting as discontinued operations.

We recognized impairments of $17.2 million and $38.1 million for the nine months ended September 30, 2014 and 2013 , respectively, which are recorded primarily as a component of depreciation and amortization. A portion of these impairments ( $1.5 million and $36.7 million , respectively) was recorded in discontinued operations for the nine months ended September 30, 2014 and 2013 .


16

Set forth below is a summary of our results of operations for properties within discontinued operations for the three and nine months ended September 30, 2014 and 2013 .
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Rental income
$
261

 
$
3,672

 
$
4,269

 
$
11,557

Resident fees and services
—

 
—

 
—

 
759

Interest and other income
—

 
—

 
750

 
—

 
261

 
3,672

 
5,019

 
12,316

Expenses:
 
 
 
 
 
 
 
Interest
281

 
1,235

 
1,462

 
4,389

Depreciation and amortization
12

 
11,354

 
1,540

 
45,292

Property-level operating expenses
123

 
310

 
403

 
1,692

General, administrative and professional expenses
—

 
—

 
—

 
3

Gain on extinguishment of debt, net
—

 
—

 
—

 
(153
)
Other
63

 
(7
)
 
309

 
(502
)
 
479

 
12,892

 
3,714

 
50,721

(Loss) income before (loss) gain on real estate dispositions
(218
)
 
(9,220
)
 
1,305

 
(38,405
)
(Loss) gain on real estate dispositions
(41
)
 
46

 
1,212

 
2,241

Discontinued operations
$
(259
)
 
$
(9,174
)
 
$
2,517

 
$
(36,164
)
NOTE 6—LOANS RECEIVABLE AND INVESTMENTS
As of September 30, 2014 and December 31, 2013 , we had $456.5 million and $414.8 million , respectively, of net loans receivable and investments relating to seniors housing and healthcare operators or properties. The following is a summary of our net loans receivable and investments as of September 30, 2014 , including amortized cost, fair value and unrealized gains (losses) on available-for-sale investments:
 
 
Carrying Amount
 
Amortized Cost
 
Fair Value
 
Unrealized Gain (Loss)
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Secured mortgage loans and other
 
$
344,948

 
$
344,948

 
$
355,559

 
$
—

Government-sponsored pooled loan investments
 
62,603

 
61,182

 
62,603

 
1,421

Total investments reported as Secured loans receivable and investments, net
 
407,551

 
406,130

 
418,162

 
1,421

 
 
 
 
 
 
 
 
 
Unsecured loans receivable
 
22,898

 
22,898

 
23,333

 
—

Marketable securities
 
26,059

 
25,000

 
26,059

 
1,059

Total investments reported as Other assets
 
48,957

 
47,898

 
49,392

 
1,059

 
 
 
 
 
 
 
 
 
Total net loans receivable and investments
 
$
456,508

 
$
454,028

 
$
467,554

 
$
2,480

During the nine months ended September 30, 2014 , we purchased $25.0 million principal amount of senior unsecured corporate bonds, a $38.7 million interest in a government-sponsored pooled loan investment, and $21.7 million of marketable equity securities. During the three months ended September 30, 2014 , we sold all of our marketable equity securities for $22.3 million and recognized a gain of $0.6 million . Our investments in marketable debt securities are classified as available-for-sale, with contractual maturity dates ranging from 2022 to 2023.

During the nine months ended September 30, 2014, we received aggregate proceeds of $52.1 million in final repayment of two secured and two unsecured loans receivable. We recognized aggregate gains of $4.0 million on the repayment of these

17

loans receivable that are recorded in income from loans and investments in our Consolidated Statements of Income for the nine months ended September 30, 2014 .
In 2013, we sold portions of a $375.0 million secured loan receivable to third parties in separate transactions, as evidenced by separate notes. As of September 30, 2014 , our remaining investment in this loan receivable was $175.1 million , which bears interest at an all-in rate of 10.6% per annum. Under the terms of the loan agreement, we act as the administrative agent and will continue to receive the stated interest rate on our remaining loan receivable balance.
NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We are not required to consolidate these entities because our joint venture partners have significant participating rights, nor are these entities considered VIEs, as they are controlled by equity holders with sufficient capital. At September 30, 2014 and December 31, 2013 , we had ownership interests (ranging from 5% to 25% ) in joint ventures that owned 50  properties. We account for our interests in these joint ventures, as well as our 34% interest in Atria, under the equity method of accounting.
With the exception of our interest in Atria, we serve as the managing member of each unconsolidated entity and provide various services in exchange for fees and reimbursements. Total management fees earned in connection with these entities were $2.0 million and $2.0 million for the three months ended September 30, 2014 and 2013 , respectively, and $6.2 million and $4.9 million for the nine months ended September 30, 2014 and 2013 , respectively.
In March 2013, we acquired two MOBs for aggregate consideration of approximately $55.6 million from a joint venture entity in which we have a 5% interest and that we account for as an equity method investment. In connection with this acquisition, we re-measured our previously held equity interest (associated with the acquired MOBs) and recognized a gain of $1.3 million , which is included in income from unconsolidated entities in our Consolidated Statements of Income for the nine months ended September 30, 2013 . Operations relating to these properties are now consolidated in our Consolidated Statements of Income.
NOTE 8—INTANGIBLES
The following is a summary of our intangibles as of September 30, 2014 and December 31, 2013 :
 
September 30, 2014
 
December 31, 2013
 
Balance
 
Remaining
Weighted Average
Amortization
Period in Years
 
Balance
 
Remaining
Weighted Average
Amortization
Period in Years
 
(Dollars in thousands)
Intangible assets:
 
 
 
 
 
 
 
Above market lease intangibles
$
210,633

 
8.2
 
$
214,353

 
8.4
In-place and other lease intangibles
829,315

 
23.2
 
795,829

 
24.1
Goodwill and other intangibles
479,513

 
8.8
 
489,346

 
8.6
Accumulated amortization
(522,407
)
 
 N/A
 
(458,919
)
 
 N/A
Net intangible assets
$
997,054

 
19.5
 
$
1,040,609

 
19.8
Intangible liabilities:
 
 
 
 
 
 
 
Below market lease intangibles
$
425,183

 
14.7
 
$
429,199

 
14.7
Other lease intangibles
32,103

 
25.7
 
32,103

 
24.8
Accumulated amortization
(149,164
)
 
 N/A
 
(119,549
)
 
 N/A
Purchase option intangibles
22,900

 
 N/A
 
29,294

 
 N/A
Net intangible liabilities
$
331,022

 
15.2
 
$
371,047

 
15.1
 
 
 
 
 
N/A—Not Applicable.
Above market lease intangibles and in-place and other lease intangibles are included in acquired lease intangibles within real estate investments on our Consolidated Balance Sheets. Goodwill and other intangibles (including non-compete agreements, trade names and trademarks) are included in other assets on our Consolidated Balance Sheets. Below market lease

18

intangibles, other lease intangibles and purchase option intangibles are included in accounts payable and other liabilities on our Consolidated Balance Sheets.
NOTE 9—OTHER ASSETS
The following is a summary of our other assets as of September 30, 2014 and December 31, 2013 :
 
September 30,
2014
 
December 31,
2013
 
(In thousands)
Straight-line rent receivables, net
$
179,069

 
$
150,829

Unsecured loans receivable and investments, net
22,898

 
38,542

Goodwill and other intangibles, net
463,458

 
476,483

Assets held for sale
200,350

 
155,340

Marketable securities
26,059

 
—

Other
129,555

 
125,141

Total other assets
$
1,021,389

 
$
946,335



19

NOTE 10—SENIOR NOTES PAYABLE AND OTHER DEBT
The following is a summary of our senior notes payable and other debt as of September 30, 2014 and December 31, 2013 :
 
September 30,
2014
 
December 31,
2013
 
(In thousands)
Unsecured revolving credit facility (1)
$
225,359

 
$
376,343

3.125% Senior Notes due 2015
400,000

 
400,000

6% Senior Notes due 2015
234,420

 
234,420

Unsecured term loan due 2015 (2)
117,006

 
—

1.55% Senior Notes due 2016
550,000

 
550,000

1.250% Senior Notes due 2017
300,000

 
—

2.00% Senior Notes due 2018
700,000

 
700,000

Unsecured term loan due 2018 (3)
200,000

 
200,000

Unsecured term loan due 2019 (3)
794,697

 
800,702

4.00% Senior Notes due 2019
600,000

 
600,000

3.00% Senior Notes, Series A due 2019 (2)
357,270

 
—

2.700% Senior Notes due 2020
500,000

 
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

3.750% Senior Notes due 2024
400,000

 
—

4.125% Senior Notes, Series B due 2024 (2)
223,294

 
—

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

 
258,750

5.70% Senior Notes due 2043
300,000

 
300,000

Mortgage loans and other (4)
2,414,695

 
2,524,889

Total
10,450,864

 
9,320,477

Unamortized fair value adjustment
45,571

 
69,611

Unamortized discounts
(27,329
)
 
(25,096
)
Senior notes payable and other debt
$
10,469,106

 
$
9,364,992

 
 
 
 
 
(1)
$5.4 million and $7.3 million of aggregate borrowings were in the form of Canadian dollars as of September 30, 2014 and December 31, 2013 , respectively.
(2)
These borrowings are in the form of Canadian dollars.
(3)
These amounts represent in aggregate the approximate $1.0 billion of unsecured term loan borrowings under our unsecured credit facility, of which $111.1 million of borrowings included in the 2019 tranche are in the form of Canadian dollars.
(4)
2014 excludes debt related to real estate assets classified as held for sale as of September 30, 2014 . The total mortgage debt for these properties as of September 30, 2014 was $43.7 million and is included in accounts payable and other liabilities on our Consolidated Balance Sheet. 2013 excludes debt related to a real estate asset classified as held for sale as of December 31, 2013 and sold in March 2014. The total mortgage debt for this property as of December 31, 2013 was $13.1 million and was included in accounts payable and other liabilities on our Consolidated Balance Sheet.


20

As of September 30, 2014 , our indebtedness had the following maturities:
 
Principal Amount
Due at Maturity
 
Unsecured
Revolving Credit
Facility (1)
 
Scheduled Periodic
Amortization
 
Total Maturities
 
(In thousands)
2014
$
7,372

 
$
—

 
$
11,581

 
$
18,953

2015
877,650

 
—

 
41,652

 
919,302

2016
921,817

 
—

 
37,833

 
959,650

2017
777,127

 
—

 
27,413

 
804,540

2018
1,075,209

 
225,359

 
21,489

 
1,322,057

Thereafter (2)
6,267,876

 
—

 
158,486

 
6,426,362

Total maturities
$
9,927,051

 
$
225,359

 
$
298,454

 
$
10,450,864

 
 
 
 
 
(1)
As of September 30, 2014 , we had $64.6 million of unrestricted cash and cash equivalents, for $160.8 million of net borrowings outstanding under our unsecured revolving credit facility.
(2)
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.
Unsecured Revolving Credit Facility and Unsecured Term Loans
Our unsecured credit facility is comprised of a $2.0 billion revolving credit facility priced at LIBOR plus 1.0% as of September 30, 2014 , and a $200.0 million four-year term loan and an $800.0 million five-year term loan, each priced at LIBOR plus 1.05% as of September 30, 2014 . The 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 $200.0 million and $800.0 million term loans mature in January 2018 and January 2019, respectively. The unsecured credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.5 billion .
As of September 30, 2014 , we had $225.4 million of borrowings outstanding, $21.8 million of letters of credit outstanding and $1.8 billion of unused borrowing capacity available under our unsecured revolving credit facility.
In July 2014, we entered into a new CAD 791 million unsecured term loan that matures on July 30, 2015 to initially fund a majority of the Holiday Canada Acquisition. In September 2014, we repaid CAD 660 million of the unsecured term loan principally with proceeds from the sale of unsecured senior notes issued by our wholly owned subsidiary, Ventas Canada Finance Limited.
Senior Notes
In April 2014, we issued and sold $300.0 million aggregate principal amount of 1.250% senior notes due 2017 at a public offering price equal to 99.815% of par, for total proceeds of $299.4 million before the underwriting discount and expenses, and $400.0 million aggregate principal amount of 3.750% senior notes due 2024 at a public offering price equal to 99.304% of par, for total proceeds of $397.2 million before the underwriting discount and expenses.
In September 2014, our wholly owned subsidiary, Ventas Canada Finance Limited, issued and sold CAD 400 million aggregate principal amount of 3.00% senior notes, series A due 2019 at an offering price equal to 99.713% of par, for total proceeds of CAD 398.9 million before the agent fees and expenses, and CAD 250 million aggregate principal amount of 4.125% senior notes, series B due 2024 at an offering price equal to 99.601% of par, for total proceeds of CAD 249.0 million before the agent fees and expenses. The notes are guaranteed by Ventas, Inc. and were offered on a private placement basis in Canada. We used the proceeds from the issuance to repay a portion of the CAD 791 million unsecured term loan.


21

NOTE 11—FAIR VALUES OF FINANCIAL INSTRUMENTS
As of September 30, 2014 and December 31, 2013 , the carrying amounts and fair values of our financial instruments were as follows:
 
September 30, 2014
 
December 31, 2013
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
64,595

 
$
64,595

 
$
94,816

 
$
94,816

Secured loans receivable, net
344,948

 
355,559

 
354,775

 
355,223

Unsecured loans receivable, net
22,898

 
23,333

 
38,542

 
40,473

Marketable securities
88,662

 
88,662

 
21,454

 
21,454

Liabilities:
 
 
 
 
 
 
 
Senior notes payable and other debt, gross
10,450,864

 
10,761,254

 
9,320,477

 
9,405,259

Derivative instruments and other liabilities
4,238

 
4,238

 
11,105

 
11,105

Redeemable OP unitholder interests
119,537

 
119,537

 
111,607

 
111,607

Fair value estimates are subjective in nature and based upon several important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.
NOTE 12—LITIGATION
Litigation Relating to the HCT Acquisition
In the weeks following the announcement of our pending acquisition of HCT on June 2, 2014, a total of 13 putative class actions were filed by purported HCT stockholders challenging the transaction. Certain of the actions also purport to bring derivative claims on behalf of HCT. Among other things, the lawsuits allege that the directors of HCT breached their fiduciary duties by approving the transaction and that Ventas, Inc. and our subsidiaries, Stripe Sub, LLC and Stripe OP, LP, aided and abetted this purported breach of fiduciary duty. The complaints seek injunctive relief and damages.
Ten of these actions were filed in the Circuit Court for Baltimore City, Maryland and consolidated under the caption In re: American Realty Capital, Healthcare Trust, Inc. Shareholder & Derivative Litigation , Case No. 24-C-14-003534, two actions were filed in the Supreme Court of the State of New York, County of New York, and one action was filed in the United States District Court of Maryland.
We believe that each of these actions is without merit.
Proceedings against Tenants, Operators and Managers
From time to time, Brookdale Senior Living, Kindred, Atria, Sunrise and our other tenants, operators and managers are parties to certain legal actions, regulatory investigations and claims arising in the conduct of their business and operations. Even though we generally are not party to these proceedings, the unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect such tenants’, operators’ or managers’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to us, which, in turn, could have a Material Adverse Effect on us.
Proceedings Indemnified and Defended by Third Parties
From time to time, we are party to certain legal actions, regulatory investigations and claims for which third parties are contractually obligated to indemnify, defend and hold us harmless. The tenants of our triple-net leased properties and, in some cases, their affiliates are required by the terms of their leases and other agreements with us to indemnify, defend and hold us harmless against certain actions, investigations and claims arising in the course of their business and related to the operations of our triple-net leased properties. In addition, third parties from whom we acquired certain of our assets and, in some cases, their affiliates are required by the terms of the related conveyance documents to indemnify, defend and hold us harmless against certain actions, investigations and claims related to the acquired assets and arising prior to our ownership or related to excluded

22

assets and liabilities. In some cases, a portion of the purchase price consideration is held in escrow for a specified period of time as collateral for these indemnification obligations. We are presently being defended by certain tenants and other obligated third parties in these types of matters. We cannot assure you that our tenants, their affiliates or other obligated third parties will continue to defend us in these matters, that our tenants, their affiliates or other obligated third parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to us or that any purchase price consideration held in escrow will be sufficient to satisfy claims for which we are entitled to indemnification. The unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect our tenants’ or other obligated third parties’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to us, which, in turn, could have a Material Adverse Effect on us.
Proceedings Arising in Connection with Senior Living and MOB Operations; Other Litigation
From time to time, we are party to various legal actions, regulatory investigations and claims (some of which may not be insured and some of which may allege large damage amounts) arising in connection with our senior living and MOB operations or otherwise in the course of our business. In limited circumstances, the manager of the applicable seniors housing community or MOB may be contractually obligated to indemnify, defend and hold us harmless against such actions, investigations and claims. It is the opinion of management that, except as otherwise set forth in this Note 12, the disposition of any such actions, investigations and claims that are currently pending will not, individually or in the aggregate, have a Material Adverse Effect on us. However, regardless of their merits, we may be forced to expend significant financial resources to defend and resolve these matters. We are unable to predict the ultimate outcome of these actions, investigations and claims, and if management’s assessment of our liability with respect thereto is incorrect, such actions, investigations and claims could have a Material Adverse Effect on us.
NOTE 13—INCOME TAXES
We have elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal and state income taxes. All entities other than the TRS entities are collectively referred to as “the REIT” within this Note 13.
Although the TRS entities have paid minimal cash federal income taxes for the nine months ended September 30, 2014 , their federal income tax liabilities may increase in future periods as we exhaust net operating loss (“NOL”) carryforwards and as our senior living operations reportable business segment grows. Such increases could be significant.
Our consolidated provision for income taxes for the three months ended September 30, 2014 and 2013 was a benefit of $1.9 million and $2.8 million , respectively. Our consolidated provision for income taxes for the nine months ended September 30, 2014 and 2013 was an expense of $4.8 million and a benefit of $13.1 million , respectively. The income tax expense for the nine months ended September 30, 2014 is due primarily to operating income at our TRS entities. The income tax benefit for the nine months ended September 30, 2013 was due primarily to the release of valuation allowances against certain deferred tax assets of one of our TRS entities.
Realization of a deferred tax benefit related to NOLs depends in part upon generating sufficient taxable income in future periods. Our NOL carryforwards begin to expire in 2024 with respect to our TRS entities and in 2016 for the REIT.
Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Net deferred tax liabilities with respect to our TRS entities totaled $361.5 million and $250.2 million as of September 30, 2014 and December 31, 2013 , respectively, and related primarily to differences between the financial reporting and tax bases of fixed and intangible assets and to loss carryforwards. The increase in the net deferred tax liability from 2013 was due primarily to approximately $107.7 million of recorded deferred tax liability as a result of the Holiday Canada Acquisition and $2.3 million of recorded deferred tax liability due to other acquisitions.
Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December 31, 2011 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2010 and subsequent years. We are subject to audit by the Canada Revenue Agency and provincial authorities with respect to entities acquired or formed in connection with our 2007 acquisition of Sunrise Senior Living Real Estate Investment Trust generally for periods subsequent to the acquisition. We are also subject to audit in Canada for periods subsequent to the acquisition, and certain prior periods, with respect to the entities acquired in connection with the Holiday Canada Acquisition.


23

NOTE 14—STOCKHOLDERS’ EQUITY
In February 2014, we canceled 3.7 million shares of our common stock held as treasury stock. These shares were owned by certain wholly owned private investment funds that we acquired in December 2012.
Accumulated Other Comprehensive Income
The following is a summary of our accumulated other comprehensive income as of September 30, 2014 and December 31, 2013 :
 
September 30, 2014
 
December 31, 2013
 
(In thousands)
Foreign currency translation
$
14,699

 
$
18,019

Unrealized gain on intra-entity foreign currency loan
(4,586
)
 
—

Unrealized gain (loss) on marketable securities
1,021

 
(216
)
Other
5,022

 
1,856

Total accumulated other comprehensive income
$
16,156

 
$
19,659

NOTE 15—EARNINGS PER COMMON SHARE
The following table shows the amounts used in computing our basic and diluted earnings per common share:
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands, except per share amounts)
 
 
 
 
Numerator for basic and diluted earnings per share:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
109,391

 
$
127,470

 
$
366,060

 
$
381,233

Discontinued operations
(259
)
 
(9,174
)
 
2,517

 
(36,164
)
Net income attributable to common stockholders          
$
109,132

 
$
118,296

 
$
368,577

 
$
345,069

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share—weighted average shares
294,030

 
292,818

 
293,965

 
292,308

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options
492

 
483

 
468

 
578

Restricted stock awards
47

 
75

 
51

 
114

OP units
1,926

 
1,814

 
1,927

 
1,788

Denominator for diluted earnings per share—adjusted weighted average shares
296,495

 
295,190

 
296,411

 
294,788

Basic earnings per share:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.37

 
$
0.43

 
$
1.24

 
$
1.30

Discontinued operations
(0.00
)
 
(0.03
)
 
0.01

 
(0.12
)
Net income attributable to common stockholders          
$
0.37

 
$
0.40

 
$
1.25

 
$
1.18

Diluted earnings per share:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.37

 
$
0.43

 
$
1.23

 
$
1.29

Discontinued operations
(0.00
)
 
(0.03
)
 
0.01

 
(0.12
)
Net income attributable to common stockholders          
$
0.37

 
$
0.40

 
$
1.24

 
$
1.17




24

NOTE 16—SEGMENT INFORMATION
As of September 30, 2014 , we operated through three reportable business segments: triple-net leased properties, senior living operations and MOB operations. Under our triple-net leased properties segment, we acquire and own seniors housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our MOB operations segment, we primarily acquire, own, develop, lease and manage MOBs. Information provided for “all other” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, loans receivable and investments, and miscellaneous accounts receivable.
We evaluate performance of the combined properties in each reportable business segment based on segment profit, which we define as NOI adjusted for income/loss from unconsolidated entities. We define NOI as total revenues, less interest and other income, property-level operating expenses and medical office building services costs. We consider segment profit useful because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis. In order to facilitate a clear understanding of our historical consolidated operating results, segment profit should be examined in conjunction with net income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.
Interest expense, depreciation and amortization, general, administrative and professional fees, income tax expense, discontinued operations and other non-property specific revenues and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are no intersegment sales or transfers.

25

Summary information by reportable business segment is as follows:
For the three months ended September 30, 2014 :
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
244,206

 
$
—

 
$
116,598

 
$
—

 
$
360,804

Resident fees and services
—

 
396,247

 
—

 
—

 
396,247

Medical office building and other services revenue
1,136

 
—

 
5,937

 
500

 
7,573

Income from loans and investments
—

 
—

 
—

 
14,043

 
14,043

Interest and other income
—

 
—

 
—

 
368

 
368

Total revenues
$
245,342

 
$
396,247

 
$
122,535

 
$
14,911

 
$
779,035

Total revenues
$
245,342

 
$
396,247

 
$
122,535

 
$
14,911

 
$
779,035

Less:
 
 
 
 
 
 
 
 
 
Interest and other income
—

 
—

 
—

 
368

 
368

Property-level operating expenses
—

 
265,274

 
41,147

 
—

 
306,421

Medical office building services costs
—

 
—

 
4,568

 
—

 
4,568

Segment NOI
245,342

 
130,973

 
76,820

 
14,543

 
467,678

Income (loss) from unconsolidated entities
252

 
(225
)
 
66

 
(140
)
 
(47
)
Segment profit
$
245,594

 
$
130,748

 
$
76,886

 
$
14,403

 
467,631

Interest and other income
 

 
 

 
 

 
 

 
368

Interest expense
 

 
 

 
 

 
 

 
(98,469
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(201,224
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(29,466
)
Loss on extinguishment of debt, net
 
 
 
 
 
 
 
 
(2,414
)
Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(16,749
)
Other
 

 
 

 
 

 
 

 
(15,229
)
Income tax benefit
 

 
 

 
 

 
 

 
1,887

Discontinued operations
 

 
 

 
 

 
 

 
(259
)
Gain on real estate dispositions
 
 
 
 
 
 
 
 
3,625

Net income
 

 
 

 
 

 
 

 
$
109,701



26

For the three months ended September 30, 2013 :
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
218,698

 
$
—

 
$
114,779

 
$
—

 
$
333,477

Resident fees and services
—

 
359,112

 
—

 
—

 
359,112

Medical office building and other services revenue
1,116

 
—

 
2,530

 
500

 
4,146

Income from loans and investments
—

 
—

 
—

 
14,448

 
14,448

Interest and other income
—

 
—

 
—

 
66

 
66

Total revenues
$
219,814

 
$
359,112

 
$
117,309

 
$
15,014

 
$
711,249

Total revenues
$
219,814

 
$
359,112

 
$
117,309

 
$
15,014

 
$
711,249

Less:
 
 
 
 
 
 
 
 
 
Interest and other income
—

 
—

 
—

 
66

 
66

Property-level operating expenses
—

 
244,316

 
40,566

 
—

 
284,882

Medical office building services costs
—

 
—

 
1,651

 
—

 
1,651

Segment NOI
219,814

 
114,796

 
75,092

 
14,948

 
424,650

Income (loss) from unconsolidated entities
203

 
(32
)
 
71

 
(132
)
 
110

Segment profit
$
220,017

 
$
114,764

 
$
75,163

 
$
14,816

 
424,760

Interest and other income
 

 
 

 
 

 
 

 
66

Interest expense
 

 
 

 
 

 
 

 
(83,764
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(177,038
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(28,659
)
Gain on extinguishment of debt, net
 
 
 
 
 
 
 
 
189

Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(6,208
)
Other
 

 
 

 
 

 
 

 
(4,353
)
Income tax benefit
 

 
 

 
 

 
 

 
2,780

Discontinued operations
 

 
 

 
 

 
 

 
(9,174
)
Net income
 

 
 

 
 

 
 

 
$
118,599



27

For the nine months ended September 30, 2014 :
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
724,778

 
$
—

 
$
346,711

 
$
—

 
$
1,071,489

Resident fees and services
—

 
1,141,781

 
—

 
—

 
1,141,781

Medical office building and other services revenue
3,429

 
—

 
13,311

 
1,500

 
18,240

Income from loans and investments
—

 
—

 
—

 
39,435

 
39,435

Interest and other income
—

 
—

 
—

 
814

 
814

Total revenues
$
728,207

 
$
1,141,781

 
$
360,022

 
$
41,749

 
$
2,271,759

Total revenues
$
728,207

 
$
1,141,781

 
$
360,022

 
$
41,749

 
$
2,271,759

Less:
 
 
 
 
 
 
 
 
 
Interest and other income
—

 
—

 
—

 
814

 
814

Property-level operating expenses
—

 
762,993

 
119,827

 
—

 
882,820

Medical office building services costs
—

 
—

 
9,565

 
—

 
9,565

Segment NOI
728,207

 
378,788

 
230,630

 
40,935

 
1,378,560

Income (loss) from unconsolidated entities
838

 
(209
)
 
326

 
(406
)
 
549

Segment profit
$
729,045

 
$
378,579

 
$
230,956

 
$
40,529

 
1,379,109

Interest and other income
 

 
 

 
 

 
 

 
814

Interest expense
 

 
 

 
 

 
 

 
(277,811
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(585,636
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(93,638
)
Loss on extinguishment of debt, net
 
 
 
 
 
 
 
 
(5,079
)
Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(37,108
)
Other
 

 
 

 
 

 
 

 
(25,321
)
Income tax expense
 

 
 

 
 

 
 

 
(4,820
)
Discontinued operations
 

 
 

 
 

 
 

 
2,517

Gain on real estate dispositions
 
 
 
 
 
 
 
 
16,514

Net income
 

 
 

 
 

 
 

 
$
369,541


28

For the nine months ended September 30, 2013 :
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
644,403

 
$
—

 
$
335,472

 
$
—

 
$
979,875

Resident fees and services
—

 
1,039,876

 
—

 
—

 
1,039,876

Medical office building and other services revenue
3,342

 
—

 
7,226

 
763

 
11,331

Income from loans and investments
—

 
—

 
—

 
45,284

 
45,284

Interest and other income
—

 
—

 
—

 
1,901

 
1,901

Total revenues
$
647,745

 
$
1,039,876

 
$
342,698

 
$
47,948

 
$
2,078,267

Total revenues
$
647,745

 
$
1,039,876

 
$
342,698

 
$
47,948

 
$
2,078,267

Less:
 
 
 
 
 
 
 
 
 
Interest and other income
—

 
—

 
—

 
1,901

 
1,901

Property-level operating expenses
—

 
706,561

 
115,010

 
—

 
821,571

Medical office building services costs
—

 
—

 
4,957

 
—

 
4,957

Segment NOI
647,745

 
333,315

 
222,731

 
46,047

 
1,249,838

Income (loss) from unconsolidated entities
573

 
(1,173
)
 
1,456

 
(323
)
 
533

Segment profit
$
648,318

 
$
332,142

 
$
224,187

 
$
45,724

 
1,250,371

Interest and other income
 

 
 

 
 

 
 

 
1,901

Interest expense
 

 
 

 
 

 
 

 
(244,635
)
Depreciation and amortization
 

 
 

 
 

 
 

 
(524,033
)
General, administrative and professional fees
 

 
 

 
 

 
 

 
(84,757
)
Gain on extinguishment of debt, net
 
 
 
 
 
 
 
 
909

Merger-related expenses and deal costs
 

 
 

 
 

 
 

 
(17,137
)
Other
 

 
 

 
 

 
 

 
(13,325
)
Income tax benefit
 

 
 

 
 

 
 

 
13,100

Discontinued operations
 

 
 

 
 

 
 

 
(36,164
)
Net income
 

 
 

 
 

 
 

 
$
346,230

Capital expenditures, including investments in real estate property and development project expenditures, by reportable business segment are as follows:
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Capital expenditures:
 
 
 
 
 
 
 
Triple-net leased properties
$
99,590

 
$
793,594

 
$
349,022

 
$
838,598

Senior living operations
853,723

 
226,442

 
932,903

 
471,531

MOB operations
6,858

 
99,706

 
29,721

 
173,978

Total capital expenditures
$
960,171

 
$
1,119,742

 
$
1,311,646

 
$
1,484,107


29

Our portfolio of properties and mortgage loan and other investments are located in the United States, Canada and the United Kingdom. Revenues are attributed to an individual country based on the location of each property.
Geographic information regarding our operations is as follows:
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
United States
$
739,320

 
$
687,925

 
$
2,184,152

 
$
2,008,111

Canada
35,129

 
23,324

 
78,168

 
70,156

United Kingdom
4,586

 
—

 
9,439

 
—

Total revenues
$
779,035

 
$
711,249

 
$
2,271,759

 
$
2,078,267


 
As of September 30, 2014
 
As of December 31, 2013
 
(In thousands)
Net real estate property:
 
 
 
United States
$
17,420,653

 
$
17,705,962

Canada
1,328,742

 
369,624

United Kingdom
176,416

 
—

Total net real estate property
$
18,925,811

 
$
18,075,586

NOTE 17—CONDENSED CONSOLIDATING INFORMATION
Ventas, Inc. has fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”), including the senior notes that were jointly issued with Ventas Capital Corporation. Ventas Capital Corporation is a direct 100% owned subsidiary of Ventas Realty that has no assets or operations, but was formed in 2002 solely to facilitate offerings of senior notes by a limited partnership. None of our other subsidiaries (such subsidiaries, excluding Ventas Realty and Ventas Capital Corporation, the “Ventas Subsidiaries”) is obligated with respect to Ventas Realty’s outstanding senior notes.
In connection with the acquisition of Nationwide Health Properties, Inc. (“NHP”), our 100% owned subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, assumed the obligation to pay principal and interest with respect to the outstanding senior notes issued by NHP. Neither we nor any of our subsidiaries (other than NHP LLC) is obligated with respect to NHP LLC’s outstanding senior notes.
Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including our payment guarantee with respect to Ventas Realty’s senior notes. Certain of our real estate assets are also subject to mortgages.

30

The following summarizes our condensed consolidating information as of September 30, 2014 and December 31, 2013 and for the three and nine months ended September 30, 2014 and 2013 :

CONDENSED CONSOLIDATING BALANCE SHEET
As of September 30, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Assets
 
 
 
 
 
 
 
 
 
Net real estate investments
$
6,555

 
$
359,392

 
$
19,055,590

 
$
—

 
$
19,421,537

Cash and cash equivalents
19,143

 
—

 
45,452

 
—

 
64,595

Escrow deposits and restricted cash
2,102

 
1,361

 
75,283

 
—

 
78,746

Deferred financing costs, net
758

 
53,195

 
10,945

 
—

 
64,898

Investment in and advances to affiliates
10,519,811

 
3,466,998

 
—

 
(13,986,809
)
 
—

Other assets
54,879

 
19,645

 
946,865

 
—

 
1,021,389

Total assets
$
10,603,248

 
$
3,900,591

 
$
20,134,135

 
$
(13,986,809
)
 
$
20,651,165

Liabilities and equity
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Senior notes payable and other debt
$
—

 
$
6,886,912

 
$
3,582,194

 
$
—

 
$
10,469,106

Intercompany loans
5,207,673

 
(5,039,728
)
 
(167,945
)
 
—

 
—

Accrued interest
—

 
48,404

 
20,708

 
—

 
69,112

Accounts payable and other liabilities
100,676

 
38,456

 
826,108

 
—

 
965,240

Deferred income taxes
361,454

 
—

 
—

 
—

 
361,454

Total liabilities
5,669,803

 
1,934,044

 
4,261,065

 
—

 
11,864,912

Redeemable OP unitholder and noncontrolling interests
1,377

 
—

 
161,703

 
—

 
163,080

Total equity
4,932,068

 
1,966,547

 
15,711,367

 
(13,986,809
)
 
8,623,173

Total liabilities and equity
$
10,603,248

 
$
3,900,591

 
$
20,134,135

 
$
(13,986,809
)
 
$
20,651,165

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.

31

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Assets
 
 
 
 
 
 
 
 
 
Net real estate investments
$
7,009

 
$
374,590

 
$
18,161,872

 
$
—

 
$
18,543,471

Cash and cash equivalents
28,169

 
—

 
66,647

 
—

 
94,816

Escrow deposits and restricted cash
2,104

 
1,211

 
81,342

 
—

 
84,657

Deferred financing costs, net
758

 
54,022

 
7,435

 
—

 
62,215

Investment in and advances to affiliates
10,481,466

 
3,201,998

 
—

 
(13,683,464
)
 
—

Other assets
29,450

 
14,102

 
902,783

 
—

 
946,335

Total assets
$
10,548,956

 
$
3,645,923

 
$
19,220,079

 
$
(13,683,464
)
 
$
19,731,494

Liabilities and equity
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Senior notes payable and other debt
$
—

 
$
6,336,240

 
$
3,028,752

 
$
—

 
$
9,364,992

Intercompany loans
4,247,853

 
(4,682,119
)
 
434,266

 
—

 
—

Accrued interest
—

 
39,561

 
14,788

 
—

 
54,349

Accounts payable and other liabilities
94,495

 
28,152

 
878,868

 
—

 
1,001,515

Deferred income taxes
250,167

 
—

 
—

 
—

 
250,167

Total liabilities
4,592,515

 
1,721,834

 
4,356,674

 
—

 
10,671,023

Redeemable OP unitholder and noncontrolling interests
—

 
—

 
156,660

 
—

 
156,660

Total equity
5,956,441

 
1,924,089

 
14,706,745

 
(13,683,464
)
 
8,903,811

Total liabilities and equity
$
10,548,956

 
$
3,645,923

 
$
19,220,079

 
$
(13,683,464
)
 
$
19,731,494

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.



32

CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Three Months Ended September 30, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
629

 
$
70,761

 
$
289,414

 
$
—

 
$
360,804

Resident fees and services
—

 
—

 
396,247

 
—

 
396,247

Medical office building and other services revenue
—

 
—

 
7,573

 
—

 
7,573

Income from loans and investments
1,049

 
—

 
12,994

 
—

 
14,043

Equity earnings in affiliates
124,735

 
—

 
45

 
(124,780
)
 
—

Interest and other income
109

 
10

 
249

 
—

 
368

Total revenues
126,522

 
70,771

 
706,522

 
(124,780
)
 
779,035

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(6,199
)
 
51,951

 
52,717

 
—

 
98,469

Depreciation and amortization
1,489

 
8,964

 
190,771

 
—

 
201,224

Property-level operating expenses
—

 
140

 
306,281

 
—

 
306,421

Medical office building services costs
—

 
—

 
4,568

 
—

 
4,568

General, administrative and professional fees
1,147

 
5,284

 
23,035

 
—

 
29,466

Loss on extinguishment of debt, net
—

 
—

 
2,414

 
—

 
2,414

Merger-related expenses and deal costs
13,848

 
—

 
2,901

 
—

 
16,749

Other
12,569

 
42

 
2,618

 
—

 
15,229

Total expenses
22,854

 
66,381

 
585,305

 
—

 
674,540

Income from continuing operations before income (loss) from unconsolidated entities, income taxes, real estate dispositions and noncontrolling interest
103,668

 
4,390

 
121,217

 
(124,780
)
 
104,495

Income (loss) from unconsolidated entities
—

 
315

 
(362
)
 
—

 
(47
)
Income tax benefit
1,887

 
—

 
—

 
—

 
1,887

Income from continuing operations
105,555

 
4,705

 
120,855

 
(124,780
)
 
106,335

Discontinued operations
(48
)
 
(190
)
 
(21
)
 
—

 
(259
)
Gain on real estate dispositions
3,625

 
—

 
—

 
—

 
3,625

Net income
109,132

 
4,515

 
120,834

 
(124,780
)
 
109,701

Net income attributable to noncontrolling interest
—

 
—

 
569

 
—

 
569

Net income attributable to common stockholders
$
109,132

 
$
4,515

 
$
120,265

 
$
(124,780
)
 
$
109,132

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.



33

CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Three Months Ended September 30, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
609

 
$
69,375

 
$
263,493

 
$
—

 
$
333,477

Resident fees and services
—

 
—

 
359,112

 
—

 
359,112

Medical office building and other services revenue
—

 
—

 
4,146

 
—

 
4,146

Income from loans and investments
—

 
90

 
14,358

 
—

 
14,448

Equity earnings in affiliates
118,150

 
—

 
201

 
(118,351
)
 
—

Interest and other income
18

 
10

 
38

 
—

 
66

Total revenues
118,777

 
69,475

 
641,348

 
(118,351
)
 
711,249

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(512
)
 
36,518

 
47,758

 
—

 
83,764

Depreciation and amortization
1,308

 
7,694

 
168,036

 
—

 
177,038

Property-level operating expenses
—

 
154

 
284,728

 
—

 
284,882

Medical office building services costs
—

 
—

 
1,651

 
—

 
1,651

General, administrative and professional fees
437

 
5,375

 
22,847

 
—

 
28,659

Gain on extinguishment of debt, net
—

 
—

 
(189
)
 
—

 
(189
)
Merger-related expenses and deal costs
2,037

 
—

 
4,171

 
—

 
6,208

Other
23

 
17

 
4,313

 
—

 
4,353

Total expenses
3,293

 
49,758

 
533,315

 
—

 
586,366

Income from continuing operations before income (loss) from unconsolidated entities, income taxes and noncontrolling interest
115,484

 
19,717

 
108,033

 
(118,351
)
 
124,883

Income (loss) from unconsolidated entities
—

 
271

 
(161
)
 
—

 
110

Income tax benefit
2,780

 
—

 
—

 
—

 
2,780

Income from continuing operations
118,264

 
19,988

 
107,872

 
(118,351
)
 
127,773

Discontinued operations
32

 
199

 
(9,405
)
 
—

 
(9,174
)
Net income
118,296

 
20,187

 
98,467

 
(118,351
)
 
118,599

Net income attributable to noncontrolling interest
—

 
—

 
303

 
—

 
303

Net income attributable to common stockholders
$
118,296

 
$
20,187

 
$
98,164

 
$
(118,351
)
 
$
118,296

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


34

CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Nine Months Ended September 30, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
1,873

 
$
211,376

 
$
858,240

 
$
—

 
$
1,071,489

Resident fees and services
—

 
—

 
1,141,781

 
—

 
1,141,781

Medical office building and other services revenue
—

 
—

 
18,240

 
—

 
18,240

Income from loans and investments
2,285

 
—

 
37,150

 
—

 
39,435

Equity earnings in affiliates
383,245

 
—

 
257

 
(383,502
)
 
—

Interest and other income
294

 
21

 
499

 
—

 
814

Total revenues
387,697

 
211,397

 
2,056,167

 
(383,502
)
 
2,271,759

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(11,071
)
 
141,980

 
146,902

 
—

 
277,811

Depreciation and amortization
4,387

 
24,370

 
556,879

 
—

 
585,636

Property-level operating expenses
—

 
388

 
882,432

 
—

 
882,820

Medical office building services costs
—

 
—

 
9,565

 
—

 
9,565

General, administrative and professional fees
3,022

 
16,649

 
73,967

 
—

 
93,638

(Gain) loss on extinguishment of debt, net
(3
)
 
3

 
5,079

 
—

 
5,079

Merger-related expenses and deal costs
22,083

 
2,110

 
12,915

 
—

 
37,108

Other
13,600

 
444

 
11,277

 
—

 
25,321

Total expenses
32,018

 
185,944

 
1,699,016

 
—

 
1,916,978

Income from continuing operations before income (loss) from unconsolidated entities, income taxes, real estate dispositions and noncontrolling interest
355,679

 
25,453

 
357,151

 
(383,502
)
 
354,781

Income (loss) from unconsolidated entities
—

 
1,156

 
(607
)
 
—

 
549

Income tax expense
(4,820
)
 
—

 
—

 
—

 
(4,820
)
Income from continuing operations
350,859

 
26,609

 
356,544

 
(383,502
)
 
350,510

Discontinued operations
1,204

 
(964
)
 
2,277

 
—

 
2,517

Gain on real estate dispositions
16,514

 
—

 
—

 
—

 
16,514

Net income
368,577

 
25,645

 
358,821

 
(383,502
)
 
369,541

Net income attributable to noncontrolling interest
—

 
—

 
964

 
—

 
964

Net income attributable to common stockholders
$
368,577

 
$
25,645

 
$
357,857

 
$
(383,502
)
 
$
368,577

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


35

CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Nine Months Ended September 30, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
1,868

 
$
208,492

 
$
769,515

 
$
—

 
$
979,875

Resident fees and services
—

 
—

 
1,039,876

 
—

 
1,039,876

Medical office building and other services revenue
—

 
—

 
11,331

 
—

 
11,331

Income from loans and investments
1,262

 
877

 
43,145

 
—

 
45,284

Equity earnings in affiliates
339,353

 
—

 
675

 
(340,028
)
 
—

Interest and other income
315

 
21

 
1,565

 
—

 
1,901

Total revenues
342,798

 
209,390

 
1,866,107

 
(340,028
)
 
2,078,267

Expenses:
 
 
 
 
 
 
 
 
 
Interest
(1,453
)
 
104,614

 
141,474

 
—

 
244,635

Depreciation and amortization
3,600

 
22,420

 
498,013

 
—

 
524,033

Property-level operating expenses
—

 
396

 
821,175

 
—

 
821,571

Medical office building services costs
—

 
—

 
4,957

 
—

 
4,957

General, administrative and professional fees
1,580

 
16,161

 
67,016

 
—

 
84,757

Gain on extinguishment of debt, net
—

 
—

 
(909
)
 
—

 
(909
)
Merger-related expenses and deal costs
9,013

 
—

 
8,124

 
—

 
17,137

Other
316

 
38

 
12,971

 
—

 
13,325

Total expenses
13,056

 
143,629

 
1,552,821

 
—

 
1,709,506

Income from continuing operations before income (loss) from unconsolidated entities, income taxes and noncontrolling interest
329,742

 
65,761

 
313,286

 
(340,028
)
 
368,761

Income (loss) from unconsolidated entities
—

 
776

 
(243
)
 
—

 
533

Income tax benefit
13,100

 
—

 
—

 
—

 
13,100

Income from continuing operations
342,842

 
66,537

 
313,043

 
(340,028
)
 
382,394

Discontinued operations
2,227

 
930

 
(39,321
)
 
—

 
(36,164
)
Net income
345,069

 
67,467

 
273,722

 
(340,028
)
 
346,230

Net income attributable to noncontrolling interest
—

 
—

 
1,161

 
—

 
1,161

Net income attributable to common stockholders
$
345,069

 
$
67,467

 
$
272,561

 
$
(340,028
)
 
$
345,069

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.




36

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Three Months Ended September 30, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
109,132

 
$
4,515

 
$
120,834

 
$
(124,780
)
 
$
109,701

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
 
Foreign currency translation
—

 
—

 
(2,747
)
 
—

 
(2,747
)
Change in unrealized gain on intra-entity currency loan
(10,138
)
 
—

 
—

 
—

 
(10,138
)
Change in unrealized gain on marketable securities
(334
)
 
—

 
—

 
—

 
(334
)
Other
—

 
—

 
3,120

 
—

 
3,120

Total other comprehensive (loss) income
(10,472
)
 
—

 
373

 
—

 
(10,099
)
Comprehensive income
98,660

 
4,515

 
121,207

 
(124,780
)
 
99,602

Comprehensive income attributable to noncontrolling interest
—

 
—

 
569

 
—

 
569

Comprehensive income attributable to common stockholders
$
98,660

 
$
4,515

 
$
120,638

 
$
(124,780
)
 
$
99,033

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Three Months Ended September 30, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
118,296

 
$
20,187

 
$
98,467

 
$
(118,351
)
 
$
118,599

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation
—

 
—

 
1,665

 
—

 
1,665

Change in unrealized gain on marketable securities
(208
)
 
—

 
—

 
—

 
(208
)
Other
—

 
—

 
84

 
—

 
84

Total other comprehensive (loss) income
(208
)
 
—

 
1,749

 
—

 
1,541

Comprehensive income
118,088

 
20,187

 
100,216

 
(118,351
)
 
120,140

Comprehensive income attributable to noncontrolling interest
—

 
—

 
303

 
—

 
303

Comprehensive income attributable to common stockholders
$
118,088

 
$
20,187

 
$
99,913

 
$
(118,351
)
 
$
119,837

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.



37

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Nine Months Ended September 30, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
368,577

 
$
25,645

 
$
358,821

 
$
(383,502
)
 
$
369,541

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
Foreign currency translation
—

 
—

 
(3,320
)
 
—

 
(3,320
)
Change in unrealized gain on intra-entity currency loan
(4,586
)
 
—

 
—

 
—

 
(4,586
)
Change in unrealized gain on marketable securities
1,237

 
—

 
—

 
—

 
1,237

Other
—

 
—

 
3,166

 
—

 
3,166

Total other comprehensive loss
(3,349
)
 
—

 
(154
)
 
—

 
(3,503
)
Comprehensive income
365,228

 
25,645

 
358,667

 
(383,502
)
 
366,038

Comprehensive income attributable to noncontrolling interest
—

 
—

 
964

 
—

 
964

Comprehensive income attributable to common stockholders
$
365,228

 
$
25,645

 
$
357,703

 
$
(383,502
)
 
$
365,074

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.


CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
For the Nine Months Ended September 30, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net income
$
345,069

 
$
67,467

 
$
273,722

 
$
(340,028
)
 
$
346,230

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
Foreign currency translation
—

 
—

 
(3,148
)
 
—

 
(3,148
)
Change in unrealized gain on marketable securities
(1,015
)
 
—

 
—

 
—

 
(1,015
)
Other
—

 
—

 
2,102

 
—

 
2,102

Total other comprehensive loss
(1,015
)
 
—

 
(1,046
)
 
—

 
(2,061
)
Comprehensive income
344,054

 
67,467

 
272,676

 
(340,028
)
 
344,169

Comprehensive income attributable to noncontrolling interest
—

 
—

 
1,161

 
—

 
1,161

Comprehensive income attributable to common stockholders
$
344,054

 
$
67,467

 
$
271,515

 
$
(340,028
)
 
$
343,008

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.








38

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2014
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net cash (used in) provided by operating activities
$
(23,288
)
 
$
77,227

 
$
866,033

 
$
—

 
$
919,972

Net cash used in investing activities
(1,073,979
)
 
(4,080
)
 
(158,111
)
 
—

 
(1,236,170
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Net change in borrowings under revolving credit facility
—

 
(149,000
)
 
(4,684
)
 
—

 
(153,684
)
Proceeds from debt
—

 
696,661

 
1,311,046

 
—

 
2,007,707

Repayment of debt
—

 
—

 
(905,117
)
 
—

 
(905,117
)
Net change in intercompany debt
959,820

 
(357,609
)
 
(602,211
)
 
—

 
—

Payment of deferred financing costs
—

 
(6,561
)
 
(8,385
)
 
—

 
(14,946
)
Cash distribution from (to) affiliates
775,066

 
(256,643
)
 
(518,423
)
 
—

 
—

Cash distribution to common stockholders
(640,414
)
 
—

 
—

 
—

 
(640,414
)
Cash distribution to redeemable OP unitholders
(4,214
)
 
—

 
—

 
—

 
(4,214
)
Distributions to noncontrolling interest
—

 
—

 
(6,760
)
 
—

 
(6,760
)
Other
2,569

 
5

 
(3,125
)
 
—

 
(551
)
Net cash provided by (used in) financing activities
1,092,827

 
(73,147
)
 
(737,659
)
 
—

 
282,021

Net decrease in cash and cash equivalents
(4,440
)
 
—

 
(29,737
)
 
—

 
(34,177
)
Effect of foreign currency translation on cash and cash equivalents
(4,586
)
 
—

 
8,542

 
—

 
3,956

Cash and cash equivalents at beginning of period
28,169

 
—

 
66,647

 
—

 
94,816

Cash and cash equivalents at end of period
$
19,143

 
$
—

 
$
45,452

 
$
—

 
$
64,595

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.



39

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2013
 
Ventas, Inc.
 
Ventas
Realty (1)
 
Ventas
Subsidiaries
 
Consolidated
Elimination
 
Consolidated
 
(In thousands)
Net cash (used in) provided by operating activities
$
(11,070
)
 
$
114,924

 
$
731,575

 
$
—

 
$
835,429

Net cash (used in) provided by investing activities
(1,338,064
)
 
(3,492
)
 
163,455

 
—

 
(1,178,101
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Net change in borrowings under revolving credit facility
—

 
(90,000
)
 
(2,586
)
 
—

 
(92,586
)
Proceeds from debt
—

 
1,606,849

 
159,995

 
—

 
1,766,844

Repayment of debt
(11,420
)
 
—

 
(829,112
)
 
—

 
(840,532
)
Net change in intercompany debt
1,874,740

 
(1,615,925
)
 
(258,815
)
 
—

 
—

Payment of deferred financing costs
—

 
(18,291
)
 
(1,686
)
 
—

 
(19,977
)
Cash distribution (to) from affiliates
(38,168
)
 
5,994

 
32,174

 
—

 
—

Issuance of common stock, net
106,002

 
—

 
—

 
—

 
106,002

Cash distribution to common stockholders
(588,770
)
 
—

 
—

 
—

 
(588,770
)
Cash distribution to redeemable OP unitholders
(3,479
)
 
—

 
—

 
—

 
(3,479
)
Purchases of redeemable OP units
(317
)
 
—

 
—

 
—

 
(317
)
Contributions from noncontrolling interest
—

 
—

 
2,094

 
—

 
2,094

Distributions to noncontrolling interest
—

 
—

 
(7,614
)
 
—

 
(7,614
)
Other
7,830

 
—

 
—

 
—

 
7,830

Net cash provided by (used in) financing activities
1,346,418

 
(111,373
)
 
(905,550
)
 
—

 
329,495

Net (decrease) increase in cash and cash equivalents
(2,716
)
 
59

 
(10,520
)
 
—

 
(13,177
)
Effect of foreign currency translation on cash and cash equivalents
—

 
(59
)
 
—

 
—

 
(59
)
Cash and cash equivalents at beginning of period
16,734

 
—

 
51,174

 
—

 
67,908

Cash and cash equivalents at end of period
$
14,018

 
$
—

 
$
40,654

 
$
—

 
$
54,672

 
 
 
 
 
(1)
Certain of Ventas Realty’s outstanding senior notes were issued jointly with our 100% owned subsidiary, Ventas Capital Corporation, which has no assets or operations.



40

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statements
Unless otherwise indicated or except where the context otherwise requires, the terms “we,” “us” and “our” and other similar terms in this Quarterly Report on Form 10-Q refer to Ventas, Inc. and its consolidated subsidiaries.
Forward-Looking Statements
This Quarterly Report on Form 10-Q 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 our or our tenants’, operators’, borrowers’ or managers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations, and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from our expectations. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
Our actual future results and trends may differ materially from expectations depending on a variety of factors discussed in our filings with the Securities and Exchange Commission (the “SEC”). These factors include without limitation:
•
The ability and willingness of our tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with us, including, in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;
•
The ability of our tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness;
•
Our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments, including our pending acquisition of American Realty Capital Healthcare Trust, Inc. (“HCT”) and investments in different asset types and outside the United States;
•
Macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates;
•
The nature and extent of future competition, including new construction in the markets in which our seniors housing communities and medical office buildings (“MOBs”) are located;
•
The extent of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates;
•
Increases in our borrowing costs as a result of changes in interest rates and other factors;
•
The ability of our operators and managers, as applicable, to comply with laws, rules and regulations in the operation of our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients;
•
Changes in general economic conditions or economic conditions in the markets in which we may, from time to time, compete, and the effect of those changes on our revenues, earnings and funding sources;
•
Our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due;
•
Our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax and other considerations;
•
Final determination of our taxable net income for the year ending December 31, 2014;

41

•
The ability and willingness of our tenants to renew their leases with us upon expiration of the leases, our ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant or manager, and obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant or manager;
•
Risks associated with our senior living operating portfolio, such as factors that can cause volatility in our operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties;
•
Changes in exchange rates for any foreign currency in which we may, from time to time, conduct business;
•
Year-over-year changes in the Consumer Price Index or the UK Retail Price Index and the effect of those changes on the rent escalators contained in our leases and our earnings;
•
Our ability and the ability of our tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers;
•
The impact of increased operating costs and uninsured professional liability claims on our liquidity, financial condition and results of operations or that of our tenants, operators, borrowers and managers and our ability and the ability of our tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims;
•
Risks associated with our MOB portfolio and operations, including our ability to successfully design, develop and manage MOBs, to accurately estimate our costs in fixed fee-for-service projects and to retain key personnel;
•
The ability of the hospitals on or near whose campuses our MOBs are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups;
•
Our ability to build, maintain and expand our relationships with existing and prospective hospital and health system clients;
•
Risks associated with our investments in joint ventures and unconsolidated entities, including our lack of sole decision-making authority and our reliance on our joint venture partners’ financial condition;
•
The impact of market or issuer events on the liquidity or value of our investments in marketable securities;
•
Merger and acquisition activity in the seniors housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of our tenants, operators, borrowers or managers or significant changes in the senior management of our tenants, operators, borrowers or managers;
•
The impact of litigation or any financial, accounting, legal or regulatory issues that may affect us or our tenants, operators, borrowers or managers;
•
Changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on our earnings; and
•
The impact of expenses related to the re-audit and re-review of our historical financial statements and related matters.
Many of these factors are beyond our control and the control of our management.
Brookdale Senior Living, Kindred, Atria and Sunrise Information
Each of Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale Senior Living and Kindred contained or referred to in this Quarterly Report on Form 10-Q has been derived from SEC filings made by Brookdale Senior Living or Kindred, as the case may be, or other publicly available information or was provided to us by Brookdale Senior Living or Kindred, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Brookdale Senior Living’s and Kindred’s publicly available filings, which can be found on the SEC’s website at www.sec.gov.

42

Neither Atria Senior Living, Inc. (“Atria”) nor Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”) is currently subject to the reporting requirements of the SEC. The information related to Atria and Sunrise contained or referred to in this Quarterly Report on Form 10-Q has been derived from publicly available information or was provided to us by Atria or Sunrise, as the case may be, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.
Company Overview
We are a REIT with a highly diversified portfolio of seniors housing and healthcare properties located throughout the United States, Canada and the United Kingdom. As of September 30, 2014 , we owned more than 1,500  properties (including properties classified as held for sale), including seniors housing communities, MOBs, skilled nursing and other facilities, and hospitals, and we had two properties under development. We are an S&P 500 company and currently headquartered in Chicago, Illinois.
We primarily acquire and own seniors housing and healthcare properties and lease them to unaffiliated tenants or operate them through independent third-party managers. As of September 30, 2014 , we leased a total of 907 properties (excluding MOBs and properties classified as held for sale) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and we engaged independent operators, such as Atria and Sunrise, to manage 270 of our seniors housing communities (excluding properties classified as held for sale) for us pursuant to long-term management agreements. Our two largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”) and Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) leased from us 161 properties (excluding six properties included in investments in unconsolidated entities) and 86 properties, respectively, as of September 30, 2014 .
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and unsecured loans and other investments relating to seniors housing and healthcare operators or properties.
We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of: (1) generating reliable and growing cash flows; (2) maintaining a balanced, diversified portfolio of high-quality assets; and (3) preserving our financial strength, flexibility and liquidity.
Our ability to access capital in a timely and cost effective manner is critical to the success of our business strategy because it affects our ability to satisfy existing obligations, including the repayment of maturing indebtedness, and to make future investments. Our access to and cost of external capital depend on factors such as general market conditions, interest rates, credit ratings on our securities, expectations of our potential future earnings and cash distributions, and the trading price of our common stock that are beyond our control and fluctuate over time. Generally, we attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt. At September 30, 2014 , 18.0% of our consolidated debt was variable rate debt.
Operating Highlights and Key Performance Trends
2014 Highlights
•
We paid the first three quarterly installments of our 2014 dividend each in the amount of $0.725 per share, which represents an 8% increase over the same periods in the prior year.

•
During the first nine months of 2014, we invested approximately $1.5 billion in healthcare assets, including the acquisition of 29 independent living communities located in Canada from Holiday Retirement (the “Holiday Canada Acquisition”) and three high-quality private hospitals located in the United Kingdom.

•
During the first nine months of 2014, we sold 19 properties for $114.2 million and received loans receivable repayments of $52.1 million.

•
In April, we issued and sold $700 million aggregate principal amount of senior notes with a weighted average interest rate of 2.75% and a weighted average maturity of seven years.


43

•
In June, we entered into a definitive agreement to acquire HCT in a stock and cash transaction valued at approximately $2.9 billion , or $11.33 per share of HCT common stock, including investments expected to be made by HCT prior to completion of our acquisition, substantially all of which have now been completed. 

•
In September, we issued and sold CAD 650 million aggregate principal amount of senior notes, with an effective weighted average interest rate of 3.5% and a weighted average maturity of 6.9 years, on a private placement basis in Canada. We used the net proceeds from the sale to repay a portion of a CAD 791 million unsecured term loan we entered into to initially fund the Holiday Canada Acquisition.
Concentration Risk
We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations, business models, and tenants, operators and managers. We evaluate concentration risk in terms of investment mix and operations mix. Investment mix measures the percentage of our investments that is concentrated in a specific asset type or that is operated or managed by a particular tenant, operator or manager. Operations mix measures the percentage of our operating results that is attributed to a particular tenant, operator or manager, geographic location or business model. The following tables reflect our concentration risk as of the dates and for the periods presented:
 
As of September 30, 2014
 
As of December 31, 2013
Investment mix by asset type (1):
 
 
 
Seniors housing communities
66.4
%
 
64.2
%
MOBs
16.2

 
18.2

Skilled nursing and other facilities
12.8

 
13.6

Hospitals
2.9

 
2.3

Secured loans receivable and investments, net
1.7

 
1.7

Investment mix by tenant, operator and manager (1):
 
 
 
Atria
24.3
%
 
19.9
%
Sunrise
12.6

 
13.9

Brookdale Senior Living
10.4

 
9.7

Kindred
2.1

 
3.2

All other
50.6

 
53.3

 
 
 
 
 
(1)
Ratios are based on the gross book value of real estate investments (excluding assets classified as held for sale) as of each reporting date.




44

 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Operations mix by tenant and operator and business model:
 
 
 
 
 
 
 
Revenues (1):
 
 
 
 
 
 
 
Senior living operations
50.9
%
 
50.8
%
 
50.4
%
 
50.4
%
Kindred
5.4

 
7.5

 
6.4

 
8.3

Brookdale Senior Living (2)
5.6

 
5.5

 
5.5

 
5.6

All others
38.1

 
36.2

 
37.7

 
35.7

Adjusted EBITDA (3):
 
 
 
 
 
 
 
Senior living operations
28.6
%
 
27.8
%
 
28.2
%
 
27.5
%
Kindred
8.8

 
12.4

 
10.4

 
13.7

Brookdale Senior Living (2)
9.3

 
9.3

 
9.1

 
9.5

All others
53.3

 
50.5

 
52.3

 
49.3

NOI (4):
 
 
 
 
 
 
 
Senior living operations
28.0
%
 
27.0
%
 
27.5
%
 
26.7
%
Kindred
9.0

 
12.5

 
10.6

 
13.8

Brookdale Senior Living (2)
9.4

 
9.2

 
9.0

 
9.4

All others
53.6

 
51.3

 
52.9

 
50.1

Operations mix by geographic location (5):
 
 
 
 
 
 
 
California
15.0
%
 
14.5
%
 
15.2
%
 
14.2
%
New York
9.5

 
9.9

 
9.7

 
10.1

Texas
6.7

 
7.0

 
7.0

 
6.7

Illinois
4.4

 
4.8

 
4.6

 
4.7

Florida
4.1

 
4.1

 
4.1

 
4.1

All others
60.3

 
59.7

 
59.4

 
60.2

 
 
 
 
 
(1)
Total revenues include medical office building and other services revenue, revenue from loans and investments and interest and other income (excluding amounts in discontinued operations).

(2)
Excludes one seniors housing community included in senior living operations.

(3)
“Adjusted EBITDA” is defined as earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, merger-related expenses and deal costs, expenses related to the re-audit and re-review of our historical financial statements, net gains on real estate activity and changes in the fair value of financial instruments (including amounts in discontinued operations).
(4)
“NOI” represents net operating income, which is defined as total revenues, less interest and other income, property-level operating expenses and medical office building services costs (excluding amounts in discontinued operations).
(5)
Ratios are based on total revenues (excluding amounts in discontinued operations) for each period presented.
See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosures regarding Adjusted EBITDA and NOI and reconciliations to our net income, as computed in accordance with GAAP.
Triple-Net Lease Expirations
If our tenants are not able or willing to renew our triple-net leases upon expiration, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic terms, if at all. Although our lease expirations are staggered, the non-renewal of some or all of our triple-net leases that expire in any given year could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and other obligations and our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a

45

“Material Adverse Effect”). During the three and nine months ended September 30, 2014 , we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for those periods.
Currently, we have re-leased to Kindred, transitioned to new operators or sold 103 of the 108 licensed healthcare assets whose lease terms with Kindred were scheduled to expire on September 30, 2014.  We expect to transition or sell by the end of 2014 the remaining five skilled nursing facilities whose leases were not renewed by Kindred, although these transactions remain subject to regulatory approval and other conditions, and we cannot assure you that we will be able to successfully complete them on a timely basis, if at all, or that expected financial results will be achieved.
With respect to four of the five remaining assets, Kindred must still continue to perform all of its obligations under the applicable master lease, including without limitation, payment of all rental amounts, through December 31, 2014 if the transitions have not yet occurred (and the fifth asset is currently under contract for sale).  Moreover, we own or have the rights to all licenses and certificates of need at the properties, and Kindred has extensive and detailed obligations to cooperate and ensure an orderly transition of the properties to another operator.
We do not expect that these transactions will materially impact our results of operations in 2014 or 2015.  However, we cannot provide any assurances of the actual impact these transactions will have on our future operations, nor can we assure you as to whether, when or on what terms we will be able to transition to qualified healthcare operators or sell any or all of the remaining non-renewed assets. Our ability to do so could be significantly delayed or limited by state licensing, CON or other laws, as well as by the Medicare and Medicaid change-of-ownership rules, and we could incur substantial additional expenses in connection with any licensing or change-of ownership proceedings. We may also be required to fund certain expenses and incur obligations to preserve the value of, and avoid the imposition of liens on, the remaining non-renewed assets while they are being transitioned or sold.
Recent Developments Regarding Government Regulation
Medicare Reimbursement: Long-Term Acute Care Hospitals
On August 4, 2014, the Centers for Medicare & Medicaid Services (“CMS”) released its final rule updating the prospective payment system for long-term acute care hospitals (LTAC PPS) for the 2015 fiscal year (October 1, 2014 through September 30, 2015). Under the final rule, the LTAC PPS standard federal payment rate will increase by 2.2% in fiscal year 2015, reflecting a 2.9% increase in the market basket index, less both a 0.5% productivity adjustment and a 0.2% adjustment mandated by the Patient Protection and Affordable Care Act and its reconciliation measure, the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”). After taking into account the last year of the three-year phase in of the permanent one-time budget neutrality adjustment (-1.3%), the LTAC PPS standard federal payment rate in fiscal year 2015 will increase under the final rule by slightly more than 1% over the rate for fiscal year 2014. In addition, the final rule provides for: the retroactive reinstatement and extension, for an additional four years, of the moratorium on the full implementation of the 25-percent rule to freestanding and grandfathered long-term acute care hospitals established under the Medicare, Medicaid and SCHIP Extension Act of 2007 and amended by subsequent legislation; and implementation of the moratorium on the establishment of new long-term acute care hospitals and satellite facilities and the moratorium on bed increases in long-term acute care hospitals under the Pathway for SGR Reform Act of 2013, as amended by the Protecting Access to Medicare Act of 2014, effective for the period beginning April 1, 2014 and ending September 30, 2017. CMS estimates that net payments to long-term acute care hospitals under the final rule will increase by approximately $62 million, or 1.1%, in fiscal year 2015 due to the update to the standard federal payment rate, changes to the area wage adjustment and expected changes to short-stay and high-cost outlier payments. However, after taking into account the reinstatement of the moratorium on the implementation of the 25-percent rule, the implementation of the moratoria on the development of new long-term acute care hospitals and satellite facilities and additional beds, and the impact of certain other policy changes, CMS estimates that net payments to long-term acute care hospitals under the final rule will increase by approximately $178 million in fiscal year 2015 relative to fiscal year 2014.

We are currently analyzing the financial implications of this final rule on the operators of our long-term acute care hospitals. We cannot provide any assurance that this rule or future updates to LTAC PPS or Medicare reimbursement for long-term acute care hospitals will not materially adversely affect our operators, which, in turn, could have a material adverse effect on our business, financial condition, results of operations and liquidity, on our ability to service our indebtedness and other obligations and on our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a “Material Adverse Effect”).


46

Medicare Reimbursement: Skilled Nursing Facilities
On July 31, 2014, CMS released its final rule updating the prospective payment system for skilled nursing facilities (SNF PPS) for the 2015 fiscal year (October 1, 2014 through September 30, 2015). Under the final rule, the SNF PPS standard federal payment rate will increase by 2.0% in fiscal year 2015, reflecting a 2.5% increase in the market basket index, less a 0.5% productivity adjustment mandated by the Affordable Care Act. CMS estimates that net payments to skilled nursing facilities as a result of the final rule will increase by approximately $750 million in fiscal year 2015.

We are currently analyzing the financial implications of this final rule on the operators of our skilled nursing facilities. We cannot provide any assurance that this rule or future updates to SNF PPS or Medicare reimbursement for skilled nursing facilities will not materially adversely affect our operators, which, in turn, could have a Material Adverse Effect on us.
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”). GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 18, 2014, as amended by Amendment No. 1 to our Annual Report on Form 10-K/A, filed with the SEC on September 4, 2014, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Business Combinations
We account for acquisitions using the acquisition method and allocate the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of in-place leases, acquired lease contracts, tenant and customer relationships, trade names/trademarks and goodwill. We do not amortize goodwill, which represents the excess of the purchase price paid over the fair value of the net assets of the acquired business and is included in other assets on our Consolidated Balance Sheets.
Our method for allocating the purchase price to acquired investments in real estate requires us to make subjective assessments for determining fair value of the assets acquired and liabilities assumed. This includes determining the value of the buildings, land and improvements, construction in progress, ground leases, tenant improvements, in-place leases, above and/or below market leases, purchase option intangible assets and/or liabilities, and any debt assumed. These estimates require significant judgment and in some cases involve complex calculations. These allocation assessments directly impact our results of operations, as amounts allocated to certain assets and liabilities have different depreciation or amortization lives. In addition, we amortize the value assigned to above and/or below market leases as a component of revenue, unlike in-place leases and other intangibles, which we include in depreciation and amortization in our Consolidated Statements of Income.
We estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over the estimated remaining life of the building, not to exceed 35 years. We determine the allocated value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analysis of recently acquired and existing comparable properties within our portfolio.
The fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above and/or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus any assumed bargain renewal periods. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized lease-related intangibles associated with that lease in

47

operations at that time.
We estimate the fair value of tenant or other customer relationships acquired, if any, by considering the nature and extent of existing business relationships with the tenant or customer, growth prospects for developing new business with the tenant or customer, the tenant’s credit quality, expectations of lease renewals with the tenant, and the potential for significant, additional future leasing arrangements with the tenant, and we amortize that value over the expected life of the associated arrangements or leases, including the remaining terms of the related leases and any expected renewal periods. We estimate the fair value of trade names and trademarks using a royalty rate methodology and amortize that value over the estimated useful life of the trade name or trademark.
We calculate the fair value of long-term debt by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings, which we approximate based on the rate at which we would expect to incur a replacement instrument on the date of acquisition, and recognize any fair value adjustments related to long-term debt as effective yield adjustments over the remaining term of the instrument.
Recently Issued or Adopted Accounting Standards
In 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. The application of this guidance is prospective from the date of adoption. We initially adopted ASU 2014-08 for the quarter ended March 31, 2014.
In 2014, the FASB issued Accounting Standards Update 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. ASU 2014-09 is effective for us beginning January 1, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.
Results of Operations
As of September 30, 2014 , we operated through three reportable business segments: triple-net leased properties, senior living operations and MOB operations. In our triple-net leased properties segment, we acquire and own seniors housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our MOB operations segment, we primarily acquire, own, develop, lease and manage MOBs. Information provided for “all other” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, loans receivable and investments, and miscellaneous accounts receivable.

48

Three Months Ended September 30, 2014 and 2013
The table below shows our results of operations for the three months ended September 30, 2014 and 2013 and the effect of changes in those results from period to period on our net income attributable to common stockholders.
 
For the Three Months Ended September 30,
 
Increase (Decrease)
to Net Income
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI:
 
 
 
 
 
 
 
Triple-Net Leased Properties
$
245,342

 
$
219,814

 
$
25,528

 
11.6
 %
Senior Living Operations
130,973

 
114,796

 
16,177

 
14.1

MOB Operations
76,820

 
75,092

 
1,728

 
2.3

All Other
14,543

 
14,948

 
(405
)
 
(2.7
)
Total segment NOI
467,678

 
424,650

 
43,028

 
10.1

Interest and other income
368

 
66

 
302

 
> 100

Interest expense
(98,469
)
 
(83,764
)
 
(14,705
)
 
(17.6
)
Depreciation and amortization
(201,224
)
 
(177,038
)
 
(24,186
)
 
(13.7
)
General, administrative and professional fees
(29,466
)
 
(28,659
)
 
(807
)
 
(2.8
)
(Loss) gain on extinguishment of debt, net
(2,414
)
 
189

 
(2,603
)
 
( > 100 )

Merger-related expenses and deal costs
(16,749
)
 
(6,208
)
 
(10,541
)
 
( > 100 )

Other
(15,229
)
 
(4,353
)
 
(10,876
)
 
( > 100 )

Income before (loss) income from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
104,495

 
124,883

 
(20,388
)
 
(16.3
)
(Loss) income from unconsolidated entities
(47
)
 
110

 
(157
)
 
( > 100 )

Income tax benefit
1,887

 
2,780

 
(893
)
 
(32.1
)
Income from continuing operations
106,335

 
127,773

 
(21,438
)
 
(16.8
)
Discontinued operations
(259
)
 
(9,174
)
 
8,915

 
97.2

Gain on real estate dispositions
3,625

 
—

 
3,625

 
nm

Net income
109,701

 
118,599

 
(8,898
)
 
(7.5
)
Net income attributable to noncontrolling interest
569

 
303

 
(266
)
 
(87.8
)
Net income attributable to common stockholders
$
109,132

 
$
118,296

 
(9,164
)
 
(7.7
)
 
 
 
 
 
nm - not meaningful
Segment NOI—Triple-Net Leased Properties
NOI for our triple-net leased properties reportable business segment equals the rental income and other services revenue earned from our triple-net assets. We incur no direct operating expenses for this segment.
The following table summarizes results of continuing operations in our triple-net leased properties reportable business segment:
 
For the Three Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
244,206

 
$
218,698

 
$
25,508

 
11.7
%
Other services revenue
1,136

 
1,116

 
20

 
1.8

Segment NOI
$
245,342

 
$
219,814

 
25,528

 
11.6


49

Triple-net leased properties segment NOI increased during the three months ended September 30, 2014 over the prior year primarily due to rent from the properties we acquired after July 1, 2013, contractual escalations in rent pursuant to the terms of our leases, and increases in base and other rent under certain of our leases.
In our triple-net leased properties segment, our revenues generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the properties. Therefore, while occupancy rates may affect the profitability of our tenants’ operations, they do not directly impact our revenues or financial results. The following table sets forth average continuing occupancy rates related to the triple-net leased properties we owned at September 30, 2014 for the second quarter of 2014 (which is the most recent information available to us from our tenants) and average continuing occupancy rates related to the triple-net leased properties we owned at September 30, 2013 for the second quarter of 2013.
 
Number of Properties Owned at September 30, 2014 (1)
 
Average
Occupancy For the
Three Months
Ended June 30,
2014 (1)
 
 
Number of Properties Owned at September 30, 2013 (1)
 
Average
Occupancy For the
Three Months
Ended June 30,
2013 (1)
Seniors housing communities
444

 
87.6
%
 
 
417

 
86.4
%
Skilled nursing facilities
270

 
79.3

 
 
247

 
80.4

Hospitals
47

 
57.5

 
 
46

 
56.1

 
 
 
 
 
(1)
Excludes properties sold or classified as held for sale as of September 30, 2014 , non-stabilized properties, properties included in investments in unconsolidated entities and certain properties for which we do not receive occupancy information.  Also excludes properties acquired during the three months ended September 30, 2014 and 2013 , respectively, and properties that transitioned operators for which we do not have five full quarters of results subsequent to the transition.
The following table compares results of continuing operations for our 836 same-store triple-net leased properties. For purposes of this table, we define same-store properties as properties that we owned for the full period in both comparison periods.
 
For the Three Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
221,929

 
$
214,382

 
$
7,547

 
3.5
%
Other services revenue
1,136

 
1,116

 
20

 
1.8

Segment NOI
$
223,065

 
$
215,498

 
7,567

 
3.5

Segment NOI—Senior Living Operations
The following table summarizes results of continuing operations in our senior living operations reportable business segment:
 
For the Three Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
396,247

 
$
359,112

 
$
37,135

 
10.3
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(265,274
)
 
(244,316
)
 
(20,958
)
 
(8.6
)
Segment NOI
$
130,973

 
$
114,796

 
16,177

 
14.1

Revenues attributed to our senior living operations segment consist of resident fees and services, which include all amounts earned from residents at our seniors housing communities, such as rental fees related to resident leases, extended health care fees and other ancillary service income. Our senior living operations segment revenues increased in the third quarter

50

of 2014 over the third quarter of 2013 primarily due to the seniors housing communities we acquired after July 1, 2013, including the Holiday Canada Acquisition.
Property-level operating expenses related to our senior living operations segment include labor, food, utilities, marketing, management and other costs of operating the properties. Property-level operating expenses also increased for the three months ended September 30, 2014 over the same period in 2013 primarily due to the acquired properties described above.
The following table compares results of continuing operations for our 227 same-store senior living operating communities. For purposes of this table, we define same-store communities as communities that we owned for the full period in both comparison periods.
 
For the Three Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
358,977

 
$
351,936

 
$
7,041

 
2.0
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(243,767
)
 
(239,749
)
 
(4,018
)
 
(1.7
)
Segment NOI
$
115,210

 
$
112,187

 
3,023

 
2.7

The following table sets forth average unit occupancy rates and the average monthly revenue per occupied room related to continuing operations in our senior living operations segment during the three months ended September 30, 2014 and 2013 :
 
Number of Properties at September 30,
 
Average Unit Occupancy For the Three Months Ended September 30,
 
Average Monthly Revenue Per Occupied Room For the Three Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total communities
272

 
237

 
91.3
%
 
91.4
%
 
$
5,389

 
$
5,457

Same-store communities
227

 
227

 
91.4

 
91.6

 
5,596

 
5,476

Segment NOI—MOB Operations
The following table summarizes results of continuing operations in our MOB operations reportable business segment:
 
For the Three Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
116,598

 
$
114,779

 
$
1,819

 
1.6
 %
Medical office building services revenue
5,937

 
2,530

 
3,407

 
> 100

Total revenues
122,535

 
117,309

 
5,226

 
4.5

Less:
 
 
 
 
 
 
 
Property-level operating expenses
(41,147
)
 
(40,566
)
 
(581
)
 
(1.4
)
Medical office building services costs
(4,568
)
 
(1,651
)
 
(2,917
)
 
( > 100 )

Segment NOI
$
76,820

 
$
75,092

 
1,728

 
2.3

The increase in our MOB operations segment rental income in the third quarter of 2014 over the same period in 2013 is attributed primarily to the MOBs we acquired after July 1, 2013 and slightly higher base rents. The $0.6 million increase in our MOB property-level operating expenses in the third quarter of 2014 over the same period in 2013 is attributed primarily to the MOBs we acquired after July 1, 2013 and increases in payroll, insurance and real estate tax expenses, partially offset by decreases in operating costs resulting from expense controls.
Medical office building services revenue, net of applicable costs, increased year over year primarily due to increased construction activity during the third quarter of 2014 over the same period in 2013 .

51

The following table compares results of continuing operations for our 297 same-store MOBs. For purposes of this table, we define same-store MOBs as MOBs that we owned for the full period in both comparison periods.
 
For the Three Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
112,468

 
$
111,370

 
$
1,098

 
1.0
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(39,574
)
 
(39,224
)
 
(350
)
 
(0.9
)
Segment NOI
$
72,894

 
$
72,146

 
748

 
1.0

The following table sets forth occupancy rates and the annualized average rent per occupied square foot related to continuing operations in our MOB operations segment at and for the three months ended September 30, 2014 and 2013 :
 
Number of Properties at September 30,
 
Occupancy at September 30,
 
Annualized Average Rent Per Occupied Square Foot for the Three Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total MOBs
309

 
306

 
90.0
%
 
90.2
%
 
$
31

 
$
30

Same-store MOBs
297

 
297

 
90.0

 
90.2

 
31

 
30

Interest Expense
The $13.8 million increase in total interest expense, including interest allocated to discontinued operations of $0.3 million and $1.2 million for the three months ended September 30, 2014 and 2013 , respectively, is attributed primarily to $17.6 million of additional interest due to higher debt balances, partially offset by a $5.1 million reduction in interest due to lower effective interest rates, including the amortization of any fair value adjustments. Our effective interest rate was 3.6% for the three months ended September 30, 2014 , compared to 3.8% for the same period in 2013 .
Depreciation and Amortization
Depreciation and amortization expense increased during the three months ended September 30, 2014 compared to the same period in 2013 primarily due to the real estate acquisitions we made in 2013 and 2014.
General, Administrative and Professional Fees
General, administrative and professional fees increased $0.8 million during the three months ended September 30, 2014 compared to the same period in 2013 primarily due to our continued organizational growth.
(Loss) Gain on Extinguishment of Debt, Net
The loss on extinguishment of debt, net for the three months ended September 30, 2014 resulted primarily from various debt repayments. The gain on extinguishment of debt, net for the three months ended September 30, 2013 resulted primarily from early mortgage repayments.
Merger-Related Expenses and Deal Costs
Merger-related expenses and deal costs for both periods consist of transition, integration, deal and severance-related expenses primarily related to pending and consummated transactions required by GAAP to be expensed rather than capitalized into the asset value. The $10.5 million increase during the three months ended September 30, 2014 over the prior year is primarily due to increased 2014 investment activity related to pending and completed transactions.
Other
Other primarily includes building rent expense paid to lease certain of our senior living operating communities, as well as certain unreimbursable expenses related to our triple-net leased portfolio. For the three months ended September 30, 2014 , other also includes expenses related to the re-audit and re-review of our historical financial statements.

52

Income Tax Benefit
Income tax benefit for the three months ended September 30, 2014 was due primarily to the release of income tax reserves at entities other than our taxable REIT subsidiaries (“TRS” or “TRS entities”) and the release of valuation allowances at our TRS subsidiaries. Income tax benefit for the three months ended September 30, 2013 was due primarily to the release of valuation allowances against certain deferred tax assets.
Discontinued Operations
Discontinued operations for the three months ended September 30, 2014 reflects activity related to ten properties, five of which we sold during the third quarter of 2014 and five of which were classified as held for sale as of September 30, 2014 . We recognized a minimal net loss on real estate dispositions during the three months ended September 30, 2014 . Discontinued operations for the comparable 2013 period reflects activity related to 23 properties, two of which we sold during the third quarter of 2013 , resulting in a minimal net gain.
Gain on Real Estate Dispositions
The $3.6 million gain on real estate dispositions for the three months ended September 30, 2014 resulted primarily from the sale of two properties that are not classified in discontinued operations. Gains on real estate dispositions for the three months ended September 30, 2013 are classified in discontinued operations.
Net Income Attributable to Noncontrolling Interest
Net income attributable to noncontrolling interest for both the three months ended September 30, 2014 and 2013 represent our partners’ joint venture interests in 51 properties.

53

Nine Months Ended September 30, 2014 and 2013
The table below shows our results of operations for the nine months ended September 30, 2014 and 2013 and the effect of changes in those results from period to period on our net income attributable to common stockholders.
 
For the Nine Months Ended September 30,
 
Increase (Decrease)
to Net Income
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI:
 
 
 
 
 
 
 
Triple-Net Leased Properties
$
728,207

 
$
647,745

 
$
80,462

 
12.4
 %
Senior Living Operations
378,788

 
333,315

 
45,473

 
13.6

MOB Operations
230,630

 
222,731

 
7,899

 
3.5

All Other
40,935

 
46,047

 
(5,112
)
 
(11.1
)
Total segment NOI
1,378,560

 
1,249,838

 
128,722

 
10.3

Interest and other income
814

 
1,901

 
(1,087
)
 
(57.2
)
Interest expense
(277,811
)
 
(244,635
)
 
(33,176
)
 
(13.6
)
Depreciation and amortization
(585,636
)
 
(524,033
)
 
(61,603
)
 
(11.8
)
General, administrative and professional fees
(93,638
)
 
(84,757
)
 
(8,881
)
 
(10.5
)
(Loss) gain on extinguishment of debt, net
(5,079
)
 
909

 
(5,988
)
 
( > 100 )

Merger-related expenses and deal costs
(37,108
)
 
(17,137
)
 
(19,971
)
 
( > 100 )

Other
(25,321
)
 
(13,325
)
 
(11,996
)
 
(90.0
)
Income before income from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
354,781

 
368,761

 
(13,980
)
 
(3.8
)
Income from unconsolidated entities
549

 
533

 
16

 
3.0

Income tax (expense) benefit
(4,820
)
 
13,100

 
(17,920
)
 
( > 100 )

Income from continuing operations
350,510

 
382,394

 
(31,884
)
 
(8.3
)
Discontinued operations
2,517

 
(36,164
)
 
38,681

 
 > 100

Gain on real estate dispositions
16,514

 
—

 
16,514

 
nm

Net income
369,541

 
346,230

 
23,311

 
6.7

Net income attributable to noncontrolling interest
964

 
1,161

 
197

 
17.0

Net income attributable to common stockholders
$
368,577

 
$
345,069

 
23,508

 
6.8

 
 
 
 
 
nm - not meaningful
Segment NOI—Triple-Net Leased Properties
The following table summarizes results of continuing operations in our triple-net leased properties reportable business segment:
 
For the Nine Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
724,778

 
$
644,403

 
$
80,375

 
12.5
%
Other services revenue
3,429

 
3,342

 
87

 
2.6

Segment NOI
$
728,207

 
$
647,745

 
80,462

 
12.4

Triple-net leased properties segment NOI increased during the nine months ended September 30, 2014 over the prior year primarily due to rent from the properties we acquired after January 1, 2013, contractual escalations in rent pursuant to the terms of our leases, and increases in base and other rent under certain of our leases.

54

The following table compares results of continuing operations for our 834 same-store triple-net leased properties. For purposes of this table, we define same-store properties as properties that we owned for the full period in both comparison periods.
 
For the Nine Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Triple-Net Leased Properties:
 
 
 
 
 
 
 
Rental income
$
659,120

 
$
633,629

 
$
25,491

 
4.0
%
Other services revenue
3,429

 
3,342

 
87

 
2.6

Segment NOI
$
662,549

 
$
636,971

 
25,578

 
4.0

Segment NOI—Senior Living Operations
The following table summarizes results of continuing operations in our senior living operations reportable business segment:
 
For the Nine Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
1,141,781

 
$
1,039,876

 
$
101,905

 
9.8
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(762,993
)
 
(706,561
)
 
(56,432
)
 
(8.0
)
Segment NOI
$
378,788

 
$
333,315

 
45,473

 
13.6

Our senior living operations segment revenues increased during the nine months ended September 30, 2014 over the prior year primarily due to the seniors housing communities we acquired after January 1, 2013, including the Holiday Canada Acquisition, and higher average monthly revenue per occupied room in our communities.
Property-level operating expenses also increased during the nine months ended September 30, 2014 over the same period in 2013 primarily due to the acquired properties described above and increases in salaries, utilities, food costs, repairs and maintenance and referral fees, partially offset by decreases in bonus expense and real estate taxes.
The following table compares results of continuing operations for our 220 same-store senior living operating communities. For purposes of this table, we define same-store communities as communities that we owned for the full period in both comparison periods.
 
For the Nine Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—Senior Living Operations:
 
 
 
 
 
 
 
Total revenues
$
1,041,918

 
$
1,021,245

 
$
20,673

 
2.0
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(703,311
)
 
(694,789
)
 
(8,522
)
 
(1.2
)
Segment NOI
$
338,607

 
$
326,456

 
12,151

 
3.7


55

The following table sets forth average unit occupancy rates and the average monthly revenue per occupied room related to continuing operations in our senior living operations segment during the nine months ended September 30, 2014 and 2013 :
 
Number of Properties at September 30,
 
Average Unit Occupancy For the Nine Months Ended September 30,
 
Average Monthly Revenue Per Occupied Room For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total communities
272

 
237

 
90.8
%
 
91.1
%
 
$
5,489

 
$
5,480

Same-store communities
220

 
220

 
90.9

 
91.1

 
5,659

 
5,531

Segment NOI—MOB Operations
The following table summarizes results of continuing operations in our MOB operations reportable business segment:
 
For the Nine Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
346,711

 
$
335,472

 
$
11,239

 
3.4
 %
Medical office building services revenue
13,311

 
7,226

 
6,085

 
84.2

Total revenues
360,022

 
342,698

 
17,324

 
5.1

Less:
 
 
 
 
 
 
 
Property-level operating expenses
(119,827
)
 
(115,010
)
 
(4,817
)
 
(4.2
)
Medical office building services costs
(9,565
)
 
(4,957
)
 
(4,608
)
 
(93.0
)
Segment NOI
$
230,630

 
$
222,731

 
7,899

 
3.5

The increase in our MOB operations segment rental income during the nine months ended September 30, 2014 over the same period in 2013 is attributed primarily to the MOBs we acquired after January 1, 2013 and slightly higher base rents. The increase in our MOB property-level operating expenses is due primarily to the MOBs we acquired after January 1, 2013 and increases in utilities, snow removal, payroll and insurance expenses, partially offset by decreases in operating costs resulting from expense controls.
Medical office building services revenue and costs both increased year over year primarily due to increased construction activity during the nine months ended September 30, 2014 over the same period in 2013 .
The following table compares results of continuing operations for our 295 same-store MOBs. For purposes of this table, we define same-store MOBs as MOBs that we owned for the full period in both comparison periods.
 
For the Nine Months Ended September 30,
 
Increase (Decrease) 
to Segment NOI
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Same-Store Segment NOI—MOB Operations:
 
 
 
 
 
 
 
Rental income
$
329,119

 
$
326,758

 
$
2,361

 
0.7
 %
Less:
 
 
 
 
 
 
 
Property-level operating expenses
(113,623
)
 
(111,995
)
 
(1,628
)
 
(1.5
)
Segment NOI
$
215,496

 
$
214,763

 
733

 
0.3


56

The following table sets forth occupancy rates and the annualized average rent per occupied square foot related to continuing operations in our MOB operations segment at and for the nine months ended September 30, 2014 and 2013 :
 
Number of Properties at September 30,
 
Occupancy at September 30,
 
Annualized Average Rent Per Occupied Square Foot for the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total MOBs
309

 
306

 
90.0
%
 
90.2
%
 
$
31

 
$
30

Same-store MOBs
295

 
295

 
90.0

 
90.1

 
30

 
30

Segment NOI—All Other
All other NOI consists primarily of income from loans and investments. Income from loans and investments decreased for the nine months ended September 30, 2014 over the same period in 2013 primarily due to final repayments and sales of portions of certain loans receivable throughout 2013.
Interest Expense
The $30.2 million increase in total interest expense, including interest allocated to discontinued operations of $1.5 million and $4.4 million for the nine months ended September 30, 2014 and 2013 , respectively, is attributed primarily to $39.0 million of additional interest due to higher debt balances, partially offset by a $11.1 million reduction in interest due to lower effective interest rates, including the amortization of any fair value adjustments. Our effective interest rate was 3.7% for the nine months ended September 30, 2014 , compared to 3.8% for the same period in 2013 .
Depreciation and Amortization
Depreciation and amortization expense increased during the nine months ended September 30, 2014 compared to the same period in 2013 primarily due to the real estate acquisitions we made in 2013 and 2014.
General, Administrative and Professional Fees
General, administrative and professional fees increased $8.9 million during the nine months ended September 30, 2014 compared to the same period in 2013 primarily due to our continued organizational growth.
(Loss) Gain on Extinguishment of Debt, Net
The loss on extinguishment of debt, net for the nine months ended September 30, 2014 resulted primarily from various debt repayments. Transactions related to the extinguishment of debt during the nine months ended September 30, 2013 were not material to our results.
Merger-Related Expenses and Deal Costs
The $20.0 million increase during the nine months ended September 30, 2014 over the prior year is primarily due to increased investment activity for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013 .
Other
Other primarily includes building rent expense paid to lease certain of our senior living operating communities, as well as certain unreimbursable expenses related to our triple-net leased portfolio. For the nine months ended September 30, 2014 , other also includes expenses related to the re-audit and re-review of our historical financial statements.
Income Tax (Expense) Benefit
Income tax expense for the nine months ended September 30, 2014 was due primarily to operating income at our TRS entities. Income tax benefit for the nine months ended September 30, 2013 was due primarily to the release of valuation allowances against certain deferred tax assets of one of our TRS entities.
Discontinued Operations
Discontinued operations for the nine months ended September 30, 2014 reflects activity related to 17 properties, twelve of which we sold during the nine months ended September 30, 2014 and five of which were classified as held for sale as of September 30, 2014 . We recognized a net gain of $1.2 million on real estate dispositions during the nine months ended

57

September 30, 2014 . Discontinued operations for the comparable 2013 period reflects activity related to 40 properties, 19 of which we sold during the nine months ended September 30, 2013 , resulting in a net gain of $2.2 million .
Gain on Real Estate Dispositions
The gain on real estate dispositions for the nine months ended September 30, 2014 resulted primarily from the sale of seven properties that are not classified in discontinued operations. Gains on real estate dispositions for the nine months ended September 30, 2013 are classified in discontinued operations.
Net Income Attributable to Noncontrolling Interest
Net income attributable to noncontrolling interest for the nine months ended September 30, 2014 and 2013 represents our partners’ joint venture interests in 51 properties and 58 properties, respectively.
Non-GAAP Financial Measures
We believe that net income, as defined by GAAP, is the most appropriate earnings measurement. However, we consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance with GAAP. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to their most directly comparable GAAP measures.
The non-GAAP financial measures we present in this Quarterly Report on Form 10-Q may not be identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures 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 these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.
Funds From Operations and Normalized Funds From Operations
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, we consider Funds From Operations (“FFO”) and normalized FFO to be appropriate measures of operating performance of an equity REIT. In particular, we believe that normalized FFO is useful 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 and other events such as transactions and litigation. In some cases, we provide information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and our management to assess the impact of those items on our financial results.
We use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property, including gain on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, 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. We define normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to our acquisition lawsuits; (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 derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income; (d) the impact of future acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions; (e) the financial impact of contingent consideration, severance-related costs, charitable donations made to the Ventas Charitable Foundation, gains and losses for non-operational foreign currency hedge agreements and changes in

58

the fair value of financial instruments; and (f) expenses related to the re-audit and re-review of our historical financial statements and related matters.
Our FFO and normalized FFO for the three and nine months ended September 30, 2014 and 2013 are summarized in the following table. The increase in normalized FFO for the nine months ended September 30, 2014 over the same period in 2013 is due primarily to our 2013 and 2014 investments, net of capital costs, and same-store growth across our portfolio of properties, partially offset by higher general and administrative expenses and loan repayments since January 1, 2013.
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
 
 
 
 
Net income attributable to common stockholders
$
109,132

 
$
118,296

 
$
368,577

 
$
345,069

Adjustments:
 
 
 
 
 
 
 
Real estate depreciation and amortization
199,617

 
175,591

 
580,879

 
519,892

Real estate depreciation related to noncontrolling interest
(2,503
)
 
(2,719
)
 
(7,808
)
 
(7,838
)
Real estate depreciation related to unconsolidated entities
1,471

 
1,634

 
4,460

 
4,902

Gain on re-measurement of equity interest upon acquisition, net
—

 
—

 
—

 
(1,241
)
Gain on real estate dispositions
(3,625
)
 
—

 
(16,514
)
 
—

Discontinued operations:
 
 
 
 
 
 
 
Loss (gain) on real estate dispositions
41

 
(488
)
 
(1,442
)
 
(2,683
)
Depreciation on real estate assets
12

 
11,354

 
1,540

 
45,292

FFO
304,145

 
303,668

 
929,692

 
903,393

Adjustments:
 
 
 
 
 
 
 
Change in fair value of financial instruments
4,595

 
—

 
4,636

 
25

Non-cash income tax (benefit) expense
(1,987
)
 
(2,780
)
 
4,420

 
(13,100
)
Loss (gain) on extinguishment of debt, net
2,414

 
(189
)
 
4,528

 
(1,062
)
Merger-related expenses, deal costs and re-audit costs
23,401

 
6,209

 
43,764

 
17,063

Amortization of other intangibles
255

 
256

 
766

 
767

Normalized FFO
$
332,823

 
$
307,164

 
$
987,806

 
$
907,086


59

Adjusted EBITDA
We consider Adjusted EBITDA an important supplemental measure to net income because it provides another manner in which to evaluate our operating performance and serves as another indicator of our ability to service debt. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, merger-related expenses and deal costs, expenses related to the re-audit and re-review of our historical financial statements, net gains on real estate activity and changes in the fair value of financial instruments (including amounts in discontinued operations). The following table sets forth a reconciliation of Adjusted EBITDA to net income (including amounts in discontinued operations) for the three and nine months ended September 30, 2014 and 2013 :
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Net income
$
109,701

 
$
118,599

 
$
369,541

 
$
346,230

Adjustments:
 
 
 
 
 
 
 
Interest
98,750

 
84,999

 
279,273

 
249,024

Loss (gain) on extinguishment of debt, net
2,414

 
(189
)
 
5,079

 
(1,062
)
Taxes (including tax amounts in general, administrative and professional fees)
(1,642
)
 
(1,462
)
 
7,595

 
(9,436
)
Depreciation and amortization
201,236

 
188,392

 
587,176

 
569,325

Non-cash stock-based compensation expense
5,381

 
4,210

 
16,792

 
15,010

Merger-related expenses, deal costs and re-audit costs
23,293

 
6,208

 
43,652

 
17,137

Gain on real estate dispositions
(3,584
)
 
(488
)
 
(17,726
)
 
(2,683
)
Change in fair value of financial instruments
4,595

 
—

 
4,636

 
25

Gain on re-measurement of equity interest upon acquisition, net
—

 
—

 
—

 
(1,241
)
Adjusted EBITDA
$
440,144

 
$
400,269

 
$
1,296,018

 
$
1,182,329


60

NOI
We also consider NOI an important supplemental measure to net income because it allows investors, analysts and our management to assess our unlevered property-level operating results and to compare our operating results with the operating results of other real estate companies and between periods on a consistent basis. We define NOI as total revenues, less interest and other income, property-level operating expenses and medical office building services costs (including amounts in discontinued operations). Cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The following table sets forth a reconciliation of NOI to net income (including amounts in discontinued operations) for the three and nine months ended September 30, 2014 and 2013 :
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
 
(In thousands)
Net income
$
109,701

 
$
118,599

 
$
369,541

 
$
346,230

Adjustments:
 
 
 
 
 
 
 
Interest and other income
(368
)
 
(66
)
 
(1,564
)
 
(1,901
)
Interest
98,750

 
84,999

 
279,273

 
249,024

Depreciation and amortization
201,236

 
188,392

 
587,176

 
569,325

General, administrative and professional fees
29,466

 
28,659

 
93,638

 
84,760

Loss (gain) on extinguishment of debt, net
2,414

 
(189
)
 
5,079

 
(1,062
)
Merger-related expenses and deal costs
16,749

 
6,208

 
37,108

 
17,137

Other
15,292

 
4,346

 
25,630

 
12,823

Loss (income) from unconsolidated entities
47

 
(110
)
 
(549
)
 
(533
)
Income tax (benefit) expense
(1,887
)
 
(2,780
)
 
4,820

 
(13,100
)
Gain on real estate dispositions
(3,584
)
 
(46
)
 
(17,726
)
 
(2,241
)
NOI
467,816

 
428,012

 
1,382,426

 
1,260,462

Discontinued operations
(138
)
 
(3,362
)
 
(3,866
)
 
(10,624
)
NOI (excluding amounts in discontinued operations)
$
467,678

 
$
424,650

 
$
1,378,560

 
$
1,249,838

Liquidity and Capital Resources
As of September 30, 2014 , we had a total of $64.6 million of unrestricted cash and cash equivalents, operating cash and cash related to our senior living operations and MOB operations reportable business segments that is deposited and held in property-level accounts. Funds maintained in the property-level accounts are used primarily for the payment of property-level expenses, debt service payments and certain capital expenditures. As of September 30, 2014 , we also had escrow deposits and restricted cash of $78.7 million and $1.8 billion of unused borrowing capacity available under our unsecured revolving credit facility.
During the nine months ended September 30, 2014 , our principal sources of liquidity were cash flows from operations, borrowings under our unsecured revolving credit facility and CAD unsecured term loan, proceeds from the issuance of debt securities, proceeds from asset sales and cash on hand.
For the next 12 months, our principal liquidity needs are to: (i) fund operating expenses; (ii) meet our debt service requirements; (iii) repay maturing mortgage and other debt, including the remaining balance of our CAD unsecured term loan; (iv) fund capital expenditures; (v) fund acquisitions, investments and commitments, including our pending HCT acquisition and development and redevelopment activities; and (vi) make distributions to our stockholders and unitholders, as required for us to continue to qualify as a REIT. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our unsecured revolving credit facility. However, an inability to access liquidity through multiple such sources concurrently could have a Material Adverse Effect on us.
We expect to fund our pending acquisition of HCT through the issuance of our common stock, valued at $67.13 per share (for aggregate consideration of between $1.8 billion and $2.0 billion ), the assumption of debt and cash. 

61

Unsecured Revolving Credit Facility and Term Loans
Our unsecured credit facility is comprised of a $2.0 billion revolving credit facility priced at LIBOR plus 1.0% as of September 30, 2014 , and a $200.0 million four-year term loan and an $800.0 million five-year term loan, each priced at LIBOR plus 1.05% as of September 30, 2014 . The 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 $200.0 million and $800.0 million term loans mature in January 2018 and January 2019, respectively. The unsecured credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.5 billion .
As of September 30, 2014 , we had $225.4 million of borrowings outstanding, $21.8 million of letters of credit outstanding and $1.8 billion of unused borrowing capacity available under our unsecured revolving credit facility.
In July 2014, we entered into a new CAD 791 million unsecured term loan that matures on July 30, 2015 to initially fund a majority of the Holiday Canada Acquisition. In September 2014, we repaid CAD 660 million of the unsecured term loan principally with proceeds from the sale of unsecured senior notes issued by our wholly owned subsidiary, Ventas Canada Finance Limited.
Senior Notes
In April 2014, we issued and sold $300.0 million aggregate principal amount of 1.250% senior notes due 2017 at a public offering price equal to 99.815% of par, for total proceeds of $299.4 million before the underwriting discount and expenses, and $400.0 million aggregate principal amount of 3.750% senior notes due 2024 at a public offering price equal to 99.304% of par, for total proceeds of $397.2 million before the underwriting discount and expenses.
In September 2014, our wholly owned subsidiary, Ventas Canada Finance Limited, issued and sold CAD 400 million aggregate principal amount of 3.00% senior notes, series A due 2019 at an offering price equal to 99.713% of par, for total proceeds of CAD 398.9 million before the agent fees and expenses, and CAD 250 million aggregate principal amount of 4.125% senior notes, series B due 2024 at an offering price equal to 99.601% of par, for total proceeds of CAD 249.0 million before the agent fees and expenses. The notes are guaranteed by Ventas, Inc. and were offered on a private placement basis in Canada. We used the proceeds from the issuance to repay a portion of the CAD 791 million unsecured term loan.
Cash Flows
The following table sets forth our sources and uses of cash flows for the nine months ended September 30, 2014 and 2013 :
 
For the Nine Months Ended September 30,
 
Increase
(Decrease) to Cash
 
2014
 
2013
 
$
 
%
 
(Dollars in thousands)
Cash and cash equivalents at beginning of period
$
94,816

 
$
67,908

 
$
26,908

 
39.6
 %
Net cash provided by operating activities
919,972

 
835,429

 
84,543

 
10.1

Net cash used in investing activities
(1,236,170
)
 
(1,178,101
)
 
(58,069
)
 
(4.9
)
Net cash provided by financing activities
282,021

 
329,495

 
(47,474
)
 
(14.4
)
Effect of foreign currency translation on cash and cash equivalents
3,956

 
(59
)
 
4,015

 
> 100

Cash and cash equivalents at end of period
$
64,595

 
$
54,672

 
9,923

 
18.2

Cash Flows from Operating Activities
Cash flows from operating activities increased during the nine months ended September 30, 2014 over the same period in 2013 primarily due to our 2013 and 2014 investments, net of capital costs, and same-store growth across our portfolio of properties, partially offset by higher general and administrative expenses.
Cash Flows from Investing Activities
Cash used in investing activities during the nine months ended September 30, 2014 and 2013 consisted primarily of cash paid for our investments in real estate ( $1.2 billion and $1.4 billion in 2014 and 2013 , respectively), purchase of marketable securities ( $46.7 million in 2014 ), investment in loans receivable and other ( $66.4 million and $34.7 million in 2014 and 2013 , respectively), capital expenditures ( $56.2 million and $50.6 million in 2014 and 2013 , respectively) and development project expenditures ( $71.4 million and $74.7 million in 2014 and 2013 , respectively). These cash outflows were partially offset by proceeds from loans receivable ( $55.6 million and $299.2 million in 2014 and 2013 , respectively), proceeds from real estate

62

disposals ( $112.7 million and $29.2 million in 2014 and 2013 , respectively) and proceeds from the sale or maturity of marketable securities ( $21.7 million and $5.5 million in 2014 and 2013 , respectively).
Cash Flows from Financing Activities
Cash provided by financing activities during the nine months ended September 30, 2014 and 2013 consisted primarily of net proceeds from the issuance of debt ( $2.0 billion and $1.8 billion in 2014 and 2013 ) and net proceeds from the issuance of common stock ( $106.0 million in 2013 ), These cash inflows were partially offset by net payments made on our unsecured revolving credit facilities and term loans ( $153.7 million and $92.6 million in 2014 and 2013 , respectively), debt repayments ( $905.1 million and $840.5 million in 2014 and 2013 , respectively) and cash distributions to common stockholders, unitholders and noncontrolling interest parties ( $651.4 million and $599.9 million in 2014 and 2013 , respectively).
Capital Expenditures
The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties. However, from time to time we may fund the capital expenditures for our triple-net leased properties through loans to the tenants or advances, which may increase the amount of rent payable with respect to the properties in certain cases. We expect to fund any capital expenditures for which we may become responsible upon expiration of our triple-net leases or in the event that our tenants are unable or unwilling to meet their obligations under those leases with cash flows from operations or through additional borrowings.
We also expect to fund capital expenditures related to our senior living operations and MOB operations reportable business segments with the cash flows from the properties or through additional borrowings. To the extent that unanticipated capital expenditure needs arise or significant borrowings are required, our liquidity may be affected adversely. Our ability to borrow additional funds may be restricted in certain circumstances by the terms of the instruments governing our outstanding indebtedness.
We are party to certain agreements that obligate us to develop healthcare or seniors housing properties funded through capital that we or our joint venture partners provide. As of September 30, 2014 , we had two properties in various stages of development pursuant to these agreements. Through September 30, 2014 , we have funded $6.0 million of our estimated total commitment over the projected development period ( $18.0 million to $20.0 million ) toward these projects.
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion of our exposure to various market risks contains forward-looking statements that involve risks and uncertainties. These projected results have been prepared utilizing certain assumptions considered reasonable in light of information currently available to us. Nevertheless, because of the inherent unpredictability of interest rates and other factors, actual results could differ materially from those projected in such forward-looking information.
We are exposed to market risk related to changes in interest rates with respect to borrowings under our unsecured revolving credit facility and our unsecured term loans, certain of our mortgage loans that are floating rate obligations, mortgage loans receivable that bear interest at floating rates and marketable debt securities. These market risks result primarily from changes in LIBOR rates or prime rates. To manage these risks, we continuously monitor our level of floating rate debt with respect to total debt and other factors, including our assessment of current and future economic conditions.
For fixed rate debt, interest rate fluctuations generally affect the fair value, but not our earnings or cash flows. Therefore, interest rate risk does not have a significant impact on our fixed rate debt obligations until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs.

63

To highlight the sensitivity of our fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points (“BPS”) in interest rates as of September 30, 2014 and December 31, 2013 :
 
As of September 30, 2014
 
As of December 31, 2013
 
(In thousands)
Gross book value
$
8,571,850

 
$
7,573,698

Fair value (1)
8,881,142

 
7,690,196

Fair value reflecting change in interest rates (1):
 
 
 
 -100 basis points
9,322,009

 
8,069,013

 +100 basis points
8,457,423

 
7,320,251


(1)
The change in fair value of our fixed rate debt from December 31, 2013 to September 30, 2014 was due primarily to 2014 senior note issuances, partially offset by mortgage loan repayments.
The table below sets forth certain information with respect to our debt, excluding premiums and discounts.
 
As of September 30, 2014
 
As of December 31, 2013
 
As of September 30, 2013
 
(Dollars in thousands)
Balance:
 
 
 
 
 
Fixed rate:
 
 
 
 
 
Senior notes and other
$
6,699,106

 
$
5,418,543

 
$
5,418,543

Mortgage loans and other (1)
1,872,744

 
2,155,155

 
2,407,718

Variable rate:
 
 
 
 
 
Unsecured revolving credit facilities
225,359

 
376,343

 
447,970

Unsecured term loans
1,111,704

 
1,000,702

 
680,739

Mortgage loans and other (1)
541,951

 
369,734

 
404,048

Total
$
10,450,864

 
$
9,320,477

 
$
9,359,018

Percentage of total debt:
 
 
 
 
 
Fixed rate:
 
 
 
 
 
Senior notes and other
64.1
%
 
58.1
%
 
57.9
%
Mortgage loans and other (1)
17.9

 
23.2

 
25.7

Variable rate:
 
 
 
 
 
Unsecured revolving credit facilities
2.2

 
4.0

 
4.8

Unsecured term loans
10.6

 
10.7

 
7.3

Mortgage loans and other (1)
5.2

 
4.0

 
4.3

Total
100.0
%
 
100.0
%
 
100.0
%
Weighted average interest rate at end of period:
 
 
 
 
 
Fixed rate:
 
 
 
 
 
Senior notes and other
3.5
%
 
3.7
%
 
3.7
%
Mortgage loans and other (1)
5.9

 
6.0

 
6.0

Variable rate:
 
 
 
 
 
Unsecured revolving credit facilities
2.2

 
1.2

 
1.3

Unsecured term loans
1.4

 
1.3

 
1.6

Mortgage loans and other (1)
2.2

 
1.7

 
1.8

Total
3.6

 
3.8

 
3.9

 
 
 
 
 
(1)
Borrowings as of September 30, 2014 exclude $43.7 million of debt related to real estate assets classified as held for sale as of September 30, 2014 . Borrowings as of December 31, 2013 exclude $13.1 million of debt related to a real

64

estate asset classified as held for sale as of December 31, 2013 and sold in March 2014. All amounts were included in accounts payable and other liabilities on our Consolidated Balance Sheets.
The variable rate debt in the table above reflects, in part, the effect of $153.6 million notional amount of interest rate swaps with a maturity of March 21, 2016 that effectively convert fixed rate debt to variable rate debt. In addition, the fixed rate debt in the table above reflects, in part, the effect of $59.0 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. The increase in our outstanding variable rate debt at September 30, 2014 compared to December 31, 2013 is primarily attributable to 2014 senior note issuances and the remaining balance of our CAD unsecured term loan, partially offset by the repayment of borrowings under our unsecured revolving credit facility. Pursuant to the terms of certain leases with one of our tenants, if interest rates increase on certain variable rate debt that we have totaling $80.0 million as of September 30, 2014 , our tenant is required to pay us additional rent (on a dollar-for-dollar basis) in an amount equal to the increase in interest expense resulting from the increased interest rates. Therefore, the increase in interest expense related to this debt is equally offset by an increase in additional rent due to us from the tenant. Assuming a 100 basis point increase in the weighted average interest rate related to our variable rate debt and assuming no change in our variable rate debt outstanding as of September 30, 2014 , interest expense for 2014 would increase by approximately $18.7 million , or $0.06 per diluted common share. The fair value of our fixed and variable rate debt is based on current interest rates at which we could obtain similar borrowings.
As of September 30, 2014 and December 31, 2013 , our joint venture and operating partners’ aggregate share of total debt was $167.4 million and $174.5 million , respectively, with respect to certain properties we owned through consolidated joint ventures and an operating partnership. Total debt does not include our portion of debt related to investments in unconsolidated entities, which was $87.8 million and $89.3 million as of September 30, 2014 and December 31, 2013 , respectively.
As of September 30, 2014 and December 31, 2013 , the fair value of our secured and unsecured loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $378.9 million and $395.7 million , respectively.
We are subject to fluctuations in certain foreign currency exchange rates that may, from time to time, affect our financial condition and results of operations. Based solely on our operating results for the three months ended September 30, 2014, including the impact of existing hedging arrangements, if the value of the U.S. dollar relative to the pound sterling were to increase or decrease by 10% compared to the average exchange rate during the quarter then ended, our NOI and normalized FFO would have decreased or increased, as applicable, each by less than $0.5 million and $0.3 million, respectively, for the three-month period.  In addition, on a pro forma basis which includes the impact of the Holiday Canada Acquisition and issuance of Canadian debt, if the value of the U.S. dollar relative to the Canadian dollar were to increase or decrease by 10% compared to the average exchange rate during the quarter then ended, our NOI and normalized FFO would have decreased or increased, as applicable, each by less than $2.1 million and $1.1 million, respectively, for the three-month period ended September 30, 2014. We currently have in place, and may in the future pursue, various hedging arrangements or borrowings in local currencies to mitigate the impact of foreign currency exchange rate fluctuations, depending on our assessment of the interest rate and foreign currency exchange rate environments and the costs and risks of such strategies.  Nevertheless, we cannot assure you that any such fluctuations will not have a Material Adverse Effect on us.
ITEM 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2014 . Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, 2014 , at the reasonable assurance level.
Internal Control Over Financial Reporting
During the third quarter of 2014 , there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

65

PART II—OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS
The information contained in “Note 12—Litigation” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, there have been no new material legal proceedings and no material developments in the legal proceedings reported in our Annual Report on Form 10-K for the year ended December 31, 2013 .
In July 2014, we voluntarily contacted the Securities and Exchange Commission (“SEC”) to advise it of the determination by our former registered public accounting firm, Ernst & Young LLP (“EY”), that it was not independent of us due solely to an inappropriate personal relationship between an EY partner, who until June 30, 2014 was the lead audit partner on our 2014 audit and quarterly review and was previously an audit engagement partner on our 2013 and 2012 audits, and an individual in a financial reporting oversight role at Ventas. We have cooperated with the SEC and intend to continue to do so with respect to its inquiries related to this matter. At this time, this matter is in its early stages and we cannot reasonably assess its timing or outcome.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The table below summarizes repurchases of our common stock made during the quarter ended September 30, 2014 :
 
Number of Shares
Repurchased (1)
 
Average Price
Per Share
July 1 through July 31
14,716

 
$
64.33

August 1 through August 31
217

 
64.93

September 1 through September 30
50

 
64.75

 
 
 
 
 
(1)
Repurchases represent shares withheld to pay taxes on the vesting of restricted stock or restricted stock units granted to employees under our 2006 Incentive Plan or 2012 Incentive Plan or under the Nationwide Health Properties, Inc. (“NHP”) 2005 Performance Incentive Plan and assumed by us in connection with our acquisition of NHP. The value of the shares withheld is the closing price of our common stock on the date the vesting or exercise occurred (or, if not a trading day, the immediately preceding trading day) or the fair market value of our common stock at the time of exercise, as the case may be.

66

ITEM 6.    EXHIBITS

 
 
 
Exhibit
Number
Description of Document
Location of Document
2.1

First Amendment to Agreement and Plan of Merger, dated as of September 15, 2014, by and among Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP, American Realty Capital Healthcare Trust, Inc. and American Realty Capital Healthcare Trust Operating Partnership, L.P.
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on September 16, 2014.
4.1

Indenture dated as of September 24, 2014 between Ventas, Inc., Ventas Canada Finance Limited, the Guarantors parties thereto from time to time and Computershare Trust Company of Canada, as Trustee.

Filed herewith.
4.2

First Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.00% Senior Notes, Series A due 2019.

Filed herewith.
4.3

Second Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 4.125% Senior Notes, Series B due 2024.

Filed herewith.
10.1

Offer Letter dated September 16, 2014 from Ventas, Inc. to Robert F. Probst.
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on September 29, 2014.
10.2

Employee Protection and Noncompetition Agreement dated September 16, 2014 between Ventas, Inc. and Robert F. Probst.
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on September 29, 2014.
12.1

Statement Regarding Computation of Ratios of Earnings to Fixed Charges.
Filed herewith.
31.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
Filed herewith.
31.2

Certification of Richard A. Schweinhart, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
Filed herewith.
32.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.
Filed herewith.
32.2

Certification of Richard A. Schweinhart, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.
Filed herewith.
101

Interactive Data File.
Filed herewith.

67

SIGNATURES

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.
Date: October 24, 2014

 
VENTAS, INC.
 
 
 
 
By:
/s/ DEBRA A. CAFARO
 
 
Debra A. Cafaro
Chairman and
Chief Executive Officer
 
 
 
 
By:
/s/ RICHARD A. SCHWEINHART
 
 
Richard A. Schweinhart
Executive Vice President and
Chief Financial Officer

68

EXHIBIT INDEX

 
 
 
Exhibit
Number
Description of Document
Location of Document
2.1

First Amendment to Agreement and Plan of Merger, dated as of September 15, 2014, by and among Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP, American Realty Capital Healthcare Trust, Inc. and American Realty Capital Healthcare Trust Operating Partnership, L.P.
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on September 16, 2014.
4.1

Indenture dated as of September 24, 2014 between Ventas, Inc., Ventas Canada Finance Limited, the Guarantors parties thereto from time to time and Computershare Trust Company of Canada, as Trustee.
Filed herewith.
4.2

First Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 3.00% Senior Notes, Series A due 2019.
Filed herewith.
4.3

Second Supplemental Indenture dated as of September 24, 2014 by and among Ventas Canada Finance Limited, as Issuer, Ventas, Inc., as Guarantor, and Computershare Trust Company of Canada, as Trustee, relating to the 4.125% Senior Notes, Series B due 2024.
Filed herewith.
10.1

Offer Letter dated September 16, 2014 from Ventas, Inc. to Robert F. Probst.
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on September 29, 2014.
10.2

Employee Protection and Noncompetition Agreement dated September 16, 2014 between Ventas, Inc. and Robert F. Probst.
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on September 29, 2014.
12.1

Statement Regarding Computation of Ratios of Earnings to Fixed Charges.
Filed herewith.
31.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
Filed herewith.
31.2

Certification of Richard A. Schweinhart, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
Filed herewith.
32.1

Certification of Debra A. Cafaro, Chairman and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.
Filed herewith.
32.2

Certification of Richard A. Schweinhart, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.
Filed herewith.
101

Interactive Data File.
Filed herewith.

69

Exhibit 4.1



Ventas, Inc.,
Ventas Canada Finance Limited,
and each of the Guarantors named herein
______________________________

INDENTURE
Dated as of September 24, 2014

Senior Debt Securities
______________________________
Computershare Trust Company of Canada,
Trustee

 




TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE    1
Section 1.01    Definitions    1
Section 1.02    Other Definitions    9
Section 1.03    Rules of Construction    9
ARTICLE 2 THE SECURITIES    10
Section 2.01    Form, Dating and Denominations    10
Section 2.02    Amount Unlimited; Issuable in Series    11
Section 2.03    Execution and Authentication    14
Section 2.04    Registrar and Paying Agent    15
Section 2.05    Paying Agent to Hold Money in Trust    16
Section 2.06    Holder Lists    16
Section 2.07    Transfer and Exchange    16
Section 2.08    Replacement Securities    21
Section 2.09    Outstanding Securities    21
Section 2.10    Treasury Securities    23
Section 2.11    Temporary Securities    23
Section 2.12    Cancellation    23
Section 2.13    Defaulted Interest    23
Section 2.14    Interest Act (Canada)    24
ARTICLE 3 REDEMPTION AND PREPAYMENT    24
Section 3.01    Applicability of Article    24
Section 3.02    Notices to Trustee    24
Section 3.03    Selection of Securities to Be Redeemed    25
Section 3.04    Notice of Redemption    25
Section 3.05    Effect of Notice of Redemption    27
Section 3.06    Deposit of Redemption or Purchase Price    27
Section 3.07    Securities Redeemed or Purchased in Part    27
Section 3.08    Conversion Arrangement on Call for Redemption    28
ARTICLE 4 COVENANTS    28
Section 4.01    Payment of Securities    28
Section 4.02    Maintenance of Office or Agency    29
Section 4.03    Reports    29
Section 4.04    Compliance Certificate    30
Section 4.05    Additional Amounts    31
Section 4.06    Corporate Existence    31
ARTICLE 5 SUCCESSORS    32
Section 5.01    Consolidation, Amalgamation, Merger, or Sale of Assets    32
Section 5.02    Successor Substituted    33
ARTICLE 6 DEFAULTS AND REMEDIES    33

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Section 6.01    Events of Default    33
Section 6.02    Acceleration    35
Section 6.03    Other Remedies    35
Section 6.04    Waiver of Past Defaults    36
Section 6.05    Control by Majority    36
Section 6.06    Limitation on Suits    36
Section 6.07    Rights of Holders of Securities to Receive Payment    37
Section 6.08    Collection Suit by Trustee    37
Section 6.09    Trustee May File Proofs of Claim    37
Section 6.10    Priorities    38
Section 6.11    Undertaking for Costs    38
ARTICLE 7 TRUSTEE    39
Section 7.01    Duties of Trustee    39
Section 7.02    Rights of Trustee    40
Section 7.03    Individual Rights of Trustee    40
Section 7.04    Trustee’s Disclaimer    40
Section 7.05    Notice of Defaults    41
Section 7.06    Compensation and Indemnity    41
Section 7.07    Replacement of Trustee    42
Section 7.08    Successor Trustee by Merger, etc.    44
Section 7.09    Eligibility; Disqualification    44
Section 7.10    Anti-Money Laundering and Anti-Terrorist Legislation    44
Section 7.11    Representation regarding third party interests    44
Section 7.12    Privacy Laws    45
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE    45
Section 8.01    Applicability of Article; Option to Effect Legal Defeasance or
Covenant Defeasance    45
Section 8.02    Legal Defeasance    45
Section 8.03    Covenant Defeasance    46
Section 8.04    Conditions to Legal or Covenant Defeasance    47
Section 8.05    Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions    48
Section 8.06    Repayment to Issuer    49
Section 8.07    Reinstatement    49
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER    50
Section 9.01    Without Consent of Holders of Securities    50
Section 9.02    With Consent of Holders of Securities    52
Section 9.03    Revocation and Effect of Consents    54
Section 9.04    Notation on or Exchange of Securities    54
Section 9.05    Trustee to Sign Amendments, etc.    54
ARTICLE 10 MEETINGS OF HOLDERS    54
Section 10.01    Right to Convene Meeting    54
Section 10.02    Notice of Meetings    55
Section 10.03    Chairman    55

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Section 10.04    Quorum    55
Section 10.05    Power to Adjourn    56
Section 10.06    Show of Hands    56
Section 10.07    Poll    56
Section 10.08    Voting    56
Section 10.09    Regulations    56
Section 10.10    Issuer, Guarantor and Trustee May Be Represented    57
Section 10.11    Powers Exercisable by Extraordinary Resolution    57
Section 10.12    Meaning of “Extraordinary Resolution”    58
Section 10.13    Powers Cumulative    58
Section 10.14    Minutes    58
Section 10.15    Instruments in Writing    58
Section 10.16    Binding Effect of Resolutions    59
Section 10.17    Serial Meetings    59
ARTICLE 11 SECURITIES GUARANTEES    59
Section 11.01    Applicability of Article; Securities Guarantee    59
Section 11.02    Limitation on Guarantor Liability    63
Section 11.03    Execution and Delivery of Securities Guarantee    63
Section 11.04    Guarantors May Consolidate, etc., on Certain Terms    63
ARTICLE 12 SATISFACTION AND DISCHARGE    64
Section 12.01    Satisfaction and Discharge    64
Section 12.02    Application of Trust Money    66
ARTICLE 13 CONVERSION OF SECURITIES    66
Section 13.01    Applicability of Article    66
Section 13.02    Right of Holders to Convert Securities into Common Stock    66
Section 13.03    Issuance of Shares of Common Stock on Conversions    67
Section 13.04    No Payment or Adjustment for Interest or Dividends    68
Section 13.05    Adjustment of Conversion Price    68
Section 13.06    No Fractional Shares to be Issued    72
Section 13.07    Preservation of Conversion Rights Upon Consolidation, Amalgamation,
Merger, Sale or Conveyance    72
Section 13.08    Notice to Holders of the Securities of a Series Prior to Taking Certain
Types of Action    73
Section 13.09    Covenants to Reserve Shares for Issuance on Conversion of Securities    73
Section 13.10    Compliance with Governmental Requirements    74
Section 13.11    Payment of Taxes upon Certificates for Shares Issued upon Conversion    74
Section 13.12    Trustee’s Duties with Respect to Conversion Provisions    74
ARTICLE 14 MISCELLANEOUS    75
Section 14.01    Notices    75
Section 14.02    Certificate and Opinion as to Conditions Precedent    76
Section 14.03    Statements Required in Certificate or Opinion    76
Section 14.04    Rules by Trustee and Agents    77
Section 14.05    No Personal Liability of Directors, Officers, Employees and Stockholders    77
Section 14.06    Governing Law    77

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Section 14.07    No Adverse Interpretation of Other Agreements    77
Section 14.08    Successors    78
Section 14.09    Severability    78
Section 14.10    Counterpart Originals    78
Section 14.11    Table of Contents, Headings, etc.    78
Section 14.12    Benefits of Indenture    78
Section 14.13    Legal Holidays    78
Section 14.14    Acts of Holders    78
Section 14.15    Force Majeure    79

SCHEDULES
Schedule I    GUARANTORS







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INDENTURE dated as of September 24, 2014 between Ventas, Inc., a Delaware corporation, Ventas Canada Finance Limited, a Nova Scotia company (“ Ventas Canada ”), the Guarantors (as defined) parties hereto from time to time and Computershare Trust Company of Canada, as trustee (the “ Trustee ”).
Ventas, Inc., as a sole issuer, or Ventas Canada, as a sole issuer (as applicable, the “ Issuer ”), deems it necessary to issue from time to time for its lawful purposes senior debt securities (the “ Securities ”) evidencing its unsecured and unsubordinated indebtedness, and has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of the Securities, unlimited as to principal amount, to bear interest at such rate or pursuant to such formula, to mature at such times and to have such other provisions, including the benefit of guarantees, as shall be fixed as hereinafter provided.
The foregoing are statements of fact made by Ventas Canada and Ventas, Inc. and not by the Trustee.
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01      Definitions.
“Additional Amounts” means,(a) when used with respect to a Security of a series issued with the benefits provided by Section 4.05, as specified as contemplated by Section 2.02, all additional interest then owing pursuant to said Section 4.05 and the Board Resolution or indenture supplemental hereto under which such Security shall be issued, or (b) when used with respect to a Securities Guarantee, all amounts required to be paid pursuant to Section 11.01(f) .
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“ Agent ” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Security, the rules and procedures of the Depository, CDS (if it is not at that time the Depository), DTC, Euroclear and Clearstream that apply to such transfer or exchange.

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“ Authorized Newspaper” means a newspaper, printed in the English language or in an official language of the country of publication, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Whenever successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different Authorized Newspapers in the same city meeting the foregoing requirements and in each case on any Business Day.
“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors or similar law in Canada (which for clarity includes the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) and the Winding-Up and Restructuring Act (Canada)).
“ Board of Directors ” means:
(1)    with respect to a corporation, the Board of Directors of the corporation;
(2)    with respect to a partnership, the Board of Directors of the general partner of the partnership or the board or committee of the general partner of the partnership serving a similar function; and
(3)    with respect to any other Person, the board or committee of such Person serving a similar function.
“ Board Resolutions ” means a copy of resolutions certified by the Secretary or an Assistant Secretary of Ventas, Inc. or of Ventas Canada, as applicable, or such other officers as may be reasonably acceptable to the Trustee to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“ Book-Entry System ” means in relation to Global Securities, the record entry securities transfer and pledge system which is administered by the Depository, its nominee or a custodian of such Depository in accordance with the operating rules and procedures of the securities settlement service of the Depository for book-entry only securities in force from time to time or any successor system thereof.
“ Business Day ” means, when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the Securities, unless otherwise specified with respect to any Securities as contemplated by Section 2.02, any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in that Place of Payment or particular location are authorized or required by law, regulation or executive order to close.
“ Capital Stock ” means, with respect to any entity, any capital stock (including preferred stock), shares, interests, participation or other ownership interests (however designated) of such entity and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options to purchase any thereof; provided , however , that leases of real property

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that provide for contingent rent based on the financial performance of the tenant shall not be deemed to be Capital Stock.
“ Capitalized Lease Obligation ” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.
“ CDS ” means CDS Clearing and Depository Services Inc., together with its successors from time to time.
“ Clearstream ” means Clearstream Banking, S.A., or its successor.
“ Commission ” means the Securities and Exchange Commission.
“ Common Stock ” means the common stock, US$0.25 par value, of Ventas, Inc.
“ Corporate Trust Office of the Trustee ” will be at the address of the Trustee specified in Section 14.01 hereof or such other address as to which the Trustee may give notice to the Issuer.
“ Custodian ” means, for so long as the Securities are Global Securities, the Depository, as custodian with respect to the Securities in global form (or any successor entity thereto), and otherwise means the Trustee (or any successor entity thereto).
“ Debt ” of Ventas, Inc. or any of its Subsidiaries means, without duplication, any indebtedness of Ventas, Inc. or any Subsidiary, whether or not contingent, in respect of:
(1)    borrowed money or evidenced by bonds, notes, debentures or similar instruments;
(2)    indebtedness for borrowed money secured by any encumbrance existing on property owned by Ventas, Inc. or its Subsidiaries, to the extent of the lesser of ( x ) the amount of indebtedness so secured or ( y ) the Fair Market Value of the property subject to such encumbrance;
(3)    the reimbursement obligations in connection with any letters of credit actually drawn or amounts representing the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense, trade payable, conditional sale obligations or obligations under any title retention agreement;
(4)    the principal amount of all obligations of Ventas, Inc. and its Subsidiaries with respect to redemption, repayment or other repurchase of any Disqualified Stock;

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(5)    any lease of property by Ventas, Inc. or any of its Subsidiaries as lessee which is reflected on Ventas, Inc.’s or such Subsidiaries’ consolidated balance sheet as a Capitalized Lease Obligation,
to the extent, in the case of items of indebtedness under clauses (1) through (5) above, that any such items would appear as a liability on Ventas, Inc.’s or such Subsidiaries’ consolidated balance sheet in accordance with GAAP; or
(6)    the liquidation preference of any Disqualified Stock of Ventas, Inc. or of any shares of preferred stock of any of its Subsidiaries.
Debt also includes, to the extent not otherwise included, any obligation by Ventas, Inc. and its Subsidiaries to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), Debt of another Person (other than Ventas, Inc. or any of its Subsidiaries); it being understood that Debt shall be deemed to be incurred by Ventas, Inc. or any of its Subsidiaries whenever Ventas, Inc. or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof.
Debt shall not include ( a ) Debt arising from agreements of Ventas, Inc. or any Subsidiary providing for indemnification, adjustment or holdback of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Debt incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition or ( b ) contingent obligations under performance bonds, performance guarantees, surety bonds, appeal bonds or similar obligations incurred in the ordinary course of business and consistent with past practices. In the case of Debt as of any date issued with original issue discount, the amount of such Debt shall be the accreted value thereof as of such date.
“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
“ Definitive Security ” means a certificated Security registered in the name of the Holder thereof and issued in accordance with Section 2.07, substantially in the form established in one or more indentures supplemental hereto or pursuant to Board Resolutions in accordance with Section 2.02 except that such Security shall not bear the Global Security Legend and shall not have any related schedule of exchanges of interests in the global security attached thereto.
“ Depository ” means, with respect to the Securities issuable or issued in whole or in part in global form, the Person specified in Section 2.04 hereof as the Depository with respect to the Securities, and any and all successors thereto appointed as depository hereunder and having become such pursuant to the applicable provision of this Indenture.
“ Disqualified Stock ”, when used with respect to Securities of any series, shall have the meaning given to such term in the Board Resolution or indenture supplemental hereto pursuant to which the Securities of that series shall be issued.

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“ DTC ” means The Depository Trust Company, or its successor.
“ Equity Interests ” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“ Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or its successor.
“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.
“ Fair Market Value ” means, with respect to any asset, the price (after taking into account any liabilities relating to such assets) which could be negotiated in an arm’s-length free market transaction between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of Ventas, Inc. in good faith.
“ Foreign Currency ” means any currency, currency unit or composite currency issued by the government of one or more countries other than Canada or by any recognized confederation or association of such governments.
“ GAAP ” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of determination.
“ Global Security ” means a permanent global Security substantially in the form of established by one or more indentures supplemental hereto or pursuant to Board Resolutions in accordance with Section 2.02 that bears the Global Security Legend and that has a schedule of exchanges of interests in the Global Security attached thereto, and that is deposited with or on behalf of and registered in the name of the Depository.
“ Global Security Legend ” means the legend set forth in Section 2.07(d)(2), which is required to be placed on all Global Securities issued under this Indenture.
“ Government Obligations ” means securities which are ( 1 ) direct obligations of Canada or the government which issued the Foreign Currency in which the Securities of a particular series are payable, for the payment of which its full faith and credit is pledged or ( 2 ) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of Canada or such government which issued the Foreign Currency in which the Securities of that series are payable, the payment of which is unconditionally guaranteed as a full faith and credit obligation by Canada or such other government, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or

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principal of any such Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest on or principal of the Government Obligation evidenced by such depository receipt.
“ Guarantee ” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Debt.
“ Guarantors ” means, when used with respect to a Security of a series issued with the benefit of Securities Guarantees as specified as contemplated by Section 2.02, (i) each of the Persons listed on Schedule I hereto that becomes a guarantor of such Security in compliance with the provisions of Section 11.03 of this Indenture and (ii) each Person executing a supplemental indenture after the date hereof in which such Person agrees to be bound by the terms of this Indenture as a guarantor and (iii) in each case, their respective successors and assigns; provided , however , that any Person constituting a Guarantor as described herein shall cease to constitute a Guarantor when its Securities Guarantee is released in accordance with the terms of this Indenture.
“ Holder ” means a Person in whose name a Security is registered.
“ incur ” means issue, create, assume, guarantee, incur or otherwise become liable for; provided , however, that any Debt or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by consolidation, amalgamation, merger, acquisition or otherwise) shall be deemed to be incurred by such Subsidiary at the time it becomes a Subsidiary. Neither the accrual of interest nor the accretion of original issue discount shall be deemed to be an incurrence of Debt. The term “incurrence” when used as a noun shall have a correlative meaning.
“ Indenture ” means this Indenture, as amended or supplemented from time to time by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of Securities established as contemplated by Section 2.02; provided, however , that, if at any time more than one Person is acting as Trustee under this instrument, “Indenture” shall mean, with respect to any one or more series of Securities for which such Person is Trustee, this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of the or those particular series of Securities for which such Person is Trustee established as contemplated by Section 2.02, exclusive, however, of any provisions or terms which relate solely to other series of Securities for which such Person is Trustee, regardless of when such terms or provisions were adopted, and exclusive of any provisions or terms adopted by means of one or more indentures supplemental hereto executed and delivered after such Person had become such Trustee but to which such Person, as such Trustee, was not a party.

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“ Indexed Security ” means a Security the terms of which provide that the principal amount thereof payable at maturity may be more or less than the principal face amount thereof at original issuance.
“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Security through a Participant.
“ interest ” means, when used with respect to an Original Issue Discount Security which by its terms bears interest only after maturity, interest payable after maturity, and, when used with respect to a Security which provides for the payment of Additional Amounts, includes such Additional Amounts.
“ Interest Payment Date ” has the meaning set forth in the Securities.
“ Issuer ” means, when used with respect to Securities of any series, either ( a ) Ventas, Inc. or ( b ) Ventas Canada, and in each case any and all respective successors thereto, as applicable.
“ Lien ” means, with respect to any asset, any mortgage, hypothec, lien (statutory or otherwise), pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code, Personal Property Security Act (Ontario) or equivalent statutes of any jurisdiction.
“ obligor ” on the Securities and the Securities Guarantees means the Issuer and the Guarantors, respectively, and any successor obligor upon the Securities and the Securities Guarantees, respectively.
“ Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Chief Investment Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.
“ Officers’ Certificate ” means a certificate signed on behalf of the Issuer by two Officers of the Issuer, one of whom must be the principal executive officer, the principal financial officer, the principal investment officer, the treasurer or the principal accounting officer of the Issuer, that meets the requirements of Section 2.03, Section 4.04, Section 8.04 or Section 14.03, as applicable.
“ Opinion of Counsel ” means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 2.03, Section 8.04 or Section 14.03, as applicable. The counsel may be an employee of or counsel to the Issuer, any Guarantor, any Subsidiary of Ventas, Inc. or the Trustee.

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“ Original Issue Discount Security ” means any security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.02.
“ Outstanding ”, when used with respect to Securities of a series, shall have the meaning ascribed thereto in Section 2.09.
“ Participant ” means, with respect to the Depository, CDS (if it is not at that time the Depository), DTC, Euroclear or Clearstream, a Person who has an account with or is considered a participant of the Depository, CDS (if it is not at that time the Depository), DTC, Euroclear or Clearstream, respectively.
“ Person ” means any individual, corporation, partnership, joint venture, real estate investment trust, association, joint-stock company, trust, unincorporated organization, limited liability company, unlimited liability company, government, government body or agency or other entity.
“ Place of Payment ” means, when used with respect to the Securities of or within any series, the place or places where the principal of (and premium, if any) and interest on such Securities are payable as specified as contemplated by Section 2.02.
“ Real Estate Assets ” means, as of any date, the real estate assets of such Person and its Subsidiaries on such date, on a consolidated basis determined in accordance with GAAP.
“ Record Date ” has the meaning set forth in the Securities.
“ Responsible Officer, ” when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee).
“ Securities Act ” means the United States Securities Act of 1933, as amended.
“ Securities Guarantee ” means the Guarantee by each Guarantor of the Issuer’s payment obligations under this Indenture and on the Securities, executed pursuant to the provisions of this Indenture.
“ Security ” has the meaning stated in the preamble to this Indenture and, more particularly, means any Security or Securities authenticated and delivered under this Indenture; provided, however , that if at any time there is more than one Person acting as Trustee under this Indenture, “ Securities ” with respect to this Indenture as to which such Person is Trustee shall have the meaning stated in the preamble to this Indenture and shall more particularly mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee.
“ Significant Subsidiary ” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02(w) of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture.

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“ Subsidiary ” means, for any Person, any corporation or other entity of which a majority of the Voting Stock is owned, directly or indirectly, by such Person or one or more other Subsidiaries of such Person.
“ Trustee ” means the Person named as the “ Trustee ” in the preamble to this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Trustee ” shall mean or include each Person who is then a Trustee hereunder; provided , however , that if at any time there is more than one such Person, “ Trustee ” as used with respect to the Securities of any series shall mean only the Trustee with respect to Securities of that series.
“ Voting Stock ” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
Section 1.02      Other Definitions.
Term
Defined in Section
“ Authentication Order ”
Section 2.03
“ Covenant Defeasance ”
Section 8.03
“ Event of Default ”
Section 6.01
“ FATCA ”
Section 11.01(f)
“ Legal Defeasance ”
Section 8.02
“ NASDAQ ”
Section 13.05(e)
“ Paying Agent ”
Section 2.04
“ Privacy Laws ”
Section 7.11
“ Registrar ”
Section 2.04
“ Special Securities ”
Section 13.05(c)
“ Trading Day ”
Section 13.05(e)
“ United States Alien ”
Section 11.01(f)

Section 1.03      Rules of Construction.
Unless the context otherwise requires:
(1)      a term has the meaning assigned to it;
(2)      an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3)      “or” is not exclusive;
(4)      words in the singular include the plural, and in the plural include the singular;
(5)      “will” shall be interpreted to express a command;

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(6)      provisions apply to successive events and transactions; and
(7)      references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the Commission from time to time.
ARTICLE 2
THE SECURITIES
Section 2.01      Form, Dating and Denominations.
(a)      General. The Securities of each series will be substantially in such forms as shall be established in one or more indentures supplemental hereto or approved from time to time by or pursuant to Board Resolutions in accordance with Section 2.02, shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements placed thereon as the Issuer may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Securities may be listed, or to conform to usage. Each Security will be dated the date of its authentication. Except as specified as contemplated by Section 2.02 in respect of Securities of any series, the Securities shall be in denominations of Cdn$1,000 and integral multiples thereof.
The terms and provisions contained in the Securities will constitute, and are hereby expressly made, a part of this Indenture and the Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Security conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b)      Form of Trustee’s Certificate of Authentication. Subject to Section 2.03, the Trustee’s certificate of authentication shall be in substantially the following form:
This is one of the  [Insert designation of Securities]  referred to in the within-mentioned Indenture.


COMPUTERSHARE TRUST COMPANY OF CANADA,
as Trustee



   By:    
 
Authorized Signatory


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(c)      Global Securities.
If Securities of or within a series are issued in global form, as specified as contemplated by Section 2.02, then, notwithstanding the provisions of paragraph (a) of this Section 2.01 and clause (9) of Section 2.02, any such Security shall represent such of the Outstanding Securities of that series as shall be specified therein and shall include the Global Securities Legend and a related schedule of exchanges of interests in the Global Securities attached thereto. Securities issued in definitive form will not include such legend or schedule. Each Global Security may provide that it shall represent the Outstanding Securities as will be specified therein and each shall provide that it represents the aggregate principal amount of Outstanding Securities from time to time endorsed thereon and that the aggregate principal amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the aggregate principal amount of Outstanding Securities represented thereby will be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.07 hereof.
Section 2.02      Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in one or more Board Resolutions or pursuant to authority granted by one or more Board Resolutions and, subject to Section 2.03, set forth, or determined in the manner provided, in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, any or all of the following, as applicable (each of which (except for the matters set forth in clauses (1), (2), (3) and (14) below), if so provided, may be determined from time to time by the Issuer with respect to unissued Securities of the series when issued from time to time):
(8)      the identity of the Issuer and Guarantors, if any, of the Securities of the series and the terms and conditions, if any, in addition to those provided in Article 11 upon which such Guarantors may be released;
(1)      the title of the Securities of the series (which shall distinguish the Securities of that series from all other series of Securities);
(2)      any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.07, Section 2.08, Section 2.11, Section 3.07 or Section 9.04);
(3)      the date or dates, or the method by which such date or dates will be determined or extended, on which the principal of the Securities of the series shall be payable;

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(4)      the rate or rates at which the Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue or the method by which such date or dates shall be determined, the interest payment dates on which such interest will be payable, and the basis upon which interest shall be calculated if other than that of a 365-day year;
(5)      the place or places, if any, other than or in addition to the City of Toronto, where the principal of (and premium, if any), interest, if any, on, and Additional Amounts, if any, payable in respect of, Securities of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange or conversion and notices or demands to or upon the Issuer in respect of the Securities of the series and this Indenture may be served;
(6)      the period or periods within which, the price or prices at which, and other terms and conditions upon which Securities of the series may be redeemed or repurchased, in whole or in part, at the option of the Issuer, if the Issuer is to have the option;
(7)      the obligation, if any, of the Issuer to redeem, repay or purchase Securities of the series pursuant to any sinking fund or analogous provision or at the option of a Holder thereof, and the period or periods within which or the date or dates on which, the price or prices at which, and other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation;
(8)      if other than denominations of Cdn$1,000 and any integral multiple thereof, the denominations in which any Securities of the series shall be issuable;
(9)      the identity of the Trustee, if other than Computershare Trust Company of Canada, and the identity of each Registrar and/or Paying Agent, if other than the Trustee;
(10)      if other than the principal amount thereof, the portion of the principal amount of Securities of the series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.02 or, if applicable, the portion of the principal amount of Securities of the series that is convertible in accordance with the provisions of this Indenture or the method by which such portion shall be determined;
(11)      whether the amount of payments of principal of (and premium, if any) or interest, if any, on the Securities of the series may be determined with reference to an index, formula or other method (which index, formula or method may be based, without limitation, on one or more currencies, currency units, composite currencies, commodities, equity indices or other indices), and the manner in which such amounts shall be determined;
(12)      provisions, if any, granting special rights to the Holders of Securities of the series upon the occurrence of such events as may be specified;
(13)      any deletions from, modifications of or additions to the Events of Default or covenants of the Issuer with respect to Securities of the series, whether or not such Events

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of Default or covenants are consistent with the Events of Default or covenants set forth herein;
(14)      whether any Securities of the series are to be issuable initially in temporary global form and the date as of which any temporary global Security representing Outstanding Securities of the series shall be dated if other than the date of original issuance of the first Security of the series to be issued, and whether any Securities of the series are to be issuable in permanent global form and, if so, whether owners of beneficial interests in any such permanent global Security may exchange such interests for Definitive Securities of that series of like tenor of any authorized form and denomination or transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Security and vice versa and if so, the circumstances under which any such exchange or transfer may occur, if other than in the manner provided in Section 2.07 and the identity of the Depository;
(15)      the Person to whom any interest on any Security of the series shall be payable, if other than the Person in whose name that Security (or one or more predecessor Securities) is registered at the close of business on the Record Date for such interest and the extent to which, or the manner in which, any interest payable on a temporary global Security on an interest payment date will be paid;
(16)      the applicability, if any, of Section 8.02 and/or Section 8.03 to the Securities of the series and any provisions in modification of, in addition to or in lieu of any of the provisions of Article 8;
(17)      if the Securities of that series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of that series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and/or terms of such certificates, documents or conditions;
(18)      if the Securities of the series are to be issued upon the exercise of warrants, the time, manner and place for such Securities to be authenticated and delivered;
(19)      whether and under what circumstances the Issuer will pay Additional Amounts as contemplated by Section 4.05 on the Securities of the series to any Holder who is not a Canadian person (in the case where Ventas Canada is the Issuer) or not a United States person (in the case where Ventas, Inc. is the Issuer), (including any modification to the definition of Additional Amounts) in respect of any tax, assessment or governmental charge and, if so, whether the Issuer will have the option to redeem such Securities rather than pay such Additional Amounts (and the terms of any such option);
(20)      the obligation, if any, of Ventas, Inc. to permit the conversion of Securities issued by Ventas, Inc. of that series into Ventas, Inc.’s Common Stock, and the terms and conditions upon which such conversion shall be effected (including, without limitation, the initial conversion price or rate, the conversion period, any adjustment of the applicable conversion price, any requirements relative to reservation of shares for purposes of

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conversion and any other provision in addition to or in lieu of those set forth in this Indenture or any indenture supplemental hereto relative to such obligation);
(21)      if other than Canadian Dollars, the Foreign Currency in which payment of the principal of, premium (if any), interest and Additional Amounts (if any) on the Securities of that series shall be payable or in which such Securities shall be denominated and the particular provisions applicable thereto; and
(22)      any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution (subject to Section 2.03) and set forth in such Officers’ Certificate or in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of the Holders, for issuances of additional Securities of that series.
If any of the terms of the Securities of any series are established by action taken pursuant to one or more Board Resolutions, a copy of an appropriate record of such action(s) shall be certified by the Secretary or an Assistant Secretary of the Issuer and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate setting forth the terms of the Securities of that series.
Section 2.03      Execution and Authentication.
Two Officers must sign the Securities of any series for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office at the time a Security is authenticated, the Security will nevertheless be valid.
A Security will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee will, upon receipt at any time or from time to time of a written order of the Issuer signed by two Officers (an “ Authentication Order ”), authenticate Securities of any series for original issue up to the aggregate principal amount set forth in such Authentication Order.
In authenticating Securities of any series, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon,
(1)      an Opinion of Counsel stating that all legal requirements imposed by this Indenture in connection with the proposed issue of Securities have been complied with; and

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(2)      an Officers’ Certificate stating that all conditions precedent provided for in this Indenture relating to the issuance of the Securities have been complied with and that, to the best of the knowledge of the signers of such Certificate, no Event of Default with respect to any of the Securities shall have occurred and be continuing.
Section 2.04      Registrar and Paying Agent.
The Issuer will maintain in each Place of Payment for Securities of any series an office or agency where such Securities may be presented for registration of transfer, exchange, conversion, redemption or as may be otherwise contemplated by this Indenture (“ Registrar ”) and an office or agency where such Securities may be presented for payment (“ Paying Agent ”). The Registrar will keep a register of the Securities of that series and of their transfer and exchange. The Issuer may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Issuer may change any Paying Agent or Registrar without notice to any Holder. The Issuer will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar. Where the Trustee is the Registrar and another Registrar is appointed by the Issuer, the Trustee shall provide a list of Holders certified as of the date the list is provided to the new Registrar. Where the Trustee is not the Registrar, if and when the Trustee is required to take any action on behalf of or instruction from a Holder, the Trustee shall be entitled to rely upon the most recent certified list of Holders provided by the Registrar in accordance with Section 7.02.
The Issuer initially appoints CDS to act as Depository and Custodian with respect to the Global Securities.
The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent with respect to the Global Securities.
If the Trustee is not the Paying Agent, then the Paying Agent shall confirm payment of any principal or interest to the Trustee in writing on the date of such payment.
If the Trustee is not the Registrar, the Trustee shall receive written and electronic confirmation from the Registrar of any conversions, transfers, exchanges, redemptions (partial or full) as soon as practicable, but not later than 2 Business Days after the change has occurred.
Section 2.05      Paying Agent to Hold Money in Trust.
The Issuer will require each Paying Agent for Securities of a series other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Additional Amounts, if any, or interest on the Securities of that series, and will notify the Trustee of any default by the Issuer in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the

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Paying Agent (if other than the Issuer or a Subsidiary of the Issuer) will have no further liability for the money. If the Issuer or a Subsidiary of the Issuer acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee will serve as Paying Agent for the Securities.
Section 2.06      Holder Lists.
The Trustee in respect of Securities of a series will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders of Securities of that series, the principal amount of Securities held by each Holder and the date and particulars of the issue and transfer of each Security held by each such Holder. If the Trustee is not the Registrar of such Securities, (a) the Issuer will furnish to the Trustee on the Record Date before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require containing the foregoing information, and (b) the Issuer shall notify the Trustee as soon as practicable, but not later than 2 Business Days after any transfer, exchange or redemption, of any changes to the Register by way of a certified list of current Holders including their names, addresses and particulars of the security being held.
Section 2.07      Transfer and Exchange.
(a)      Transfer and Exchange of Global Securities . A Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository, by a nominee of the Depository to the Depository or to another nominee of the Depository, or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. All Global Securities will be exchanged by the Issuer for Definitive Securities if:
(1)      the Issuer delivers to the Trustee notice from the Depository that it is unwilling or unable to continue to act as Depository for such Global Securities or that it is no longer eligible as a clearing agency under applicable securities laws and, in either case, a successor Depository is not appointed by the Issuer within 120 days after the date of such notice from the Depository; or
(2)      the Issuer in its sole discretion determines that the Global Securities (in whole but not in part) should be exchanged for Definitive Securities and deliver a written notice to such effect to the Trustee.
Upon the occurrence of either of the preceding events in subparagraph (1) or (2) above, the Trustee shall, through the Depository, notify all holders of beneficial interests in such Global Securities and Definitive Securities shall be issued in such names as the Depository shall instruct the Trustee, provided the Depository has the ability to provide such notice. Global Securities also may be exchanged or replaced, in whole or in part, as provided in Section 2.08 and Section 2.11. Every Security authenticated and delivered in exchange for, or in lieu of, a Global Security or any portion thereof, pursuant to this Section 2.07 or Section 2.08 or Section 2.11 hereof, shall

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be authenticated and delivered in the form of, and shall be, a Global Security. A Global Security may not be exchanged for another Security other than as provided in this Section 2.07(a), however, beneficial interests in a Global Security may be transferred and exchanged as provided in Section 2.07(b).
(b)      Transfer and Exchange of Beneficial Interests in the Global Securities. The transfer and exchange of beneficial interests in the Global Securities will be effected through the Depository, in accordance with the provisions of this Indenture and the Applicable Procedures.
(c)      Transfer or Exchange of Beneficial Interests for Definitive Securities.
(1)      If any holder of a beneficial interest in a Global Security is entitled to exchange such beneficial interest for a Definitive Security or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Security of the same series and of like tenor and principal amount of authorized form and denomination, as specified as contemplated by Section 2.02(15), then, upon satisfaction of the conditions set forth in Section 2.07(c)(2), the Trustee will cause the aggregate principal amount of the applicable Global Security to be reduced accordingly pursuant to Section 2.07(e), and the Issuer will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Security in the appropriate principal amount. Any Definitive Security issued in exchange for a beneficial interest pursuant to this Section 2.07(c) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depository and the Participant or Indirect Participant. The Trustee will deliver such Definitive Securities to the Persons in whose names such Securities are so registered.
(2)      In connection with all transfers and exchanges of beneficial interests pursuant to Section 2.07(c), the transferor of such beneficial interest must deliver to the Registrar either:
(i)      both:
(A)      a written order from a Participant or an Indirect Participant given to the Depository in accordance with the Applicable Procedures directing the Depository to credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or exchanged; and
(B)      instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or
(ii)      both:
(A)      a written order from a Participant or an Indirect Participant given to the Depository in accordance with the Applicable Procedures

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directing the Depository to cause to be issued a Definitive Security in an amount equal to the beneficial interest to be transferred or exchanged; and
(B)      instructions given by the Depository to the Registrar containing information regarding the Person in whose name such Definitive Security shall be registered to effect the transfer or exchange referred to in (1) above.
Notwithstanding the foregoing, where the Trustee is the Registrar, the Trustee shall only accept transfer instructions from the Holder appearing on the Register.
(3)      No transfer shall be effective unless made on the Register by the Trustee as instructed in writing by the registered Holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, upon compliance with such requirements as the Trustee may prescribe.
(4)      Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Securities contained in this Indenture and the Securities or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Security(s) pursuant to Section 2.07(e).
(d)      Legends . The following legends shall appear on the face of all Global Securities and Definitive Securities, as applicable, issued under this Indenture unless specifically stated otherwise in the applicable provisions of any indenture supplemental hereto.
(1)      Private Placement Legend.
Each Global Security and each Definitive Security (and all Securities issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“EXCEPT IN THE PROVINCE OF MANITOBA, IN ACCORDANCE WITH NATIONAL INSTRUMENT 45-102 – RESALE OF SECURITIES, UNLESS OTHERWISE PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS NOTE MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE LATER OF (I) l , l [INSERT DATE ON WHICH THE SECURITY IS ISSUED], AND (II) THE DATE THE COMPANY BECOMES A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.
IN THE PROVINCE OF MANITOBA, UNLESS OTHERWISE PERMITTED UNDER APPLICABLE CANADIAN SECURITIES LEGISLATION OR WITH THE PRIOR WRITTEN CONSENT OF THE APPLICABLE REGULATORS, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE

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THE DATE THAT IS TWELVE MONTHS AND A DAY AFTER THE DATE THE PURCHASER ACQUIRED THE SECURITY.”
(2)      Global Security Legend. In addition to the legend set forth in Section 2.07(d)(1), each Global Security will bear a legend in substantially the following form:
“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CDS & CO. THIS SECURITY MAY NOT BE TRANSFERRED TO OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF, TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO [INSERT NAME OF ISSUER] (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.”
(e)      Cancellation and/or Adjustment of Global Securities. At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security will be returned to or retained and canceled by the Trustee in accordance with Section 2.12. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security will be reduced accordingly and an endorsement will be made on such Global Security by the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security will be increased accordingly and an endorsement will be made on such Global Security by the Trustee to reflect such increase.

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(f)      General Provisions Relating to Transfers and Exchanges.
(1)      To permit registrations of transfers and exchanges, the Issuer will execute and the Trustee will authenticate Global Securities and Definitive Securities upon receipt of an Authentication Order in accordance with Section 2.03 or at the Registrar’s request.
(2)      No service charge will be made to a Holder of a Global Security or to a Holder of a Definitive Security for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Section 2.11, Section 3.07, and Section 9.04 hereof). The Registrar will not be required to register the transfer of or exchange any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
(3)      All Global Securities and Definitive Securities issued upon any registration of transfer or exchange of Global Securities or Definitive Securities will be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Securities or Definitive Securities surrendered upon such registration of transfer or exchange.
(4)      The Issuer will not be required:
(i)      to issue, to register the transfer of or to exchange any Securities during a period beginning at the opening of business 15 days before the day of any selection of Securities for redemption under Section 3.03 hereof and ending at the close of business on the day of selection;
(ii)      to register the transfer of or to exchange any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part;
(iii)      to register the transfer of or to exchange a Security between a Record Date and the next succeeding Interest Payment Date; or
(iv)      to register the transfer of any Security which has been surrendered for repayment at option of Holder, except the portion, if any, of such Security not to be so repaid.
(5)      Prior to due presentment for the registration of a transfer of any Security, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Securities and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.

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(6)      The Trustee will authenticate Global Securities and Definitive Securities in accordance with the provisions of Section 2.03 hereof.
(7)      All orders and instructions required to be submitted to the Registrar or the Issuer pursuant to this Section 2.07 to effect a registration of transfer or exchange may be submitted by facsimile or other electronic means. Notwithstanding the foregoing, where the Trustee is the Registrar, transfers and exchanges must comply with the then current policies of the Trustee and the Securities Transfer Association of Canada. The Trustee acting as Registrar shall not act upon facsimile or other electronic means of order or instruction unless electronic instructions are provided through the Depository system.
Section 2.08      Replacement Securities.
If any mutilated Security is surrendered to the Trustee or the Issuer or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Security, the Issuer will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Security if the Trustee’s requirements are met. The Trustee shall, and the Issuer may, require that an indemnity and surety bond be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Security is replaced. The Issuer may charge for its expenses in replacing a Security, and the applicable Holder(s) shall pay the Issuer for any expenses so charged.
Every replacement Security is an additional obligation of the Issuer and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Securities duly issued hereunder.
Notwithstanding the provisions of the previous two paragraphs, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Issuer in its discretion may, instead of issuing a new Security, pay such Security.
Section 2.09      Outstanding Securities.
The Securities “Outstanding” at any time are all the Securities authenticated by the Trustee except for:
(5)      Securities previously cancelled by the Trustee or delivered to the Trustee for cancellation;
(6)      Securities, or portions thereof, for whose payment or redemption or repayment at the option of the Holder, money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Issuer) in trust or set aside and segregated in trust by the Issuer (if the Issuer shall act as its own Paying Agent) for the Holders of such Securities, provided that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

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(7)      Securities, except to the extent provided in Section 8.02 and Section 8.03, with respect to which the Issuer has effected defeasance and/or covenant defeasance as provided in Article 8;
(8)      Securities which have been paid pursuant to Section 4.01 or Section 12.01 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Issuer;
(9)      lost, stolen or destroyed Securities, when new Securities have been duly and validly issued in substitution for them; and
(10)      Securities converted into Common Stock in accordance with or as contemplated by this Indenture, if the terms of such Securities provide for convertibility as contemplated by Section 2.02;
provided, however , that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver, ( i ) the principal amount of an Original Issue Discount Security that may be counted in making such determination or calculation and that shall be deemed to be Outstanding for such purpose shall be equal to the amount of principal thereof that would be (or shall have been declared to be) due and payable, at the time of such determination, upon a declaration of acceleration of the maturity thereof pursuant to Section 6.02, ( ii ) the principal amount of any Indexed Security that may be counted in making such determination or calculation and that shall be deemed Outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided with respect to such Security as contemplated by Section 2.02, and ( iii ) Securities owned by the Issuer or any other obligor upon the Securities or any Affiliate of the Issuer or of such other obligor shall be disregarded and deemed not to be Outstanding to the extent provided in Section 2.10.
Section 2.10      Treasury Securities.
In determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, waiver or consent, Securities owned by the Issuer or any other obligor upon the Securities or any Affiliate of the Issuer or of such other obligor shall be disregarded and deemed not to be Outstanding, except that in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any Affiliate of the Issuer or of such other obligor.

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Section 2.11      Temporary Securities.
Until certificates representing Securities are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Securities. Temporary Securities will be substantially in the form of certificated Securities but may have variations that the Issuer considers appropriate for temporary Securities and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuer will prepare and the Trustee will authenticate definitive Securities in exchange for temporary Securities.
Holders of temporary Securities will be entitled to all of the benefits of Holders under this Indenture.
Section 2.12      Cancellation.
The Issuer at any time may deliver Securities to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of canceled Securities (subject to the record retention requirement of the Exchange Act). The Issuer may not issue new Securities to replace Securities that it has paid or that have been delivered to the Trustee for cancellation, except for replacement Securities for mutilated Securities pursuant to Section 2.08 hereof.
Section 2.13      Defaulted Interest.
(1)      If the Issuer defaults in a payment of interest on the Securities of any series, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders of Securities of that series on a subsequent special record date, in each case at the rate provided in the Securities of that series and in Section 4.01 hereof. The Issuer will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Security of that series and the date of the proposed payment. The Issuer will fix or cause to be fixed each such special record date and payment date, provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) will mail or cause to be mailed to Holders of Securities of that series a notice that states the special record date, the related payment date and the amount of such interest to be paid on such Securities.
(2)      Wherever in this Indenture or any Security there is mention, in any context, of the payment of interest, such mention is deemed to include the payment of interest on amounts in default to the extent that, in such context, such interest is, was or would be payable pursuant to this Indenture or such Security, and express mention of interest on amounts in default in any of the provisions of this Indenture or such Security will not be

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construed as excluding such interest in those provisions of this Indenture or such Security where such express mention is not made.
Section 2.14      Interest Act (Canada).
For any interim period (other than a full semi-annual period), the rate of interest applicable to the Securities will be computed on the basis of a 365-day year. Whenever interest is computed on the basis of a year (the “ deemed year ”) which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing such product by the number of days in the deemed year. The Issuer will provide the interest calculation to the Trustee for any period for any Securities and the Trustee shall be entitled to rely on the calculations of the Issuer.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01      Applicability of Article.
Securities of any series which are redeemable before their maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 2.02 for Securities of any series) in accordance with this Article.
Section 3.02      Notices to Trustee.
The election of the Issuer to redeem or purchase in an offer to purchase Securities of any series shall be evidenced by a Board Resolution. The Issuer shall, at least 45 days prior to the redemption date fixed by the Issuer (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such redemption date and of the principal amount of Securities of that series to be redeemed by delivering to the Trustee an Officers’ Certificate setting forth:
(1)      the paragraph of the Securities and/or Section of this Indenture or any indenture supplemental hereto pursuant to which the redemption shall occur;
(2)      the redemption date;
(3)      the principal amount of Securities of that series to be redeemed, plus accrued interest and Additional Amounts, if any, to the redemption date;
(4)      the redemption price, including any make-whole amount or premium, if applicable; and
(5)     the effects, if any, to the conversion privileges of Holders.

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Section 3.03      Selection of Securities to Be Redeemed.
If less than all of the Securities of any series are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select the particular Securities for redemption or purchase from the Outstanding Securities of that series not previously called for redemption, as follows:
(1)      if the Securities of that series are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which such Securities are listed; or
(2)      if the Securities of that series are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate.
In the event of partial redemption by lot, the particular Securities to be redeemed will be selected, unless otherwise provided in this Indenture, not less than 30 nor more than 60 days prior to the redemption date by the Trustee.
The Trustee will promptly notify the Issuer in writing of the Securities selected for redemption or purchase and, in the case of any Security selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Securities and portions of Securities of any series selected will be in amounts equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof; provided, however , that if all of the Outstanding Securities of a Holder are to be redeemed or purchased, the entire amount of such Securities held by such Holder, even if not a multiple of the minimum authorized denomination for Securities of that series, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Securities called for redemption or purchase also apply to portions of Securities called for redemption or purchase.
Section 3.04      Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date, unless a shorter period is specified by the terms of that series as contemplated by Section 2.02, the Issuer will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Securities are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Securities or a satisfaction and discharge of this Indenture pursuant to Article 8 or Article 12 of this Indenture. Any notice that is mailed to the Holders of Securities in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.
The notice will identify the Securities to be redeemed and will state:
(1)      the redemption date;

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(2)      the redemption price, including the accrued interest and Additional Amounts, if any, to the redemption date and any make-whole amount or premium, if applicable;
(3)      if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the redemption date upon surrender of such Security, a new Security or Securities of the same series and tenor in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Security;
(4)      the name and address of the Paying Agent;
(5)      that Securities called for redemption must be surrendered to the Paying Agent at the Place of Payment to collect the redemption price or to convert (if applicable);
(6)      that, unless the Issuer defaults in making such redemption payment, interest on Securities called for redemption ceases to accrue on and after the redemption date;
(7)      the paragraph of the Securities and/or Section of this Indenture or any indenture supplemental hereto pursuant to which the Securities called for redemption are being redeemed;
(8)      that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities;
(9)      that the redemption is for a sinking fund, if applicable; and
(10)      if applicable, that a Holder of Securities who desires to convert Securities in connection with a redemption must satisfy the requirements for conversion contained in such Securities, the then existing conversion price or rate, and the date and time when the option to convert shall expire.
At the Issuer’s request, the Trustee will give the notice of redemption in the Issuer’s name and at the Issuer’s expense; on condition that the Issuer has delivered to the Trustee, at least 30 days (or such shorter period of time as is satisfactory to the Trustee) prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
Section 3.05      Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04 hereof, Securities called for redemption become irrevocably due and payable on the redemption date at the redemption price therein specified. Except as otherwise provided pursuant to Section 2.02 with respect to the Securities of any series, a notice of redemption of Securities of that series may not be conditional.

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Section 3.06      Deposit of Redemption or Purchase Price.
By 10:00 a.m. (Toronto time) on the redemption or purchase date, the Issuer will deposit with the Trustee or with the Paying Agent money in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities are payable sufficient to pay the redemption or purchase price of and accrued interest and Additional Amounts, if any, on all Securities to be redeemed or purchased on that date. The Trustee or the Paying Agent will, as soon as practicable, return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest and Additional Amounts, if any, on, all Securities to be redeemed or purchased.
If the Issuer complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Securities or the portions of Securities called for redemption or purchase. If a Security is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the Person in whose name such Security was registered at the close of business on such Record Date; provided , however , that except as otherwise provided with respect to Securities convertible into Common Stock, installments of interest on Securities whose maturity is on or prior to the redemption date shall be payable to the Holders of such Securities, or one or more predecessor Securities, registered as such at the close of business on the relevant Record Dates according to the terms and provisions of Section 2.02. If any Security called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Securities and in Section 4.01 hereof.
Section 3.07      Securities Redeemed or Purchased in Part.
Upon surrender of a Security of a series that is redeemed or purchased in part at a Place of Payment therefor (with, if the Issuer or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), the Issuer will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Issuer a new Security of the same series of any authorized denomination as requested by the Holder in an aggregate principal amount equal to and in exchange for the unredeemed or unpurchased portion of the principal of the Security so surrendered.
Section 3.08      Conversion Arrangement on Call for Redemption.
In connection with any redemption of Securities, the Issuer may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Trustee or the Paying Agent in trust for the Holders of Securities, on or before 10:00 a.m. Eastern Time on the redemption date, an amount not less than the redemption price, together with interest, if any, accrued

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to the redemption date of such Securities, in immediately available funds. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Issuer to pay the redemption price of such Securities, including all accrued interest, if any, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Issuer, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the last day on which Securities of that series called for redemption may be converted in accordance with this Indenture and the terms of such Securities, subject to payment to the Trustee or Paying Agent of the above-described amount. The Trustee or the Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it in the same manner as it would pay moneys deposited with it by the Issuer for the redemption of Securities. Without the Trustee’s and the Paying Agent’s prior written consent, no arrangement between the Issuer and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee and the Paying Agent as set forth in this Indenture, and the Issuer agrees to indemnify the Trustee and the Paying Agent from, and hold them harmless against, any loss, liability or expense owing out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Issuer and such purchasers, including the costs and expenses incurred by the Trustee and Paying Agent (including the fees and expenses of their agents and counsel) in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of their powers, duties, responsibilities or obligations under this Indenture.
ARTICLE 4
COVENANTS
Section 4.01      Payment of Securities.
The Issuer will pay or cause to be paid the principal of, premium, if any, and interest and Additional Amounts, if any, on the Securities of each series on the dates, in the currency or currency unit and in the manner provided in the terms of that series of Securities and this Indenture. Principal, premium, if any, and interest and Additional Amounts, if any, will be considered paid on the date due if the Paying Agent, if other than Ventas, Inc. or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.
The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Securities of the applicable series to the extent lawful; the Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Amounts (without regard to any applicable grace period) at the same rate to the extent lawful.

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Section 4.02      Maintenance of Office or Agency.
The Issuer will maintain in each Place of Payment for Securities of any series an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Securities of that series may be presented or surrendered for payment or conversion, where Securities of that series may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Securities of that series and this Indenture may be served. The Issuer will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Issuer may also from time to time designate one or more other offices or agencies where the Securities of any series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission will in any manner relieve the Issuer of its obligation to maintain an office or agency in the Place of Payment for such purposes. The Issuer will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
Unless otherwise specified with respect to Securities of any series as contemplated by Section 2.02, the Issuer hereby designates as a Place of Payment for each series of Securities the Corporate Trust Office of the Trustee in the City of Toronto as one such office or agency of the Issuer in accordance with Section 2.04 hereof.
Section 4.03      Reports.
The Issuer and each Guarantor shall
(1)      file with the Trustee, within 15 days after either of the Issuer or such Guarantor, as applicable, is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer or such Guarantor may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act (it being understood that any information, documents and other reports filed or furnished on the Electronic Data Gathering, Analysis and Retrieval system (“ EDGAR ”) or such other system of the Commission or the website of Ventas, Inc. will be deemed to be furnished to such Holders of Securities once such information, documents and other reports are so filed on EDGAR or the Commission’s website or the website of Ventas, Inc.); or, if the Issuer or such Guarantor is not required to file information, documents or reports pursuant to either of such Sections, then they/it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section

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13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; and
(2)      file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Issuer and such Guarantor with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations (it being understood that the Issuer or any Guarantor not required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall not be required to file such reports with the Commission or the Trustee).
Section 4.04      Compliance Certificate.
(a)      Ventas, Inc. shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of Ventas, Inc. and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether Ventas, Inc. has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, Ventas, Inc. has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action Ventas, Inc. is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Securities of any series is prohibited or if such event has occurred, a description of the event and what action Ventas, Inc. is taking or proposes to take with respect thereto. For purposes of this Section 4.04, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
(b)      So long as any of the Securities are outstanding, Ventas, Inc. will deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action Ventas, Inc. is taking or proposes to take with respect thereto.
Section 4.05      Additional Amounts.
If any Securities of a series provide for the payment of Additional Amounts, the Issuer will pay to the Holder of any Security of that series Additional Amounts as may be specified as contemplated by Section 2.02. Whenever in this Indenture there is mentioned the payment of the principal of or any premium or interest on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of that series established pursuant to Section 2.02 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms and express mention of the

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payment of Additional Amounts (if applicable) in any provisions hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made.
Except as otherwise specified as contemplated by Section 2.02, if the Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first interest payment date with respect to that series of Securities (or if the Securities of that series will not bear interest prior to maturity, the first day on which a payment of principal and any premium is made), and at least 10 days prior to each date of payment of principal and any premium or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers’ Certificate, the Issuer will furnish the Trustee and the Issuer’s principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers’ Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and any premium or interest on the Securities of that series shall be made to Holders of Securities of that series who are not Canadian persons (where the Issuer is Ventas Canada) or United States persons (where the Issuer is Ventas, Inc.) without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of the series. If any such withholding shall be required, then such Officers’ Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities of that series and the Issuer will pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Securities. In the event that the Trustee or any Paying Agent, as the case may be, shall not so receive the above-mentioned certificate, then the Trustee or such Paying Agent shall be entitled ( i ) to assume that no such withholding or deduction is required with respect to any payment of principal or interest with respect to any Securities of a series until it shall have received a certificate advising otherwise and ( ii ) to make all payments of principal and interest with respect to the Securities of a series without withholding or deductions until otherwise advised. The Issuer covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them or in reliance on any Officers’ Certificate furnished pursuant to this Section or in reliance on the Issuer’s not furnishing such an Officers’ Certificate.
Section 4.06      Corporate Existence.
Except as permitted by Article 5 and Section 11.04, Ventas, Inc. and its Subsidiaries shall do all things necessary to preserve and keep their existence, rights and franchises; provided , however , that the existence of a Subsidiary (other than the Issuer) may be terminated if the Board of Directors of Ventas, Inc. determines that it is in the best interests of Ventas, Inc. to do so; and provided, further, for clarity, the amalgamation or other combination of the Issuer or a Subsidiary with one or more other Subsidiaries of Ventas, Inc. shall not constitute a breach of this Section 4.06.
ARTICLE 5
SUCCESSORS
Section 5.01      Consolidation, Amalgamation, Merger, or Sale of Assets.
Ventas, Inc. may not, directly or indirectly: ( 1 ) consolidate, amalgamate or merge with or into another Person (whether or not Ventas, Inc. is the surviving corporation); or ( 2 ) sell,

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assign, transfer, convey, lease (other than to an unaffiliated operator in the ordinary course of business) or otherwise dispose of all or substantially all of the properties or assets of Ventas, Inc. and its Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless:
(1)      either:
(i)      Ventas, Inc. is the surviving corporation; or
(ii)      the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Ventas, Inc.) or to which such sale, assignment, transfer, conveyance or other disposition has been made is organized or existing under the laws of the United States, any state of the United States or the District of Columbia;
(2)      the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Ventas, Inc.) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of Ventas, Inc. under the Securities and this Indenture pursuant to agreements reasonably satisfactory to the Trustee; and
(3)      immediately after such transaction, on a pro forma basis giving effect to such transaction or series of transactions (and treating any obligation of Ventas, Inc. or any Subsidiary incurred in connection with or as a result of such transaction or series of transactions as having been incurred at the time of such transaction), no Default or Event of Default exists.
In addition, in the case of any lease of all or substantially all of its properties or assets (other than to an unaffiliated operator in the ordinary course of business), in one or more related transactions, to any other Person the terms of the lease must be reasonably acceptable to the Trustee or to Holders of a majority in principal amount of the Securities.
This Section 5.01 will not apply to a consolidation, amalgamation, merger, sale, assignment, transfer, conveyance or other disposition of assets between or among Ventas, Inc. and its Subsidiaries.
Section 5.02      Successor Substituted.
Upon any consolidation, amalgamation or merger or any sale, assignment, transfer, conveyance, transfer or other disposition of all or substantially all of the properties or assets of Ventas, Inc. in accordance with Section 5.01, the successor Person formed by such consolidation or into which Ventas, Inc. is merged or to which such sale, assignment, transfer, conveyance or other disposition is made, shall succeed to, and be substituted for, and may exercise every right and power of, Ventas, Inc. under this Indenture with the same effect as if such successor initially had been named as Ventas, Inc. herein. Such successor thereupon may cause to be signed, and may issue either in its own name or in the name of Ventas, Inc., any or all of the Securities issuable hereunder which theretofore shall not have been signed by Ventas, Inc. and delivered to the Trustee;

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and, upon the order of such successor, instead of Ventas, Inc., and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the Officers of Ventas, Inc. to the Trustee for authentication, and any Securities which such successor thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, amalgamation, merger, sale, lease or conveyance, such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.
When a successor assumes all the obligations of its predecessor under this Indenture and the Securities following a consolidation, amalgamation or merger, or any sale, assignment, transfer, conveyance, transfer or other disposition of all or substantially all of the assets of the predecessor in accordance with the foregoing provisions, the predecessor shall be released from those obligations.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01      Events of Default.
Each of the following is an “Event of Default” wherever used herein with respect to any particular series of Securities:
(1)      Ventas, Inc. or its Subsidiaries do not pay the principal or any premium on any Security of that series when due and payable;
(2)      Ventas, Inc. or its Subsidiaries do not pay interest on any Security of that series within 30 days after the applicable due date;
(3)      Ventas, Inc. or its Subsidiaries fail to deposit any sinking fund payment, when and as due by the terms of any Security of that series;
(4)      Ventas, Inc. or its Subsidiaries remain in breach of any other term of this Indenture for 60 days after they receive a notice of Default stating they are in breach. Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Securities of that series then Outstanding may send the notice;
(5)      except as permitted by this Indenture and the Securities of that series, the Securities Guarantee by any Guarantor shall cease to be in full force and effect or any Guarantor shall deny or disaffirm its obligations with respect thereto;

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(6)      Ventas, Inc. or its Subsidiaries default under any of their third party indebtedness (including a default with respect to Securities of any series other than that series) in an aggregate principal amount exceeding US$50.0 million after the expiration of any applicable grace period, which default results in the acceleration of the maturity of such indebtedness. Such default is not an Event of Default if the other indebtedness is discharged, or the acceleration is rescinded or annulled, within a period of 10 days after Ventas, Inc. or its Subsidiaries receive notice specifying the default and requiring that they discharge the other indebtedness or cause the acceleration to be rescinded or annulled. Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Securities of that series then Outstanding may send the notice, with a copy to the Trustee if the Holders send the notice;
(7)      Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary:
(i)      commences a voluntary case;
(ii)      consents to the entry of an order for relief against it in an involuntary case;
(iii)      consents to the appointment of a custodian of it or for all or substantially all of its property;
(iv)      makes a general assignment for the benefit of its creditors; or
(v)      generally is not paying its debts as they become due;
(8)      a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i)      is for relief against Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case;
(ii)      appoints a custodian of Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, or for all or substantially all of the property of Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or
(iii)      orders the liquidation of Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days; or

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(9)      any other Event of Default provided with respect to Securities of that series as contemplated by Section 2.02.
Section 6.02      Acceleration.
In the case of an Event of Default specified in clause (7) or (8) of Section 6.01, with respect to Ventas, Inc. or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all Outstanding Securities will become due and payable immediately without further action or notice. If any other Event of Default with respect to Securities of any series at the time Outstanding occurs and has not been cured, the Trustee or the Holders of at least 25% in aggregate principal amount of the Securities of that series then Outstanding may declare the entire principal amount (or, if any Securities are Original Issue Discount Securities or Indexed Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of that series to be due and immediately payable by written notice to the Issuer, Ventas, Inc. and the Trustee. Upon any such declaration, such principal amount (or specified amount) of the Securities of that series shall become due and payable immediately. The Holders of a majority in aggregate principal amount of the Securities of that series then Outstanding, by written notice to the Trustee, may on behalf of all of the Holders rescind and annul an acceleration and its consequences if the rescission or annulment would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.
Section 6.03      Other Remedies.
If an Event of Default occurs and is continuing with respect to Securities of any series at the time Outstanding, the Trustee may pursue any available remedy to collect the payment of principal, premium and Additional Amounts, if any, and interest on the Securities of that series or to enforce the performance of any provision of the Securities of that series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities of that series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Security of that series in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04      Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the then Outstanding Securities of any series by notice to the Trustee may on behalf of the Holders of all of the Securities of that series waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Additional Amounts, if any, or interest on, the Securities of that series (excluding in connection with an offer to purchase) or in respect of a covenant or provision of this Indenture which under Article 9 may not be modified or amended without the consent of the Holder of each Outstanding Security of the affected series; provided , however , that the Holders of a majority in

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aggregate principal amount of the then Outstanding Securities of that series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration as provided in Section 6.02. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 6.05      Control by Majority.
Holders of a majority in aggregate principal amount of the Securities of any series then Outstanding may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it with respect to the Securities of that series. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee, upon advice of counsel, determines may be unduly prejudicial to the rights of other Holders of Securities of that series or to the Holders of the Securities of any other series or that may involve the Trustee in personal liability.
Section 6.06      Limitation on Suits.
A Holder of a Security of any series may pursue a remedy with respect to this Indenture or the Securities of that series only if:
(1)      such Holder has given the Trustee written notice that an Event of Default has occurred and remains uncured;
(2)      the Holders of at least a majority in aggregate principal amount of all Outstanding Securities of that series have made a written request that the Trustee take action because of the Default, and offered reasonable indemnity to the Trustee against the cost and other liabilities of taking that action;
(3)      the Trustee has not taken action for 60 days after receipt of the notice and offer of indemnity; and
(4)      the Holders of at least a majority in aggregate principal amount of all Outstanding Securities of that series have not given the Trustee a direction inconsistent with such request within such 60-day period.
A Holder of any Security of any series may not use this Indenture to prejudice the rights of another Holder of a Security of that series or to obtain a preference or priority over another Holder of a Security of that series.
Section 6.07      Rights of Holders of Securities to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder of any Security to receive payment of principal, premium and Additional Amounts, if any, and interest on such Security, on or after the respective due dates expressed in such Security (excluding in

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connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08      Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1), (2) or (3) occurs and is continuing with respect to the Securities of any series, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal (including any sinking fund payment), premium and Additional Amounts, if any, and interest remaining unpaid on the Securities of that series and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09      Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Securities of any series allowed in any judicial proceedings relative to the Issuer or any other obligor upon the Securities of that series, their creditors or their property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder of Securities of that series to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities of that series, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders of Securities of that series may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding.
Section 6.10      Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:

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First: to the Trustee, its agents and attorneys for amounts due under Section 7.06 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Securities in respect of which or for the benefit of which such money has been collected for amounts due and unpaid on such Securities for principal, premium and Additional Amounts, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium and Additional Amounts, if any, and interest, respectively; and
Third: to the Issuer or to such party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to Holders of Securities pursuant to this Section 6.10.
Section 6.11      Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Security pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then Outstanding Securities of any series.
ARTICLE 7
TRUSTEE
Section 7.01      Duties of Trustee.
(a)      If an Event of Default with respect to the Securities of any series has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent trustee would exercise in comparable circumstances. In addition, notwithstanding any other provision of this Indenture and whether or not an Event of Default has occurred, in exercising its powers and discharging its duties under this Indenture, the Trustee shall act honestly and in good faith with a view to the best interests of the Holders of Securities and exercise the care, diligence and skill of a reasonably prudent trustee.
(b)      The duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee.
(c)      The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that:

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(1)      this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(2)      the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(3)      the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.
(d)      No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holder, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.
(e)      The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(f)      Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
Section 7.02      Rights of Trustee.
(a)      The Trustee may conclusively rely upon any document (whether original or facsimile) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b)      Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c)      The Trustee may act through its attorneys and agents and will not be responsible for the wilful misconduct or negligence of any agent unless the Trustee was negligent in acting through its attorneys and agents.
(d)      The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e)      Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer.

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(f)      The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have provided to the Trustee reasonable security and indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.
Section 7.03      Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.09 hereof.
Section 7.04      Trustee’s Disclaimer.
The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Issuer’s use of the proceeds from the Securities or any money paid to the Issuer or upon the Issuer’s direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Securities or any other document in connection with the sale of the Securities or pursuant to this Indenture other than its certificate of authentication.
Section 7.05      Notice of Defaults.
If a Default or Event of Default occurs and is continuing with respect to the Securities of any series and if it is known to the Trustee, the Trustee will mail to Holders of Securities of that series a notice of the Default or Event of Default within 90 days after it is aware of such Default or Event of Default, unless such default shall have been cured or waived.
Section 7.06      Compensation and Indemnity.
(a)      The Issuer will pay to the Trustee from time to time reasonable compensation as agreed upon between the Trustee and Issuer for its acceptance of this Indenture and services hereunder. The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust. The Issuer will reimburse the Trustee promptly upon written request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services (including the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel), except any such disbursement, advances and expenses as shall be determined to have been caused by the Trustee’s own negligence, bad faith or wilful misconduct.
(b)      The Issuer and each Guarantor will indemnify and hold harmless the Trustee, its officers, directors, agents and employees against any and all losses, claims, damages, penalties, actions, suits, demands, levies, costs, disbursements, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs, claims, damages, penalties, actions, suits, demands, levies, disbursements and

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expenses of enforcing this Indenture against the Issuer and the Guarantors (including this Section 7.06) and defending itself against any claim (whether asserted by the Issuer, the Guarantors or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, bad faith, or wilful misconduct. The Trustee will notify the Issuer in writing promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer will not relieve the Issuer or any of the Guarantors of its obligations hereunder. The Issuer or such Guarantor will defend the loss, claim, action or suit and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Issuer will pay the reasonable fees and expenses of such counsel. Neither the Issuer nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.
(c)      The obligations of the Issuer and the Guarantors under this Section 7.06 will survive the satisfaction and discharge of this Indenture.
(d)      To secure the Issuer’s payment obligations in this Section 7.06, the Trustee will have a Lien prior to the Securities of any series on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities of any series. Such Lien will survive the satisfaction and discharge of this Indenture.
(e)      When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.07      Replacement of Trustee.
(a)      A resignation or removal of the Trustee (a “retiring Trustee”) and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07.
(b)      The Trustee may resign upon 60 days’ prior written notice or such shorter period as the Issuer may accept with respect to the Securities of one or more series in writing at any time and be discharged from the trust hereby created by so notifying the Issuer. The Holders of a majority in aggregate principal amount of the then Outstanding Securities of any series may remove the Trustee with respect to the Securities of that series by so notifying the Trustee and the Issuer in writing. The Issuer may remove the Trustee if:
(1)      the Trustee fails to comply with Section 7.09 hereof;
(2)      the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3)      a custodian or public officer takes charge of the Trustee or its property; or
(4)      the Trustee becomes incapable of acting.

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(c)      If the Trustee resigns, is removed, is incapable of acting or if a vacancy exists in the office of Trustee for any reason with respect to the Securities of one or more series, the Issuer, by Board Resolution, will promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series. Within one year after the successor Trustee or Trustees with respect to the Securities of any series takes office, the Holders of a majority in aggregate principal amount of the then Outstanding Securities of that series may appoint a successor Trustee with respect to the Securities of that series to replace the successor Trustee appointed by the Issuer.
(d)      If a successor Trustee with respect to the Securities of any series does not take office within 60 days after the effective resignation date or removal of the retiring Trustee, the retiring Trustee, the Issuer, or the Holders of at least 10% in aggregate principal amount of the then Outstanding Securities of that series may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to Securities of that series.
(e)      If the Trustee, after written request by any Holder of Securities of any series who has been a Holder of Securities of that series for at least six months, fails to comply with Section 7.09, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to Securities of that series.
(f)      In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture without any further act, deed or conveyance. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Issuer’s obligations under Section 7.06 hereof will continue for the benefit of the retiring Trustee.
(g)      In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Issuer, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto, pursuant to Article 9 hereof, wherein each successor Trustee shall accept such appointment and which ( 1 ) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, ( 2 ) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and ( 3 ) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder

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separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Issuer or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
(h)      Upon request of any such successor Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (f) and (g) of this Section, as the case may be.
(i)      No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
Section 7.08      Successor Trustee by Merger, etc.
If the Trustee consolidates, amalgamates or merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of the parties hereto.
Section 7.09      Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the Province of Ontario and any other jurisdictions as may be necessary to enable it to act as a trustee hereunder. The Trustee represents and warrants to the Issuer, Ventas, Inc. and the Holders that, to the best of its knowledge, as of the date of this Indenture, there is no material conflict of interest between its role as Trustee hereunder and its role in any other capacity, but if, notwithstanding the provisions of this Section 7.09, such a material conflict of interest exists, or hereafter arises, Section 7.07 shall apply.
Section 7.10      Anti-Money Laundering and Anti-Terrorist Legislation
The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 30 days’ written notice to the Issuer, provided that (a) the Trustee’s written notice shall describe the circumstances of such non-compliance; and

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(b) if such circumstances are rectified to the Trustee’s satisfaction within such 30 day period, then such resignation shall not be effective.
Section 7.11      Representation regarding third party interests
Each party to this Agreement (in this paragraph referred to as a “representing party”) hereby represents to the Trustee that any account to be opened by, or interest to be held by, the Trustee in connection with this Indenture, for or to the credit of such representing party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such representing party hereby agrees to complete, execute and deliver forthwith to the Trustee a Declaration, in the Trustee’s prescribed form or in such other form as may be satisfactory to it, as to the particulars of such third party.
Section 7.12      Privacy Laws
The Issuer and the Trustee acknowledge that Canadian federal and/or provincial legislation and United States federal and/or state legislation that addresses the protection of individuals’ personal information (collectively, “Privacy Laws”) may apply to obligations and activities under this Indenture. Despite any other provision of this Indenture, no party shall take or direct any action that would contravene, or cause the other to contravene, applicable Privacy Laws. The Issuer shall, prior to transferring or causing to be transferred personal information to the Trustee, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have previously been given upon which the parties can rely or are not required under applicable Privacy Laws. The Trustee shall use commercially best efforts to ensure that its services hereunder comply with applicable Privacy Laws. Specifically, the Trustee agrees: (a) to have a designated chief privacy officer; (b) to maintain policies and procedures to protect personal information and to receive and respond to any privacy complaint or injury; (c) to use personal information solely for the purposes of providing its services under or ancillary to this Indenture and not to use it for any other purpose except with the consent of, or direction from, the Issuer or the individual involved; (d) not to sell or otherwise improperly disclose personal information to any third party; and (e) to employ administrative, physical and technological safeguards to reasonably secure and protect personal information against loss, theft, or unauthorized access, use or modification.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01
Applicability of Article; Option to Effect Legal Defeasance or Covenant Defeasance.
If, pursuant to Section 2.02, provision is made for either or both of ( a ) defeasance of the Securities of or within a series under Section 8.02 or ( b ) covenant defeasance of the Securities of or within a series under Section 8.03, then the provisions of such Section or Sections, as the case may be, together with the other provisions of this Article (with such modifications thereto as may be specified pursuant to Section 2.02 with respect to any Securities), shall be applicable to such Securities, and the Issuer may at its option by Board Resolutions, at any time, with respect to such

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Securities, elect to have Section 8.02 (if applicable) or Section 8.03 (if applicable) be applied to such Outstanding Securities upon compliance with the conditions set forth below in this Article.
Section 8.02      Legal Defeasance.
Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02 with respect to any Outstanding Securities of or within a series, the Issuer and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04, be deemed to have been discharged from their obligations with respect to all such Outstanding Securities (including the related Securities Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Issuer and the Guarantors will be deemed to have paid and discharged the entire Debt represented by such Outstanding Securities (including the related Securities Guarantees), which will thereafter be deemed to be “Outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Securities, such Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:
(1)    the rights of Holders of such Outstanding Securities to receive payments in respect of the principal of, or interest or premium and Additional Amounts, if any, on such Securities when such payments are due from the trust referred to in Section 8.04 hereof;
(2)    the Issuer’s obligations with respect to such Securities under Article 2 and Section 4.02 hereof;
(3)    the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuer’s and the Guarantors’ obligations in connection therewith; and
(4)    this Article 8.
Subject to compliance with this Article 8, the Issuer may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03      Covenant Defeasance.
Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 with respect to any Outstanding Securities of or within a series, the Issuer and the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04, be released from each of their obligations under the covenant contained in Section 4.04 and, if specified as contemplated by Section 2.02, its obligations under any other covenant, with respect to such Outstanding Securities on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “ Covenant Defeasance ”), and such Securities will thereafter be deemed not “Outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “Outstanding” for all other purposes hereunder. For this purpose, Covenant Defeasance

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means that, with respect to the Outstanding Securities and the related Securities Guarantees, the Issuer and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Securities and the related Securities Guarantees will be unaffected thereby. In addition, upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 with respect to any Outstanding Securities of or within a series, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Section 6.01(4) through Section 6.01(6) hereof will not constitute Events of Default.
Section 8.04      Conditions to Legal or Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or Section 8.03 hereof with respect to any Outstanding Securities of or within a series:
(a)      the Issuer irrevocably deposits with the Trustee for the Securities of that series, in trust, for the benefit of the Holders, money in such currency or currencies, or currency unit or currency units, in which such Security is then specified as payable at maturity, non-callable Government Obligations applicable to such Securities (determined on the basis of the currency or currencies, or currency unit or currency units, in which such Securities are then specified as payable at maturity), or any combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of (including any sinking fund payment or analogous payments applicable to such Outstanding Securities), premium and Additional Amounts, if any, and interest on such Outstanding Securities on the stated date for payment thereof or on the applicable redemption date, as the case may be;
(b)      in the case of an election under Section 8.02 hereof, the Issuer has delivered to the Trustee for the Securities of that series an Opinion of Counsel in Canada reasonably acceptable to such Trustee confirming that:
(1)      the Issuer has received from, or there has been published by, the Canada Revenue Agency a ruling; or
(2)      since the date of this Indenture, there has been a change in the applicable Canadian federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of such Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to Canadian federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(c)      in the case of an election under Section 8.03 hereof, the Issuer must deliver to such Trustee for Securities of that series an Opinion of Counsel in Canada reasonably acceptable

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to such Trustee confirming that the Holders of such Outstanding Securities will not recognize income, gain or loss for Canadian federal income tax purposes as a result of such Covenant Defeasance and will be subject to Canadian federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d)      no Default or Event of Default shall have occurred in respect of Securities of that series and be continuing on the date of such deposit (other than a Default or Event of Default in respect of that series resulting from the borrowing of funds to be applied to such deposit);
(e)      such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture in respect of Securities of that series) to which Ventas, Inc. or any of its Subsidiaries is a party or by which Ventas, Inc. or any of its Subsidiaries is bound;
(f)      the Issuer must deliver to the Trustee for Securities of that series an Officers’ Certificate stating that the deposit was not made by Issuer with the intent of preferring the Holders of such Securities over the other creditors of Issuer with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuer or others;
(g)      the Issuer must deliver to the Trustee for Securities of that series an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and
(h)      notwithstanding any other provisions of this Section, such Legal Defeasance or Covenant Defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Issuer in connection therewith pursuant to Section 2.02.
Section 8.05
Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money, Government Obligations or other property as may be provided pursuant to Section 2.02 (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “ Trustee ”) pursuant to Section 8.04 in respect of any Outstanding Securities of any series will be held in trust and applied by such Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as Paying Agent) as such Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium and Additional Amounts, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
Upon receipt of a written direction from the Issuer, the Trustee will invest any funds being held pursuant to this Indenture in accordance with such direction. Any direction from the Issuer to the Trustee shall be in writing and shall be provided to the Trustee no later than 11:00 a.m. (Toronto time) on the day on which the investment is to be made. Any such direction received by

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the Trustee after 11:00 am. (Toronto time) or received on a day that is not a Business Day in the City of Toronto, shall be deemed to have been given prior to 11:00 a.m. (Toronto time) on the next Business Day.
The Trustee shall hold any Government Obligations deposited with it by the Issuer and shall cash or re-invest any remaining amounts only in accordance with the written direction of the Issuer.
The Trustee shall not be held liable for any losses incurred in the investment of any funds being held pursuant to this Indenture other than in the event of negligence, wilful misconduct or bad faith of the Trustee.
The Issuer will pay and indemnify such Trustee against any tax, fee or other charge imposed on or assessed against the money or non-callable Government Obligations deposited pursuant to Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of such Outstanding Securities.
Notwithstanding anything in this Article 8 to the contrary, such Trustee will deliver or pay to the Issuer from time to time upon the request of the Issuer any money or non-callable Government Obligations held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to such Trustee (which may be the opinion delivered under Section 8.04 (1)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06      Repayment to Issuer.
Any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium or Additional Amounts, if any, or interest on any Security and remaining unclaimed for two years after such principal, premium or Additional Amounts, if any, or interest has become due and payable shall be paid to the Issuer on their request or (if then held by the Issuer) will be discharged from such trust; and the Holder of such Security will thereafter be permitted to look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, will thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.
Section 8.07      Reinstatement.
(b)      If the Trustee or Paying Agent is unable to apply any money or non-callable Government Obligations deposited in respect of Securities of or within a series in accordance with Section 8.02 or Section 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the

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Issuer’s and the Guarantor’s obligations under this Indenture and such Securities and the related Securities Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or Section 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or Section 8.03 hereof, as the case may be; provided , however , that unless otherwise provided in the Board Resolution or indenture supplemental hereto pursuant to which such Securities shall have been issued, the principles set forth in paragraphs (b) and (c) of this Section 8.07 shall apply following such reinstatement; provided further , however , that if the Issuer makes any payment of principal of, premium or Additional Amounts, if any, or interest on any Security following the reinstatement of its obligations, the Issuer will be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.
(c)      If reinstatement of the Issuer’s and Guarantors’ obligations under this Indenture, the Securities and the related Securities Guarantees shall occur as provided in Section 8.07(a), such reinstatement shall be deemed to have occurred as of the date of such deposit except that no Default will be deemed to have occurred solely by reason of a breach while any such obligation was suspended.
(d)      Neither ( 1 ) the continued existence following the reinstatement of the foregoing obligations of facts and circumstances or obligations that were incurred or otherwise came into existence while the foregoing obligations were suspended nor ( 2 ) the performance of any such obligations, including the consummation of any transaction pursuant to, and on materially the same terms as, a contractual agreement in existence prior to the reinstatement of the foregoing obligations, shall constitute a breach of any such obligations or cause a Default or Event of Default in respect thereof; provided, however , that ( A ) Ventas, Inc. and its Subsidiaries did not incur or otherwise cause such facts and circumstances or obligations to exist in anticipation of the reinstatement of the foregoing obligations and ( B ) Ventas, Inc. and its Subsidiaries did not reasonably believe that such incurrence or actions would result in such reinstatement. For purposes of clause (2) above, any increase in the consideration to be paid prior to such amendment or modification to the terms of an existing obligation following the reinstatement of the foregoing obligations that does not exceed 10% of the consideration that was to be paid prior to such amendment or modification shall not be deemed a “material” amendment or modification. For purposes of clauses (A) and (B) above, anticipation and reasonable belief may be determined by Ventas, Inc. and shall be conclusively evidenced by a board resolution to such effect adopted by the Board of Directors of Ventas, Inc.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01      Without Consent of Holders of Securities.
Notwithstanding Section 9.02 of this Indenture, the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Securities Guarantees or the Securities without the consent of any Holder of a Security:

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(1)      to cure any ambiguity, defect or inconsistency;
(2)      to provide for uncertificated Securities in addition to or in place of certificated Securities;
(3)      to provide for the assumption of the Issuer’s obligations to Holders of Securities in the case of a consolidation, amalgamation, merger or sale of all or substantially all of the Issuer’s assets;
(4)      to add to the covenants of the Issuer for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of that series) or to surrender any right or power herein conferred upon the Issuer;
(5)      to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such Events of Default are to be for the benefit of less than all series of Securities, stating that such Events of Default are expressly being included solely for the benefit of that series); provided , however , that in respect of any such additional Events of Default such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default or may limit the right of the Holders of a majority in aggregate principal amount of that or those series of Securities to which such additional Events of Default apply to waive such default;
(6)      to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision;
(7)      to establish the form or terms of Securities of any series as permitted by Section 2.01 and Section 2.02, including the provisions and procedures relating to Securities convertible into Ventas, Inc. Common Stock;
(8)      to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series (provided that the successor Trustee is otherwise qualified and eligible to act under the terms of this Indenture) and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee;
(9)      to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of Securities pursuant to Section 8.02, Section 8.03 and Section 12.01, provided that any such action shall not adversely affect the interests of the Holders of Securities of that series or any other series of Securities in any material respect;

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(10)      to add additional Securities Guarantees with respect to the Securities;
(11)      to secure the Securities;
(12)      to make any other change that would provide any additional rights or benefits to the Holders of Securities or that does not adversely affect the legal rights under this Indenture of any such Holder; or
(13)      to comply with requirements of applicable Canadian or United States laws.
Section 9.02      With Consent of Holders of Securities.
Except as provided below in this Section 9.02, the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Securities Guarantees and the Securities with the consent of the Holders of at least a majority in aggregate principal amount of the then Outstanding Securities affected by such amendment or supplemental indenture voting as a single class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Securities), and, subject to Section 6.04 and Section 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium or Additional Amounts, if any, or interest on the Securities, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Securities Guarantees or the Securities may be waived generally or in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the then Outstanding Securities affected thereby voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Securities).
However, without the consent of the Holder of each Outstanding Security affected thereby, an amendment or waiver under this Section 9.02 may not (with respect to any Securities held by a non-consenting Holder):
(1)      reduce the principal amount of Securities of any series whose Holders must consent to an amendment, supplement or waiver;
(2)      change the stated maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.02, or adversely affect any right of repayment at the option of the Holder of any Security, or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date), in each case other than the amendment or waiver in accordance with the terms of this Indenture of any covenant or related definition included pursuant to Section 2.02 that provides for an offer to repurchase any Securities of a series upon a sale of assets or change of control transaction;

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(3)      waive a Default or Event of Default in the payment of principal of, or interest or premium, or Additional Amounts, if any, on the Securities of any series (except a rescission of acceleration of the Securities by the Holders of at least a majority in aggregate principal amount of the Securities of that series then Outstanding and a waiver of the payment Default that resulted from such acceleration);
(4)      make any Security payable in a currency or currencies or currency unit or currency units other than that stated in the Securities;
(5)      make any change in Section 6.04 or Section 6.07 hereof relating to waivers of past Defaults or the rights of Holders of Securities to receive payments of principal of, or interest or premium or Additional Amounts, if any, on the Securities;
(6)      release any Guarantor from any of its obligations under its Securities Guarantee or this Indenture, except in accordance with the terms of this Indenture;
(7)      impair the rights of Holders to convert their Securities, if convertible, upon the terms established pursuant to or in accordance with the provisions of this Indenture; or
(8)      make any change in the amendment and waiver provisions set forth in clauses (1) through (8) of this Section 9.02.
Section 2.09 hereof shall determine which Securities are considered to be “Outstanding” for purposes of this Section 9.02.
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of Holders of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of that series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
It is not necessary for the consent of the Holders of Securities under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it is sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer will mail to the Holders of Securities affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuer to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.
Section 9.03      Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder of a Security and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s

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Security, even if notation of the consent is not made on any Security. However, any such Holder of a Security or subsequent Holder of a Security may revoke the consent as to its Security if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder, whether or not the Holder consented to the amendment, supplement or waiver.
Section 9.04      Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Outstanding Security thereafter authenticated. The Issuer in exchange for all Outstanding Securities of a series may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Securities of that series that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Security of that series will not affect the validity and effect of such amendment, supplement or waiver.
Section 9.05      Trustee to Sign Amendments, etc.
Upon the request of the Issuer accompanied by Board Resolutions authorizing the execution of any amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Securities as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Issuer in the execution of an amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental indenture. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 14.03 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.
ARTICLE 10
MEETINGS OF HOLDERS
Section 10.01      Right to Convene Meeting
The Trustee may at any time and from time to time and shall on receipt of a written request of the Issuer or a written request signed by the Holders of not less than 25% in principal amount of the Securities then outstanding (or not less than 25% in principal amount of the Securities of a particular series then outstanding in the case of a “serial meeting” pursuant to Section 10.17) and upon being funded and indemnified to its reasonable satisfaction by the Issuer or by the Holders signing such request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the applicable Holders. In the event of the Trustee failing within 15 days after receipt of any such request and such funding and indemnity to give notice convening a meeting, the Issuer or such Holders, as the case may be, may convene such

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meeting. Every such meeting shall be held in the City of Toronto, Ontario or at such other place as may be approved or determined by the Trustee.
Section 10.02      Notice of Meetings
At least 15 Business Days’ notice of any meeting shall be given to the applicable Holders in the manner provided in Section 14.01 and a copy thereof shall be sent to the Trustee unless the meeting has been called by it and to the Issuer unless the meeting has been called by it. Such notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat and it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article 10. Such notice shall also be accompanied by a copy of any regulations made by the Trustee under Section 10.09 in respect of such meeting.
Section 10.03      Chairman
The chairman of the meeting shall be any individual, who need not be a Holder, nominated in writing by the Trustee and if no individual is so nominated, or if the person so nominated is unable or unwilling to act or is not present within 15 minutes from the time fixed for the holding of the meeting, the Holders present in person or by proxy shall choose some individual present to be chairman.
Section 10.04      Quorum
At any meeting of the Holders a quorum shall consist of Holders present in person or by proxy and representing at least 50% in principal amount of the outstanding Securities (or at least 50% in principal amount of the outstanding Securities of a particular series in the case of a “serial meeting” pursuant to Section 10.17). If a quorum of the Holders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Holders or pursuant to a request of the Holders, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day in which case it shall be adjourned to the next following Business Day thereafter) at the same time and place and no notice shall be required to be given in respect of such adjourned meeting. At the adjourned meeting, the Holders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened notwithstanding that they may not represent 50% of the principal amount of the outstanding Securities or outstanding Securities of a particular series, as applicable.
Section 10.05      Power to Adjourn
The chairman of any meeting at which a quorum of the applicable Holders is present may with the consent of the holders of a majority in principal amount of the applicable Securities represented thereat adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

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Section 10.06      Show of Hands
Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on extraordinary resolutions shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.
Section 10.07      Poll
On every extraordinary resolution, and on any other question submitted to a meeting when demanded by the chairman or by one or more Holders and/or proxies for Holders holding at least 5% of the principal amount of the Securities represented thereat, a poll shall be taken in such manner, and either at once or after an adjournment, as the chairman shall direct. Questions other than extraordinary resolutions shall, if a poll be taken, be decided by the votes of the holders of a majority in principal amount of the Securities represented at the meeting and voted on the poll.
Section 10.08      Voting
On a show of hands, every person who is present and entitled to vote, whether as a Holder or as proxy for one or more Holders or both, shall have one vote. On a poll, each Holder present in person or represented by a proxy duly appointed by an instrument in writing shall be entitled to one vote in respect of each Cdn$1,000 of principal amount of Securities then held by such Holder. A proxy need not be a Holder. In the case of joint Holders of a Security, any one of them present in person or by proxy at the meeting may vote in the absence of the other or others; but in case more than one of them be present in person or by proxy, they shall vote together in respect of the Securities of which they are joint holders.
Section 10.09      Regulations
(a)      Subject to the Trustee having sent a copy of any proposed regulations to all applicable Holders with the notice of meeting given pursuant to Section 10.02, the Trustee or the Issuer (with the approval of the Trustee) may from time to time make and vary such regulations as it shall from time to time think fit providing for and governing:
(1)      the voting by proxy by Holders and form of instrument appointing proxies where authorized under such regulations and the manner in which the same shall be executed, and for the production of the authority of any person signing on behalf of the giver of such proxy;
(2)      the deposit of instruments appointing proxies at such place as the Trustee, the Issuer or the Holders convening the meeting, as the case may be, may, in the notice convening the meeting, direct and the time, if any, before the holding of the meeting or any adjournment thereof by which the same shall be deposited;

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(3)      the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed or sent by facsimile before the meeting to the Issuer or to the Trustee at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting; and
(4)      such other matters as may be specified in any Supplemental Indenture in respect of any series of Securities.
(b)      Any regulation so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as the holders of any Securities, or as entitled to vote or be present at the meeting in respect thereof shall be Holders to which the meeting relates and persons whom Holders have by instrument in writing duly appointed as their proxies.
Section 10.10      Issuer, Guarantor and Trustee May Be Represented
The Issuer and any Guarantor, and their respective employees, representatives, officers, board members and directors, and the legal and other professional advisors of the Issuer and any Guarantor, may attend any meeting of the Holders but shall have no vote thereat as such. The Trustee, and its respective employees, representatives, officers and directors, and the legal and other professional advisors of the Trustee, may attend any meeting of the Holders but shall have no vote thereat as such.
Section 10.11      Powers Exercisable by Extraordinary Resolution
(a)      In addition to the powers conferred upon them by any other provisions of this Indenture or by law, a meeting of the Holders shall have the powers to approve by extraordinary resolution the matters contemplated by Section 9.02 (other than those matters in Section 9.02 that require the specific consent of each Holder affected thereby) and any other matter in any other provision of this Indenture in respect of which consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding (or the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding of a particular series) is required.
(b)      For greater certainty and notwithstanding any other provision hereof, no amendment, supplement or waiver of this Indenture, whether by extraordinary resolution or otherwise, and no Supplemental Indenture entered into pursuant to the terms hereof, which has the effect of increasing the financial or other liability of the Issuer or any Guarantor hereunder, including increases to the principal amount of Securities issued, the amount of the premium payable thereon, the rate of interest payable thereon, the calculation of the Redemption Price, or the timing of payments of any of the foregoing, shall be binding on the Issuer or any such Guarantor unless agreed to in writing by the Issuer and the Guarantor, as applicable.

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Section 10.12      Meaning of “Extraordinary Resolution”
The expression “extraordinary resolution” when used in this Indenture means a resolution proposed to be passed as an extraordinary resolution at a meeting of Holders duly convened for the purpose and held in accordance with the provisions of this Article 10 at which a quorum is present and such resolution is passed by the favorable votes of the holders of at least 50% of the principal amount of Securities (or Holders holding at least 50% of the principal amount of the Securities of a particular series then outstanding in the case of a “serial meeting” pursuant to Section 10.17) present in person or by proxy at the meeting and voted on a poll upon such resolution.
Section 10.13      Powers Cumulative
It is hereby declared and agreed that any one or more of the powers and/or any combination of the powers in this Indenture stated to be exercisable by Holders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the rights of Holders to exercise the same or any other such power or combination of powers thereafter from time to time.
Section 10.14      Minutes
Minutes of all resolutions and proceedings at every meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee at the expense of the Issuer, and any such minutes as aforesaid, if signed by the chairman of the meeting at which such resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the applicable Holders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made, shall be deemed to have been duly held and convened, and all resolutions passed thereat or proceedings had thereat, to have been duly passed and had.
Section 10.15      Instruments in Writing
(a)      All actions which may be taken and all powers that may be exercised by extraordinary resolution or other resolution of applicable Holders at a meeting held as hereinbefore in this Article 10 provided may also be taken and exercised by the holders of not less than 50% of the principal amount of all outstanding Securities or not less than 50% of the principal amount of all outstanding Securities of a particular series, as applicable, by an instrument in writing signed in one or more counterparts and the expression “extraordinary resolution” when used in this Indenture shall include an instrument so signed.
(b)      All actions which may be taken and all powers that may be exercised by any resolution (other than an extraordinary resolution) of Holders at a meeting held as provided in this Indenture or as required in respect of any consent of Holders to be provided hereunder may also be taken and exercised by the Holders of the applicable percentage of the principal amount of all outstanding Securities (or Securities of an applicable series) by an instrument in writing signed in one or more counterparts.

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Section 10.16      Binding Effect of Resolutions
Every extraordinary resolution passed in accordance with the provisions of this Article 10 shall be binding upon all the Holders (or in the case of an extraordinary resolution passed in respect of a particular series only, all the Holders of that series), and each and every such Holder and the Trustee (subject to the provisions for its indemnity herein contained) shall be bound to give effect accordingly to every such extraordinary resolution.
Section 10.17      Serial Meetings
If any business to be transacted at a meeting of Holders, or any action to be taken or powers to be exercised by instrument in writing under Section 10.15, is to be taken in respect of such series Securities or especially affects the rights of the holders of Securities of one or more series in a manner or to an extent differing from that in which it affects the rights of the holders of Securities of any other series then:
(a)      reference to such fact, indicating each series involved or affected shall be made in the notice of such meeting and the meeting shall be and is herein called a “serial meeting”; and
(b)      the holders of Securities of a series involved or so especially affected shall not be bound by any action taken at a serial meeting or by any instrument in writing under Section 10.15 unless in addition to the other provisions of this Article 10, in the case of action taken at a serial meeting, there are present in person or by proxy at the said meeting holders of at least 50% in principal amount of the outstanding Securities of the series involved or so especially affected, subject to the provisions of this Article 10 as to adjourned meetings, and the resolution is passed by the favorable votes of the holders of at least a majority of the principal amount of Securities of the series involved or so especially affected, voted on the resolution.
ARTICLE 11
SECURITIES GUARANTEES
Section 11.01      Applicability of Article; Securities Guarantee.
(a)      If the Issuer elects to issue any series of Securities with the benefit of Securities Guarantees as contemplated by Section 2.02, then the provisions of this Article 11 (with such modifications thereto as may be specified pursuant to Section 2.02 with respect to any series of Securities), will be applicable to such Securities. Each reference in this Article 11 to a “Security” or “the Securities” refers to the Securities of the particular series as to which provision has been made for such Securities Guarantees. If more than one series of Securities as to which such provision has been made are Outstanding at any time, the provisions of this Article 11 shall be applied separately to each such series.
(b)      Subject to this Article 11, each of the Guarantors, jointly and severally, fully and unconditionally guarantees to each Holder of a Security of any series issued with the benefit of Securities Guarantees authenticated and delivered by the Trustee and to the Trustee and its

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successors and assigns, irrespective of the validity and enforceability of this Indenture, such Security or the obligations of the Issuer hereunder or thereunder, that:
(1)      the principal of, premium and Additional Amounts, if any, and interest on such Security will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on such Security, if any, if lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(2)      in case of any extension of time of payment or renewal of any Securities of that series or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
(c)      The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Securities of any series issued with the benefit of Securities Guarantees or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities of that series with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor, other than payment in full of all obligations under the Securities of that series. Each Guarantor in respect of a series of Securities hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer in respect of that series, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenant that this Securities Guarantee will not be discharged except by complete performance of the obligations contained in such Securities and this Indenture.
(d)      If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Securities Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.
(e)      Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, ( 1 ) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of its Securities

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Guarantee notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and ( 2 ) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by such Guarantor for the purpose of its Securities Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Securities Guarantee.
(f)      Any and all payments made by Ventas, Inc. as a Guarantor pursuant to the provisions of a Securities Guarantee shall be made without withholding of or deduction for, or on account of, any present or future tax, assessment or governmental charge unless required by applicable law, provided that, in the case of any payment made by Ventas, Inc. in its capacity as Guarantor to a Holder of a Security who is a United States Alien (as defined below), if any amount is so withheld or deducted for or on account of any tax, assessment or governmental charge imposed by or on behalf of the United States (or any political subdivision or taxing authority thereof or therein), Ventas, Inc. will pay such Additional Amounts to such Holder as will result (after the deduction or withholding of such tax, assessment or governmental charge) in the payment to such Holder of the amounts that would otherwise have been payable pursuant to such Securities Guarantee; provided, however, the foregoing obligation will not apply to and Ventas, Inc. will not be required to make any payment of Additional Amounts to any such Holder for or on account of:
(1)      any such tax, assessment or other governmental charge that would not have been so imposed but for the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein, or having or having had a permanent establishment therein;
(2)      any tax, assessment or other governmental charge imposed by reason of such Holder’s past or present status for United States federal income tax purposes as a personal holding company or foreign personal holding company or controlled foreign corporation or passive foreign investment company or as a corporation that accumulates earnings to avoid United States federal income tax or as a private foundation or other tax-exempt organization;
(3)      any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by the Holder of any Securities of any series or tranche for payment on a date more than 60 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;
(4)      any estate, inheritance, gift, sales, transfer, excise or personal property tax or any similar tax, assessment or governmental charge;

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(5)      any tax, assessment or other governmental charge imposed by reason of such Holder’s past or present status as the actual or constructive owner of 10% or more of the total combined voting power of all classes of stock entitled to vote of Ventas, Inc., or as a direct or indirect Subsidiary of Ventas, Inc.;
(6)      any tax, assessment or other governmental charge imposed on interest or other amounts received by a bank on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business;
(7)      any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with certification, information or other reporting requirements concerning the nationality, residence or identity of the Holder or beneficial owner of such Security if such compliance is required by statute or by regulation of the United States or of any political subdivision or taxing authority thereof or therein as a precondition to relief or exemption from such tax, assessment or other governmental charge;
(8)      any tax, assessment or other governmental charge that is payable otherwise than by withholding from payment of principal or interest on that Security;
(9)      any withholding or deduction imposed as a result of a beneficial owner’s failure, or the failure of any agent having custody or control over a payment, to establish its exemption from such withholding or deduction by complying with any requirements to report on its owners of holders of interests, or to enter into an agreement with a taxing authority to provide such information; or
(10)      any withholding or deduction imposed, pursuant to or in connection with FATCA, on payments to a beneficial owner, any agent having custody or control over a payment made by the issuer or any agent in the chain of payment.
As used herein, the term “FATCA” means (i) Sections 1471 to 1474 of the Internal Revenue Code, as amended, or any associated United States Treasury regulations or other official guidance; and (ii) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction, which (in either case) facilitates the implementation of clause (i) above. The term “ United States Alien ” means any person who, for United States federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust.
Section 11.02      Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Securities of any series issued with the benefit of Securities Guarantees, each Holder, hereby confirms that it is the intention of all such parties that the Securities Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, provincial or state law to the extent applicable to

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any Securities Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each such Guarantor will, after giving effect to any maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Securities Guarantee not constituting a fraudulent transfer or conveyance.
Section 11.03      Execution and Delivery of Securities Guarantee.
To evidence its Securities Guarantee set forth in Section 11.01 in respect of Securities of a series issued with the benefit of Securities Guarantees, each Guarantor hereby agrees that a notation of such Securities Guarantee substantially in the form as shall be established in one or more indentures supplemental hereto or approved from time to time pursuant to Board Resolutions in accordance with Section 2.02, will be endorsed by an Officer of such Guarantor on each Security of that series authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.
Each Guarantor hereby agrees that its Securities Guarantee set forth in Section 11.01 will remain in full force and effect notwithstanding any failure to endorse on each Security of that series a notation of such Securities Guarantee.
If an Officer whose signature is on this Indenture or on the Securities Guarantee no longer holds that office at the time the Trustee authenticates the Security of that series on which a Securities Guarantee is endorsed, such Securities Guarantee will be valid nevertheless.
The delivery of any Security of a series issued with the benefit of Securities Guarantees by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Securities Guarantee set forth in this Indenture on behalf of the Guarantors.
Section 11.04      Guarantors May Consolidate, etc., on Certain Terms.
Subject to Article 5 and except as otherwise may be provided in a supplemental indenture pursuant to Section 2.02 in respect of the release of Guarantors in connection with a sale of assets permitted by such supplemental indenture or otherwise, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Issuer or another Guarantor, unless:
(1)      immediately after giving effect to that transaction, no Default or Event of Default exists; and
(2)      the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation, amalgamation or merger assumes all the obligations of that Guarantor under this Indenture and its Securities Guarantee pursuant to a supplemental indenture.

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In case of any such consolidation, amalgamation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, of the Securities Guarantee endorsed upon the Securities of any series and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Securities Guarantees to be endorsed upon all of the Securities of that series issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee. All the Securities Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Securities Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Securities Guarantees had been issued at the date of the execution hereof.
Except as set forth in Article 5 or as otherwise may be provided in a supplemental indenture pursuant to Section 2.02, and notwithstanding this Section 11.04, nothing contained in this Indenture or in any of the Securities of any series will prevent any consolidation, amalgamation or merger of a Guarantor with or into the Issuer or another Guarantor of that series, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor of that series.
ARTICLE 12
SATISFACTION AND DISCHARGE
Section 12.01      Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect as to any series of Securities issued hereunder (except as to any surviving rights of registration of transfer or exchange of Securities of that series herein expressly provided for and the right to receive Additional Amounts), when:
(1)      either:
(A)      all Securities of that series that have been authenticated (except lost, stolen or destroyed Securities that have been replaced or paid and Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuer) have been delivered to the Trustee for cancellation; or
(B)      all Securities of that series that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year thereof and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee for Securities of that series as trust funds in trust solely for the benefit of the Holders, money in such currency or currencies, or currency unit or currency units, in which such Securities are then specified as payable at maturity, non-callable Government Obligations applicable to such Securities (determined on

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the basis of the currency or currencies, or currency unit or currency units, in which such Securities are then specified as payable at maturity), or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such Securities not delivered to the Trustee for cancellation for principal, premium and Additional Amounts, if any, and accrued interest to the date of maturity or redemption;
(2)      no Default or Event of Default with respect to the Securities of that series has occurred and is continuing on the date of such deposit or will occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound;
(3)      the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture with respect to the Securities of that series; and
(4)      the Issuer has delivered irrevocable instructions to the Trustee for Securities of that series, to apply the money on deposit in the trust referred to in subclause (B) of clause (1) above toward the payment of such Securities at maturity or on the redemption date, as the case may be.
In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee for Securities of that series stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture in respect of Securities of a series, if money has been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the provisions of Section 12.02 and Section 8.06 will survive. In addition, nothing in this Section 12.01 will be deemed to discharge those provisions of Section 7.07 that, by their terms, survive the satisfaction and discharge of this Indenture.
Section 12.02      Application of Trust Money.
Subject to the provisions of Section 8.06, all money deposited with the Trustee in respect of any Securities pursuant to Section 12.01 shall be held in trust and applied by it, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest and Additional Amounts for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law and Section 2.05.
If the Trustee or Paying Agent is unable to apply any money or Government Obligations in accordance with Section 12.01 in respect of any Securities by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and any Guarantor’s obligations

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under this Indenture and such Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01 and the provisions of Section 8.07 shall apply to the extent provided therein.
ARTICLE 13
CONVERSION OF SECURITIES
Section 13.01      Applicability of Article.
Securities of any series issued by Ventas, Inc. which are convertible into Common Stock at the option of the Holder of such Securities shall be convertible in accordance with their terms and (unless otherwise specified as contemplated by Section 2.02 for the Securities of any series) in accordance with this Article. Each reference in this Article 13 to “a Security” or “the Securities” refers to the Securities of the particular series that is convertible into Common Stock. If more than one series of Securities with conversion privileges is Outstanding at any time, the provisions of this Article 13 shall be applied separately to each that series.
Section 13.02      Right of Holders to Convert Securities into Common Stock.
Subject to and upon compliance with the terms of the Securities and the provisions of this Article 13, at the option of the Holder thereof, any Security of any series of any authorized denomination which is convertible into Common Stock, or any portion of the principal amount thereof which is Cdn$1,000 or any integral multiple of Cdn$1,000, may, at any time during the period specified in the Securities of that series, or in case such Security or portion thereof shall have been called for redemption, then in respect of such Security or portion thereof until and including, but not after (unless Ventas, Inc. shall default in payment due upon the redemption thereof) the close of business on the Business Day prior to the redemption date (except that in the case of repayment at the option of the Holder, if specified in the terms of the relevant Security, such right shall terminate upon Ventas, Inc.’s receipt of written notice of the exercise of such option), be converted into duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, as specified in such Security, at the conversion price or conversion rate for each Cdn$1,000 principal amount of Securities (such initial conversion rate reflecting an initial conversion price specified in such Security) in effect on the conversion date, or, in case an adjustment in the conversion price has taken place pursuant to the provisions of this Article 13, then at the applicable conversion price as so adjusted, upon surrender of the Security or Securities, the principal amount of which is so to be converted, to Ventas, Inc. at any time during usual business hours at the office or agency to be maintained by it in accordance with the provisions of Section 4.02, accompanied by a written notice of election to convert as provided in Section 13.03 and, if so required by Ventas, Inc. and/or the Trustee, by a written instrument or instruments of transfer in form satisfactory to Ventas, Inc. and/or the Trustee, as applicable, duly executed by the Holder thereof or his attorney duly authorized in writing. All Securities surrendered for conversion shall, if surrendered to Ventas, Inc. or any conversion agent, be delivered to the Trustee for cancellation and cancelled by it, or shall, if surrendered to the Trustee, be cancelled by it, as provided in Section 2.12.

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The initial conversion price or conversion rate in respect of a series of Securities shall be as specified in the Securities of that series. The conversion price or conversion rate will be subject to adjustment on the terms set forth in Section 13.05 or such other or different terms, if any, as may be specified as contemplated by Section 2.02 for Securities of that series. Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of any portion of it.
Section 13.03      Issuance of Shares of Common Stock on Conversions.
As promptly as practicable after the surrender, as herein provided, of any Security or Securities for conversion into Common Stock, Ventas, Inc. shall deliver or cause to be delivered at its said office or agency to or upon the written order of the Holder of the Security or Securities so surrendered a certificate or certificates representing the number of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock into which such Security or Securities may be converted in accordance with the terms thereof and the provisions of this Article 13. Prior to delivery of such certificate or certificates, Ventas, Inc. shall require written notice at its said office or agency from the Holder of the Security or Securities so surrendered stating that the Holder irrevocably elects to convert such Security or Securities, or, if less than the entire principal amount thereof is to be converted, stating the portion thereof to be converted. Such notice shall also state the name or names (with address and social security or other taxpayer identification number) in which said certificate or certificates are to be issued. Such conversion shall be deemed to have been made at the time that such Security or Securities shall have been surrendered for conversion and such notice shall have been received by Ventas, Inc. or the Trustee, the rights of the Holder of such Security or Securities as a Holder shall cease at such time, the Person or Persons entitled to receive the shares of Common Stock upon conversion of such Security or Securities shall be treated for all purposes as having become either record holder or holders of such shares of Common Stock at such time and such conversion shall be at the conversion price in effect at such time. In the case of any Security of any series which is converted in part only, upon such conversion, Ventas, Inc. shall execute and, upon Ventas, Inc.’s request and at Ventas, Inc.’s expense, the Trustee or an authenticating agent shall authenticate and deliver to the Holder thereof, as requested by such Holder, a new Security or Securities of that series of authorized denominations in aggregate principal amount equal to the unconverted portion of such Security.
Ventas, Inc. shall not be required to deliver certificates for shares of Common Stock upon conversion while its stock transfer books are closed for a meeting of shareholders or for the payment of dividends or for any other purpose, but certificates for shares of Common Stock shall be delivered as soon as the stock transfer books shall again be opened.
Section 13.04      No Payment or Adjustment for Interest or Dividends.
Unless otherwise specified as contemplated by Section 2.02 for Securities of that series, Securities surrendered for conversion into Common Stock during the period from the close of business on any Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except Securities called for redemption on a redemption date within such period) when surrendered for conversion must be accompanied by payment (by certified or

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official bank cheque to the order of Ventas, Inc.) of an amount equal to the interest thereon which the Holder is entitled to receive on such Interest Payment Date. Payment of interest shall be made, on such Interest Payment Date or such other payment date (as set forth in Section 2.13), as the case may be, to the Holder of the Securities as of such Record Date. Except where Securities surrendered for conversion must be accompanied by payment as described above, no interest on converted Securities will be payable by Ventas, Inc. on any Interest Payment Date subsequent to the date of conversion. No other payment or adjustment for interest or dividends is to be made upon conversion. Notwithstanding the foregoing, upon conversion of any Original Issue Discount Security, the fixed number of shares of Common Stock into which such Security is convertible delivered by Ventas, Inc. to the Holder thereof shall be applied, first, to the portion attributable to the accrued original issue discount relating to the period from the date of issuance to the date of conversion of such Security, and, second, to the portion attributable to the balance of the principal amount of such Security.
Section 13.05      Adjustment of Conversion Price.
Unless otherwise specified as contemplated by Section 2.02 for Securities of that series, the conversion price for Securities convertible into Common Stock shall be adjusted from time to time as follows:
(a)      In case Ventas, Inc. shall ( 1 ) pay a dividend or make a distribution on Common Stock in shares of Common Stock, ( 2 ) subdivide the outstanding Common Stock into a greater number of shares or ( 3 ) combine the outstanding Common Stock into a smaller number of shares, the conversion price for the Securities of that series shall be adjusted so that the Holder of any such Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned or have been entitled to receive after the happening of any of the events described above had such Security been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of subdivision or combination. An adjustment made pursuant to this paragraph (a) shall become effective immediately after the record date in the case of a dividend or distribution, except as provided in paragraph (h) below, and shall become effective immediately after the effective date in the case of a subdivision or combination.
(b)      In case Ventas, Inc. shall issue rights or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of Common Stock (as defined for purposes of this paragraph (b) in paragraph (e) below), at the record date for the determination of stockholders entitled to receive such rights or warrants, the conversion price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the conversion price in effect immediately prior to the date of issuance of such rights or warrants by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at such current market price, and the denominator of which shall be the number of shares of Common Stock outstanding on the date of

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issuance of such rights or warrants plus the number of additional shares of Common Stock receivable upon exercise of such rights or warrants. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately, except as provided in paragraph (h) below, after such record date. In determining whether any rights or warrants entitle the Holders of the Securities of that series to subscribe for or purchase shares of Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by Ventas, Inc. for such rights or warrants plus the exercise price thereof, the value of such consideration or exercise price, as the case may be, if other than cash, to be determined by the Board of Directors.
(c)      In case Ventas, Inc. shall distribute to all holders of Common Stock any shares of Capital Stock of Ventas, Inc. (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of Ventas, Inc.) or rights or warrants to subscribe for or purchase any of its securities (excluding those rights or warrants referred to in paragraph (b) above) (any of the foregoing being herein in this paragraph (c) called the “ Special Securities ”), then, in each such case, unless Ventas, Inc. elects to reserve such Special Securities for distribution to the Holders of Securities of that series upon the conversion so that any such Holder converting such Securities will receive upon such conversion, in addition to the shares of Common Stock to which such Holder is entitled, the amount and kind of Special Securities which such Holder would have received if such Holder had, immediately prior to the record date for the distribution of the Special Securities, converted Securities into Common Stock, the conversion price shall be adjusted so that the same shall equal the price determined by multiplying the conversion price in effect immediately prior to the date of such distribution by a fraction the numerator of which shall be the current market price per share (as defined for purposes of this paragraph (c) in paragraph (e) below) of Common Stock on the record date mentioned above less the then fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive) of the portion of the Special Securities so distributed applicable to one share of Common Stock, and the denominator of which shall be the current market price per share (as defined in paragraph (e) below) of Common Stock; provided, however , that in the event the then fair market value (as so determined) of the portion of the Special Securities so distributed applicable to one share of Common Stock is equal to or greater than the current market price per share (as defined in paragraph (e) below) of Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Securities of that series shall have the right to receive the amount and kind of Special Securities such Holder would have received had such Holder converted such Securities immediately prior to the record date for the distribution of the Special Securities. Such adjustment shall become effective immediately, except as provided in paragraph (h) below, after the record date for the determination of stockholders entitled to receive such distribution.
(d)      If, pursuant to paragraph (b) or (c) above, the number of shares of Common Stock shall have been adjusted because Ventas, Inc. has declared a dividend, or made a distribution, on the outstanding shares of Common Stock in the form of any right or warrant to purchase securities of Ventas, Inc., or Ventas, Inc. has issued any such right or warrant, then, upon the expiration of any such unexercised right or unexercised warrant, the conversion price shall forthwith be adjusted

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to equal the conversion price that would have applied had such right or warrant never been declared, distributed or issued.
(e)      For the purpose of any computation under paragraph (b) above, the current market price per share of Common Stock on any date shall be deemed to be the average of the reported last sales prices for the 30 consecutive Trading Days (as defined below) commencing 45 Trading Days before the date in question. For the purpose of any computation under paragraph (c) above, the current market price per share of Common Stock on any date shall be deemed to be the average of the reported last sales prices for the 10 consecutive Trading Days before the date in question. The reported last sales price for each day (whether for purposes of paragraph (b) or paragraph (c)) shall be the reported last sales price, regular way, or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if the Common Stock is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System (“ NASDAQ ”) or, if the Common Stock is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for the Common Stock on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board of Directors of Ventas, Inc. or a committee thereof or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange Member firm regularly making a market in the Common Stock selected for such purpose by the Board of Directors of Ventas, Inc. or a committee thereof or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board of Directors of Ventas, Inc. or a committee thereof. As used herein, the term “ Trading Day ” with respect to the Common Stock means ( 1 ) if the Common Stock is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business or ( 2 ) if the Common Stock is quoted on the National Market System of the NASDAQ, a day on which trades may be made on such National Market System or ( 3 ) otherwise, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
(f)      No adjustment in the conversion price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however , that any adjustments which by reason of this paragraph (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; and, provided, further , that adjustment shall be required and made in accordance with the provisions of this Article 13 (other than this paragraph (f)) not later than such time as may be required in order to preserve the tax free nature of a distribution to the holders of Common Stock. All calculations under this Article 13 shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be, with one-half cent and 1/200 of a share, respectively, being rounded upward. Anything in this Section 13.05 to the

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contrary notwithstanding, Ventas, Inc. shall be entitled to make such reductions in the conversion price, in addition to those required by this Section 13.05, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or distribution of other assets (other than cash dividends) hereafter made by Ventas, Inc. to its stockholders shall not be taxable.
(g)      Whenever the conversion price is adjusted, as herein provided, Ventas, Inc. shall promptly file with the Trustee, at the corporate trust office of the Trustee, and with the office or agency maintained by Ventas, Inc. for the conversion of Securities of that series pursuant to Section 4.02, an Officers’ Certificate, setting forth the conversion price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment. Neither the Trustee nor any conversion agent shall be under any duty or responsibility with respect to any such certificate or any facts or computations set forth therein, except to exhibit said certificate from time to time to any Holder of a Security of that series desiring to inspect the same. Ventas, Inc. shall promptly cause a notice setting forth the adjusted conversion price to be mailed to the Holders of Securities of that series, as their names and addresses appear upon the Security Register of Ventas, Inc.
(h)      In any case in which this Section 13.05 provides that an adjustment shall become effective immediately after a record date for an event, Ventas, Inc. may defer until the occurrence of such event ( 1 ) issuing to the Holder of any Security of that series converted after such record date and before the occurrence of such event the additional shares of the Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and ( 2 ) paying to such Holder any amount in cash in lieu of any fractional share of Common Stock pursuant to Section 13.06 hereof.
Section 13.06      No Fractional Shares to be Issued.
No fractional shares of Common Stock shall be issued upon any conversion of Securities. If more than one Security of any series shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities of that series (or specified portions thereof to the extent permitted hereby) so surrendered. Instead of a fraction of a share of Common Stock which would otherwise be issuable upon conversion of any Security or Securities (or specified portions thereof), Ventas, Inc. shall pay a cash adjustment (computed to the nearest cent, with one‑half cent being rounded upward) in respect of such fraction of a share in an amount equal to the same fractional interest of the reported last sales price (as defined in Section 13.05(e)) of the Common Stock on the Trading Day (as defined in Section 13.05(e)) next preceding the day of conversion.

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Section 13.07
Preservation of Conversion Rights Upon Consolidation, Amalgamation, Merger, Sale or Conveyance.
In case of any consolidation of Ventas, Inc. with, or amalgamation or merger of Ventas, Inc. into, any other corporation (other than a consolidation, amalgamation or merger in which the Ventas, Inc. is the continuing corporation), or in the case of any sale or transfer of all or substantially all of the assets of Ventas, Inc., the corporation formed by such consolidation or the corporation into which Ventas, Inc. shall have been merged or the corporation which shall have acquired such assets, as the case may be, shall execute and deliver to the Trustee, a supplemental indenture, in accordance with the provisions of Article 5 and Article 9 as they relate to supplemental indentures, providing that the Holder of each Security then Outstanding of a series which was convertible into Common Stock shall have the right thereafter to convert such Security into the kind and amount of shares of stock and other securities and property, including cash, receivable upon such consolidation, amalgamation, merger, sale or transfer by a holder of the number of shares of Common Stock of Ventas, Inc. into which such Securities might have been converted immediately prior to such consolidation, amalgamation, merger, sale or transfer. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 13. Neither the Trustee nor any conversion agent shall have any liability or responsibility for determining the correctness of any provision contained in any such supplemental indenture relating either to the kind or amount of shares of stock or other securities or property receivable by Holders of the Securities upon the conversion of their Securities after any such consolidation, amalgamation, merger, sale or transfer, or to any adjustment to be made with respect thereto and may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, an Officers’ Certificate with respect thereto and an Opinion of Counsel with respect to legal matters related thereto. If in the case of any such consolidation, amalgamation, merger, sale or transfer, the stock or other securities and property receivable by a Holder of the Securities includes stock or other securities and property of a corporation other than the successor or purchasing corporation, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary. The above provisions of this Section 13.07 shall similarly apply to successive consolidations, amalgamations, mergers, sales or transfers.
Section 13.08
Notice to Holders of the Securities of a Series Prior to Taking Certain Types of Action.
With respect to the Securities of any series, in case:
(a)      Ventas, Inc. shall authorize the issuance to all holders of Common Stock of rights or warrants to subscribe for or purchase shares of its Capital Stock or of any other right;
(b)      Ventas, Inc. shall authorize the distribution to all holders of Common Stock of evidences of indebtedness or assets (except for cash dividends or distributions paid from retained earnings of Ventas, Inc.);

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(c)      of any subdivision or combination of Common Stock or of any consolidation, amalgamation or merger to which Ventas, Inc. is a party and for which approval by the shareholders of Ventas, Inc. is required, or of the sale or transfer of all or substantially all of the assets of Ventas, Inc.; or
(d)      of the voluntary or involuntary dissolution, liquidation or winding up of Ventas, Inc.;
then Ventas, Inc. shall cause to be filed with the Trustee and at the office or agency maintained for the purpose of conversion of Securities of that series pursuant to Section 4.02, and shall cause to be mailed to the Holders of Securities of that series, at their last addresses as they shall appear on the register of Ventas, Inc. maintained by the Registrar, at least 10 days prior to the applicable record date hereinafter specified, a notice stating ( 1 ) the date as of which the holders of Common Stock to be entitled to receive any such rights, warrants or distribution are to be determined, or ( 2 ) the date on which any such subdivision, combination, consolidation, amalgamation, merger, sale, transfer, dissolution, liquidation, winding up or other action is expected to become effective, and the date as of which it is expected that holders of record of Common Stock shall be entitled to exchange their Common Stock for securities or other property, if any, deliverable upon such subdivision, combination, consolidation, amalgamation, merger, sale, transfer, dissolution, liquidation, winding up or other action. The failure to give the notice required by this Section 13.08 or any defect therein shall not affect the legality or validity of any distribution, right, warrant, subdivision, combination, consolidation, amalgamation, merger, sale, transfer, dissolution, liquidation, winding up or other action, or the vote upon any of the foregoing. Such notice shall also be published by and at the expense of Ventas, Inc. not later than the aforesaid filing date at least once in an Authorized Newspaper.
Section 13.09      Covenants to Reserve Shares for Issuance on Conversion of Securities.
Ventas, Inc. covenants that at all times it will reserve and keep available out of each class of its authorized Common Stock, free from preemptive rights, solely for the purpose of issue upon conversion of Securities of any series as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding Securities of that series. Ventas, Inc. covenants that all shares of Common Stock which shall be so issuable shall, when issued or delivered, be duly and validly issued shares of Common Stock into which Securities of that series are convertible, and shall be fully paid and nonassessable, free of all liens and charges and not subject to preemptive rights and that, upon conversion, the appropriate capital stock accounts of Ventas, Inc. will be duly credited.
Section 13.10      Compliance with Governmental Requirements.
Ventas, Inc. covenants that if any shares of Common Stock required to be reserved for purposes of conversion of Securities hereunder require registration or listing with or approval of any governmental authority under any federal, provincial or state law, pursuant to the Securities Act or the Exchange Act, applicable Canadian securities laws or any national or regional securities exchange on which Common Stock is listed at the time of delivery of any shares of Common Stock,

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before such shares may be issued upon conversion, Ventas, Inc. will use its best efforts to cause such shares to be duly registered, listed or approved, as the case may be, provided that, in respect of any issuances in Canada, Ventas, Inc. may rely on applicable prospectus qualification exemptions under applicable securities laws and may, but shall not be obligated to, become a reporting issuer in Canada.
Section 13.11      Payment of Taxes upon Certificates for Shares Issued upon Conversion.
The issuance of certificates for shares of Common Stock upon the conversion of Securities shall be made without charge to the converting Holders for any tax (including, without limitation, all documentary and stamp taxes) in respect of the issuance and delivery of such certificates, and such certificates shall be issued in the respective names of, or in such names as may be directed by, the Holders of the Securities converted; provided, however , that Ventas, Inc. shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the Holder of the Security converted, and Ventas, Inc. shall not be required to issue or deliver such certificate unless or until the Person or Persons requesting the issuance thereof shall have paid to Ventas, Inc. the amount of such tax or shall have established to the satisfaction of Ventas, Inc. that such tax has been paid.
Section 13.12      Trustee’s Duties with Respect to Conversion Provisions.
The Trustee and any conversion agent shall have no duty, responsibility or liability to any Holder to determine whether any facts exist which may require any adjustment of the conversion rate, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any conversion agent shall be accountable with respect to the registration under securities laws, listing, validity or value (or the kind or amount) of any shares of Common Stock, or of any other securities or property, which may at any time be issued or delivered upon the conversion of any Security, and neither the Trustee nor any conversion agent makes any representation with respect thereto. Neither the Trustee nor any conversion agent shall be responsible for any failure of Ventas, Inc. to make any cash payment or to issue, transfer or deliver any shares of stock or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion; and the Trustee and any conversion agent shall not be responsible for any failure of Ventas, Inc. to comply with any of the covenants of Ventas, Inc. contained in this Article 13.
ARTICLE 14
MISCELLANEOUS
Section 14.01      Notices.
Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in writing in the English language and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others’ address:

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If to the Issuer and/or any Guarantor:
Ventas, Inc.
10350 Ormsby Park Place, Suite 300
Louisville, Kentucky 40223
Telecopier No.: (502) 357-9029
Attention: General Counsel
With a copy to:

Osler, Hoskin & Harcourt LLP
Box 50, 1 First Canadian Place
Toronto, Ontario, Canada M5X 1B8
Telecopier No: (416) 862-6666
Attention: Michael Innes
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Telecopier No.: (212) 728-8111
Attention: Leslie Mazza, Esquire
If to the Trustee:

Computershare Trust Company of Canada
11th Floor
100 University Avenue
Toronto, Ontario, M5J 2Y1
Telecopier No.:    (416) 981-9777
Attention:    Manager, Corporate Trust, 11th Floor

The Issuer, any Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery

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to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Issuer mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.
Section 14.02      Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee:
(1)      an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 14.03 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(2)      an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 14.03 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
Notwithstanding the foregoing, in the case of any such request or application as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular request or application, no additional certificate or opinion need be furnished unless specifically required.
Section 14.03      Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(1)      a statement that the Person making such certificate or opinion has read such covenant or condition;
(2)      a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3)      a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and
(4)      a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

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Section 14.04      Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
Section 14.05      No Personal Liability of Directors, Officers, Employees and Stockholders.
No director, officer, employee or stockholder of Ventas, Inc. or any of its Subsidiaries, as such, will have any liability for any obligations of Ventas, Inc. or any of its Subsidiaries under the Securities or this Indenture based on, in respect of, or by reason of such obligations or their creation. Each holder by accepting a Security waives and releases all such liability. The foregoing waiver and release are an integral part of the consideration for the issuance of the Securities.
Section 14.06      Governing Law.
THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE SECURITIES, EXCEPT FOR ARTICLE 11 HEREOF AND THE SECURITIES GUARANTEES. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE ARTICLE 11 HEREOF AND THE SECURITIES GUARANTEES.
Section 14.07      No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 14.08      Successors.
All agreements of the Issuer in this Indenture and the Securities will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Article 11 and any applicable indentures supplemental hereto.
Section 14.09      Severability.
In case any provision in this Indenture or in the Securities is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.
Section 14.10      Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement.

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Section 14.11      Table of Contents, Headings, etc.
The Table of Contents and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.
Section 14.12      Benefits of Indenture.
Nothing in this Indenture, the Securities or the Securities Guarantees, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or legal or equitable right, remedy or claim under this Indenture.
Section 14.13      Legal Holidays.
In any case where any Interest Payment Date, redemption date, purchase date or stated maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of such Security (other than a provision of such Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, redemption date or purchase date, or at the stated maturity.
Section 14.14      Acts of Holders.
(a)      Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of the Outstanding Securities of all series or one or more series, as the case may be, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Issuer and any agent of the Trustee or the Issuer, if made in the manner provided in this Section.
(b)      The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may be proved in any reasonable manner which the Trustee deems sufficient.
(c)      The ownership of Securities shall be proved by the register maintained by the Registrar.

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(d)      If the Issuer shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other act, the Issuer may, at its or their option, in or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other act, but the Issuer shall have no obligation to do so. Such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purpose of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.
(e)      Any request, demand, authorization, direction, notice, consent, waiver or other act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Registrar, any Paying Agent, any authenticating agent or the Issuer in reliance thereon, whether or not notation of such action is made upon such Security.
Section 14.15      Force Majeure
Except for the payment obligations of the Issuer and the Guarantor contained herein, no party shall be liable to the other, or held in breach of this Agreement, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes beyond its control (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Agreement shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.
[Signatures on following page]


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Dated as of September 24 , 2014
VENTAS, INC.
By: /s/ Richard A. Schweinhart    
Name:    Richard A. Schweinhart
Title:    Executive Vice President and
    Chief Financial Officer
VENTAS CANADA FINANCE LIMITED

By: /s/ Brian K. Wood    
Name:    Brian K. Wood
Title:     Secretary and Treasurer


Signature page to the Indenture between Ventas, Inc., Ventas Canada Finance Limited and Computershare





COMPUTERSHARE TRUST COMPANY OF CANADA
 
 

By: /s/ Lisa M. Kudo    
Name:    Lisa M. Kudo
Title:    Corporate Trust Officer


By: /s/ Raji Sivalingam    
Name:    Raji Sivalingam
Title:    Associate Trust Officer

Signature page to the Indenture between Ventas, Inc., Ventas Canada Finance Limited and Computershare


Exhibit 4.2
FIRST SUPPLEMENTAL INDENTURE

by and among

Ventas Canada Finance Limited, as Issuer
Ventas, Inc., as Guarantor

and

Computershare Trust Company of Canada,
as Trustee


Cdn$400,000,000
3.00% Senior Notes, Series A due 2019

___________________

Dated as of September 24, 2014

Supplement to Indenture dated as of September 24, 2014 (Senior Debt Securities)






TABLE OF CONTENTS

Page
ARTICLE I CREATION OF THE SECURITIES    2
Section 1.01    Designation of the Series; Securities Guarantee    2
Section 1.02    Form of Notes    2
Section 1.03    No Limit on Amount of Notes    2
Section 1.04    Ranking    2
Section 1.05    Certificate of Authentication    3
Section 1.06    No Sinking Fund    3
Section 1.07    No Additional Amounts    3
Section 1.08    Definitions    3

ARTICLE II REDEMPTION    10
Section 2.01    Amendment to Article 3    10

ARTICLE III COVENANTS    11
Section 3.01    Amendments to Article 4    11

ARTICLE IV SUCCESSORS    14
Section 4.01    Amendments to Article 5    14

ARTICLE V DEFAULTS AND REMEDIES    16
Section 5.01    Amendments to Article 6    16

ARTICLE VI TRUSTEE    18
Section 6.01    Amendments to Article 7    18

ARTICLE VII LEGAL DEFEASANCE AND COVENANT DEFEASANCE    18
Section 7.01    Applicability of Defeasance Provisions    18
Section 7.02    Determinations Under Section 8.03    18
Section 7.03    Determination Under Section 8.07    18
Section 7.04    Amendments to Article 8    18

ARTICLE VIII SECURITIES GUARANTEES    19
Section 8.01    Applicability of Guarantee Provisions    19

ARTICLE IX MISCELLANEOUS    19
Section 9.01    Determination Under Section 14.08    19
Section 9.02    Application of First Supplemental Indenture; Ratification    19
Section 9.03    Benefits of First Supplemental Indenture    20
Section 9.04    Effective Date    20
Section 9.05    Governing Law    20

 


Section 9.06    Counterparts    20

SCHEDULE 1
Real Estate Revenues

EXHIBIT A
Form of Note
EXHIBIT B
Form of Notation of Securities Guarantee


 


THIS FIRST SUPPLEMENTAL INDENTURE, dated as of September 24, 2014 (the “ First Supplemental Indenture ”), is by and among Ventas Canada Finance Limited, a Nova Scotia company, as issuer (the “ Issuer ”), Ventas, Inc., a Delaware corporation, as Guarantor, and Computershare Trust Company of Canada, as trustee (the “ Trustee ”), having a Corporate Trust Office at 11th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y, as Trustee under the Indenture (defined below).
WHEREAS, Ventas, Inc., the Issuer and the Trustee are parties to that certain indenture dated as of September 24, 2014 (the “ Base Indenture ” and, as amended and supplemented by this First Supplemental Indenture and as further amended and supplemented from time to time, the “ Indenture ”), providing for the issuance by Ventas, Inc. or by the Issuer together from time to time of their respective senior debt securities (the “ Securities ”);
WHEREAS, Sections 2.02 and 9.01 of the Base Indenture provide, among other things, that, without the consent of the Holders of the Securities, one or more indentures supplemental to the Base Indenture may be entered into to establish the form or terms of Securities of any series or to change or eliminate any of the provisions of the Base Indenture; provided that any such change or elimination shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provisions;
WHEREAS, the Issuer, acting in its capacity as issuer under the Base Indenture, desires to issue a series of its Securities under the Base Indenture, and has duly authorized the creation and issuance of such Securities and the execution and delivery of this First Supplemental Indenture to modify the Base Indenture and to provide certain additional provisions in respect of such Securities as hereinafter described;
WHEREAS, the Issuer desires to issue such Securities with the benefit of a guarantee provided by Ventas, Inc. on the terms set forth in the Base Indenture, as supplemented by this First Supplemental Indenture;
WHEREAS, the Issuer, Ventas, Inc. and the Trustee deem it advisable to enter into this First Supplemental Indenture for the purposes of establishing the terms of such Securities and guarantee and providing for the rights, obligations and duties of the Trustee with respect to such Securities;
WHEREAS, concurrently with the execution hereof, the Issuer has delivered to the Trustee an Officers’ Certificate and has caused its counsel to deliver to the Trustee an Opinion of Counsel or a reliance letter upon an Opinion of Counsel satisfying the requirements of Section 2.03 of the Base Indenture;
WHEREAS, all conditions and requirements of the Base Indenture necessary to make this First Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto, and the execution and delivery hereof have been in all respects duly authorized by the parties hereto; and




WHEREAS, the foregoing recitals are made as statements of fact by the Issuer and the Guarantor and not by the Trustee.
NOW, THEREFORE, for and in consideration of the premises and agreements herein contained, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of such Securities, as follows:
ARTICLE I
CREATION OF THE SECURITIES
Section 1.01      Designation of the Series; Securities Guarantee .
(a)      The changes, modifications and supplements to the Base Indenture effected by this First Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes (as defined below), which shall not apply to any other Securities that have been or may be issued under the Base Indenture unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements. Pursuant to the terms hereof and Sections 2.01 and 2.02 of the Base Indenture, the Issuer hereby creates a series of Securities designated as the “3.00% Senior Notes, Series A due 2019” (the “ Notes ”), which Notes shall be deemed “ Securities ” for all purposes under the Base Indenture. Except as otherwise provided in the Base Indenture, the Notes shall form their own series for voting purposes, and shall not be part of the same class or series as any other Securities issued by the Issuer or by Ventas, Inc.
(b)      Each of the Notes will be guaranteed by the Guarantor in accordance with Article 11 of the Base Indenture and Article VIII of this First Supplemental Indenture. For clarity, the Issuer shall not be considered a Guarantor for purposes of the Indenture or the Notes.
Section 1.02      Form of Notes . The Notes will be issued in definitive form and the definitive form of the Notes shall be one or more Global Securities substantially in the form set forth in Exhibit A attached hereto, which is incorporated herein and made a part hereof. The Notes shall bear interest, be payable and have such other terms as are stated in the form of definitive Note or in the Indenture. The stated maturity of the principal of the Notes shall be September 30, 2019.
Section 1.03      No Limit on Amount of Notes . The Trustee shall authenticate and deliver on September 24, 2014, Notes for original issue in an aggregate principal amount of up to Cdn$400,000,000. Notwithstanding the foregoing, the aggregate principal amount of the Notes shall be unlimited; provided , that the terms of all Notes issued under this First Supplemental Indenture (other than the date of issuance) shall be the same. The Issuer may, upon the execution and delivery of this First Supplemental Indenture or from time to time thereafter, execute and deliver the Notes to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Notes upon an Authentication Order and delivery of an Officers’ Certificate and Opinion of Counsel as contemplated by Section 2.03 of the Base Indenture, without further action by the Issuer.

2


Section 1.04      Ranking . The Notes will be the Issuer’s unsecured and unsubordinated obligations and rank equal in right of payment with all of the Issuer’s existing and future unsecured and unsubordinated indebtedness.
Section 1.05      Certificate of Authentication . The Trustee’s certificate of authentication to be included on the Notes shall be substantially as provided in the form of Note attached hereto as Exhibit A .
Section 1.06      No Sinking Fund . No sinking fund will be provided with respect to the Notes (notwithstanding any provisions of the Base Indenture with respect to sinking fund obligations).
Section 1.07      No Additional Amounts . No Additional Amounts will be payable with respect to the Notes (notwithstanding any provisions of the Base Indenture with respect to Additional Amount obligations), except those Additional Amounts payable by the Guarantor pursuant to Section 11.01(f) of the Base Indenture as and when such Additional Amounts are payable.
Section 1.08      Definitions .
(a)      Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in the Base Indenture.
(b)      Solely for purposes of this First Supplemental Indenture and the Notes, the following definitions in Section 1.01 of the Base Indenture are hereby amended in their entirety to read as follows:
“ Business Day ” means any day other than a Saturday or Sunday or a day on which banking institutions in the City of Toronto are required or authorized by law to close.
“ Debt ” means, as of any date (without duplication), (1) all indebtedness and liabilities for borrowed money, secured or unsecured, of Ventas, Inc. and its Subsidiaries, including mortgages and other notes payable (including the Notes to the extent outstanding from time to time), but excluding any indebtedness, including mortgages and other notes payable, which is secured by cash, cash equivalents or marketable securities or defeased (it being understood that cash collateral shall be deemed to include cash deposited with a trustee with respect to third party indebtedness) and (2) all Contingent Liabilities of Ventas, Inc. and Subsidiaries, excluding in each of clauses (1) and (2) Intercompany Debt and all liabilities associated with customary exceptions to non-recourse indebtedness, such as for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar exceptions.
It is understood that Debt shall not include any redeemable equity interest in Ventas, Inc.

3


“ Default ” means, with respect to the Indenture and the Notes, any event that is, or with the passage of time or giving of notice would be, an Event of Default.
“ GAAP ” means generally accepted accounting principles in the United States, consistently applied, as in effect from time to time.
“ Incur ” means, with respect to any Debt or other obligation of any Person, to create, assume, guarantee or otherwise become liable in respect of such Debt or other obligation, and “Incurrence” and “Incurred” have the meanings correlative to the foregoing.
“ Interest Payment Date ” has the meaning set forth in the Indenture and the Notes.
“ Lien ” means (without duplication) any lien (statutory or otherwise), mortgage, hypothec, trust deed, deed of trust, deed to secure debt, pledge, security interest, assignment for collateral purposes, deposit arrangement, or other security agreement, excluding any right of setoff but including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and any other like agreement granting or conveying a security interest; provided , that for purposes hereof, “Lien” shall not include any mortgage that has been defeased by Ventas, Inc. or any of its Subsidiaries in accordance with the provisions thereof through the deposit of cash, cash equivalents or marketable securities (it being understood that cash collateral shall be deemed to include cash deposited with a trustee with respect to third party indebtedness).
“ Significant Subsidiary ” means each Subsidiary that is a “significant subsidiary”, if any, of Ventas, Inc., as such term is defined in Regulation S-X under the Securities Act.
(c)      Solely for purposes of this First Supplemental Indenture and the Notes, the following terms shall have the indicated meanings:
“ Canada Yield Price ” means in respect of any redemption of the Notes, a price calculated to provide a yield to maturity, compounded semi-annually and calculated in accordance with generally accepted financial practice, equal to the Government of Canada Yield on the date on which the Issuer gives notice of redemption of such Notes to the Holders pursuant to the Indenture, plus 34 basis points.
“ Consolidated EBITDA ” means, for any period of time, the net income (loss) of Ventas, Inc. and its Subsidiaries, determined on a consolidated basis in accordance with GAAP for such period, before deductions for (without duplication):
(1)     Interest Expense;
(2)     taxes;
(3)     depreciation, amortization, and all other non-cash items, as determined reasonably and in good faith by Ventas, Inc., deducted in arriving at net income (loss);
(4)     extraordinary items;

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(5)     non-recurring items or other unusual items, as determined reasonably and in good faith by Ventas, Inc. (including, without limitation, all prepayment penalties and all costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed));
(6)     noncontrolling interests;
(7)     income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; and
(8)     gains or losses on dispositions of depreciable real estate investments, property valuation losses and impairment charges.
For purposes of calculating Consolidated EBITDA, all amounts shall be as determined reasonably and in good faith by Ventas, Inc., and in accordance with GAAP except to the extent that GAAP is not applicable with respect to the determination of all non-cash and non-recurring items.
“ Consolidated Financial Statements ” means, with respect to any Person, collectively, the consolidated financial statements and notes to those financial statements, of that Person and its subsidiaries prepared in accordance with GAAP.
“ Contingent Liabilities of Ventas, Inc. and Subsidiaries ” means, as of any date, those liabilities of Ventas, Inc. and its Subsidiaries consisting of (without duplication) indebtedness for borrowed money, as determined in accordance with GAAP, that are or would be stated and quantified as contingent liabilities in the notes to the Consolidated Financial Statements of Ventas, Inc. as of the date of determination.
“ First Supplemental Indenture ” has the meaning stated in the preamble.
“ Government of Canada Yield ” on any date means the yield to maturity on such date, compounded semi-annually and calculated in accordance with generally accepted financial practice, which a non-callable Government of Canada bond would carry if issued, in Canadian dollars in Canada, at 100% of its principal amount on such date with a term to maturity equal to the remaining term to maturity, calculated as of the redemption date, of the Notes, such yield to maturity being the average of the yields provided by two major Canadian investment dealers selected by the Issuer.
“ Guarantor ” means Ventas, Inc. and its successors and assigns; provided , however, that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Guarantee of the Notes is released in accordance with the terms of the Indenture.
“ Intercompany Debt ” means, as of any date, Debt to which the only parties are Ventas, Inc. and any of its Subsidiaries as of such date; provided , however, that with respect to

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any such Debt of which the Issuer or the Guarantor is the borrower, such Debt is subordinate in right of payment to the Notes.
“ Interest Expense ” means, for any period of time, the aggregate amount of interest recorded in accordance with GAAP for such period by Ventas, Inc. and its Subsidiaries, but excluding (i) interest reserves funded from the proceeds of any loan, (ii) prepayment penalties, (iii) amortization of deferred financing costs, and (iv) non-cash swap ineffectiveness charges, in all cases as reflected in the applicable Consolidated Financial Statements.
“ Issue Date ” means September 24, 2014.
“ Issuer ” has the meaning stated in the preamble.
“ Latest Completed Quarter ” means, as of any date, the then most recently ended fiscal quarter of Ventas, Inc. for which Consolidated Financial Statements of Ventas, Inc. have been completed, it being understood that at any time when Ventas, Inc. is subject to the informational requirements of the Exchange Act, and in accordance therewith files annual and quarterly reports with the Commission, the term “Latest Completed Quarter” shall be deemed to refer to the fiscal quarter covered by Ventas, Inc.’s most recently filed Quarterly Report on Form 10-Q, or, in the case of the last fiscal quarter of the year, Ventas, Inc.’s Annual Report on Form 10-K.
“ Notes ” has the meaning stated in Section 1.01 hereof.
“ Obligations ” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt.
“ Property EBITDA ” means for any property owned by Ventas, Inc. or any of its Subsidiaries as of the date of determination, for any period of time, the net income (loss) derived from such property for such period, before deductions for (without duplication):
(1)     Interest Expense;
(2)     taxes;
(3)     depreciation, amortization, and all other non-cash items, as determined reasonably and in good faith by Ventas, Inc., deducted in arriving at net income (loss);
(4)     general and administrative expenses that are not allocated by management to a property segment, as reflected in Ventas, Inc.’s Consolidated Financial Statements available for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter;
(5)     extraordinary items;
(6)     non-recurring items or other unusual items, as determined reasonably and in good faith by Ventas, Inc. (including, without limitation, all prepayment penalties and all costs

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or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed));
(7)     noncontrolling interests;
(8)     income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; and
(9)    property valuation losses and impairment charges;
in each case attributable to such property.
For purposes of calculating Property EBITDA, all amounts shall be determined reasonably and in good faith by Ventas, Inc., and in accordance with GAAP except to the extent that GAAP is not applicable with respect to the determination of all non-cash and non-recurring items.
Property EBITDA shall be adjusted (without duplication) to give pro forma effect:
(x)     in the case of any assets having been placed-in-service or removed from service since the first day of the period to the date of determination, to include or exclude, as the case may be, any Property EBITDA earned or eliminated as a result of the placement of such assets in service or removal of such assets from service as if the placement of such assets in service or removal of such assets from service occurred as of the first day of the period; and
(y)     in the case of any acquisition or disposition of any asset or group of assets since the first day of the period to the date of determination, including, without limitation, by merger, or stock or asset purchase or sale, to include or exclude, as the case may be, any Property EBITDA earned or eliminated as a result of the acquisition or disposition of those assets as if the acquisition or disposition occurred as of the first day of the period.
“ Secured Debt ” means, as of any date, that portion of the aggregate principal amount of all outstanding Debt of Ventas, Inc. and its Subsidiaries as of that date that is secured by a Lien on properties or other assets of Ventas, Inc. or any of its Subsidiaries.
“ Stabilized Development Asset ” means, as of any date, a new construction or development Real Estate Asset at such date that, following the first four consecutive fiscal quarters occurring after substantial completion of construction or development, either (i) an additional six consecutive fiscal quarters have occurred or (ii) such Real Estate Asset is at least 90% leased, whichever shall first occur.
“ Subsidiary ” means, with respect to any Person, a corporation, partnership association, joint venture, trust, limited liability company, unlimited liability company or other business entity which is required to be consolidated with such Person in accordance with GAAP.

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“ Total Assets ” means, as of any date, in each case as determined reasonably and in good faith by Ventas, Inc., the sum of (without duplication):
(1)      with respect to Real Estate Assets that were owned by Ventas, Inc. and its Subsidiaries as of April 17, 2002 and that continue to be owned as of the date of determination, the annualized rental revenues specified for such Real Estate Assets on Schedule 1 attached to this First Supplemental Indenture, divided by 0.0900, plus any annualized incremental rental revenue generated by such Real Estate Assets as a result of, arising out of or in connection with annual rent escalations or rent reset rights of Ventas, Inc. and its Subsidiaries with respect to such Real Estate Assets (whether by agreement or exercise of such right or otherwise), divided by 0.0900; for the purpose of this clause (1), “annualized incremental rental revenue” in respect of a Real Estate Asset shall mean the increase in daily rental revenue generated by such Real Estate Asset as a result of, arising out of or in connection with such annual rent escalations or rent reset rights over the daily rental revenue generated by such Real Estate Asset immediately prior to the effective date of such increase, annualized by multiplying such daily increase by 365;
(2)      with respect to all other Real Estate Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination (except as set forth in clause (3) below), the cost (original cost plus capital improvements before depreciation and amortization) thereof, determined in accordance with GAAP;
(3)      with respect to Stabilized Development Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination, the aggregate sum of all Property EBITDA for such Stabilized Development Assets for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter divided by (i) 0.0900, in the case of a government reimbursed property and (ii) 0.0700 in all other cases; provided , however, that if the value of a particular Stabilized Development Asset calculated pursuant to this clause (3) is less than the cost (original cost plus capital improvements before depreciation and amortization) of such Real Estate Asset, as determined in accordance with GAAP, such cost shall be used in lieu thereof with respect to such Real Estate Asset;
(4)      the proceeds of the Debt, or the assets to be acquired in exchange for such proceeds, as the case may be, incurred since the end of the Latest Completed Quarter;
(5)      mortgages and other notes receivable of Ventas, Inc. and its Subsidiaries, determined in accordance with GAAP;
(6)      cash, cash equivalents and marketable securities of Ventas, Inc. and its Subsidiaries, but excluding all cash, cash equivalents and marketable securities securing, or applied to defease or discharge, in each case as of that date, any indebtedness, including mortgages and other notes payable (including cash deposited with a trustee with respect to third party indebtedness), all determined in accordance with GAAP; and

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(7)      all other assets of Ventas, Inc. and its Subsidiaries (excluding goodwill), determined in accordance with GAAP.
“ Unencumbered Assets ” means, as of any date, in each case as determined reasonably and in good faith by Ventas, Inc., the sum of (without duplication):
(1)      with respect to Real Estate Assets that were owned by Ventas, Inc. and its Subsidiaries as of April 17, 2002 and that continue to be owned as of the date of determination, but excluding any such Real Estate Assets that are serving as collateral for Secured Debt, the annualized rental revenues specified for such Real Estate Assets on Schedule 1 attached to this First Supplemental Indenture, divided by 0.0900, plus any annualized incremental rental revenue generated by such Real Estate Assets as a result of, arising out of or in connection with annual rent escalations or rent reset rights of Ventas, Inc. and its Subsidiaries with respect to such Real Estate Assets (whether by agreement or exercise of such right or otherwise), divided by 0.0900; for the purpose of this clause (1), “annualized incremental rental revenue” in respect of a Real Estate Asset shall mean the increase in daily rental revenue generated by such Real Estate Asset as a result of, arising out of or in connection with such annual rent escalations or rent reset rights over the daily rental revenue generated by such Real Estate Asset immediately prior to the effective date of such increase, annualized by multiplying such daily increase by 365;
(2)      with respect to all other Real Estate Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination (except as set forth in clause (3) below), but excluding any such Real Estate Assets that are serving as collateral for Secured Debt, the cost (original cost plus capital improvements before depreciation and amortization) thereof, determined in accordance with GAAP;
(3)      with respect to Stabilized Development Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination, excluding any such Stabilized Development Assets that are serving as collateral for Secured Debt, the aggregate sum of all Property EBITDA for such Stabilized Development Assets for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter divided by (i) 0.0900, in the case of a government reimbursed property and (ii) 0.0700 in all other cases; provided , however, that if the value of a particular Stabilized Development Asset calculated pursuant to this clause (3) is less than the cost (original cost plus capital improvements before depreciation and amortization) of such Real Estate Asset, as determined in accordance with GAAP, such cost shall be used in lieu thereof with respect to such Real Estate Asset;
(4)      the proceeds of the Debt, or the assets to be acquired in exchange for such proceeds, as the case may be, incurred since the end of the Latest Completed Quarter;
(5)      mortgages and other notes receivable of Ventas, Inc. and its Subsidiaries, except any mortgages or other notes receivable that are serving as collateral for Secured Debt, determined in accordance with GAAP;

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(6)      cash, cash equivalents and marketable securities of Ventas, Inc. and its Subsidiaries, but excluding all cash, cash equivalents and marketable securities securing, or applied to defease or discharge, in each case as of that date, any indebtedness, including mortgages and other notes payable (including cash deposited with a trustee with respect to third party indebtedness), all determined in accordance with GAAP; and
(7)      all other assets of Ventas, Inc. and its Subsidiaries (excluding goodwill), other than assets pledged to secure Debt, determined in accordance with GAAP; provided , however, that Unencumbered Assets shall not include net real estate investments in unconsolidated joint ventures of Ventas, Inc. and its Subsidiaries.
For the avoidance of doubt, cash held by a “qualified intermediary” in connection with proposed like-kind exchanges pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, which may be classified as “restricted” for GAAP purposes shall nonetheless be included in clause (6) above, so long as Ventas, Inc. or any of its Subsidiaries has the right to (i) direct the qualified intermediary to return such cash to Ventas, Inc. or such Subsidiary if and when Ventas, Inc. or such Subsidiary fails to identify or acquire the proposed like-kind property or at the end of the 180-day replacement period or (ii) direct the qualified intermediary to use such cash to acquire like-kind property.
“ Unsecured Debt ” means, as of any date, that portion of the aggregate principal amount of all outstanding Debt of Ventas, Inc. and its Subsidiaries as of that date that is neither Secured Debt nor Contingent Liabilities of Ventas, Inc. and its Subsidiaries.
ARTICLE II
REDEMPTION
Section 2.01      Amendment to Article 3 . Pursuant to Sections 2.02(7) and 2.02(8) of the Base Indenture, Article 3 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 3.09, 3.10 and 3.11, in each case to read as follows:
“ Section 3.09 Optional Redemption .
(a)    The Issuer may, at its option, redeem the Notes at any time prior to maturity, in whole or from time to time in part.
(b)    The redemption price for any redemption of the Notes will be equal to the greater of: (1) 100% of the principal amount of the Notes to be redeemed, and (2) the Canada Yield Price, in each case plus accrued and unpaid interest thereon to the redemption date.
(c)    Any redemption pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.07 of the Indenture.

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Section 3.10 Mandatory Redemption . The Issuer is not required to make mandatory redemption payments with respect to the Notes.
Section 3.11 Purchase of Notes. The Issuer may purchase, at any time or from time to time, all or any of the Notes in the market (which shall include purchase from or through an investment dealer or a firm holding membership on a recognized stock exchange) or by invitation for tenders or by private contract at such price or prices as may be determined by the Issuer.”
ARTICLE III
COVENANTS
Section 3.01      Amendments to Article 4 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, Section 4.03 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 4.03 Reports . Whether or not required by the Commission, so long as any Notes are outstanding, Ventas, Inc. shall file with the Trustee, within 15 days after it files the same with the Commission (or if not subject to the periodic reporting requirements of the Exchange Act, within 15 days after it would have been required to file the same with the Commission had it been so subject):
(1)      all quarterly and annual financial information that is required to be contained in filings with the Commission on Forms 10-Q and 10-K, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by Ventas, Inc.’s certified independent accountants; and
(2)      all current reports that are required to be filed with the Commission on Form 8-K.
For so long as any Notes remain outstanding, if at any time Ventas, Inc. is not required to file with the Commission the reports required by the preceding paragraph of this Section 4.03, Ventas, Inc. shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
The availability of the foregoing materials on the Commission’s website or on Ventas, Inc.’s website shall be deemed to satisfy the foregoing delivery obligations.”

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(b)      Pursuant to Section 2.02(14) of the Base Indenture, Section 4.04 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 4.04 Compliance Certificate . “Ventas, Inc. shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of Ventas, Inc. and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether Ventas, Inc. has kept, observed, performed and fulfilled its obligations under the Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, Ventas, Inc. has kept, observed, performed and fulfilled each and every covenant contained in the Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of the Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action Ventas, Inc. is taking or proposes to take with respect thereto) and that to the best of his or her knowledge, no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Securities of any series is prohibited or if such event has occurred, a description of the event and what action Ventas, Inc. is taking or proposes to take with respect thereto. For purposes of this Section 4.04, such compliance shall be determined without regard to any period of grace or requirement of notice under the Indenture.”
(c)      Pursuant to Section 2.02(14) of the Base Indenture, Section 4.06 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 4.06 Corporate Existence . Except as permitted by Article 5 and Section 11.04, Ventas, Inc. and the Issuer shall do all things necessary to preserve and keep their existence, rights and franchises; provided , however, that neither Ventas, Inc. nor the Issuer shall be required to preserve any such right or franchise if Ventas, Inc. or the Issuer, as applicable, shall determine reasonably and in good faith that the preservation thereof is no longer desirable in the conduct of its business; and provided, further, for clarity, the amalgamation or other combination of the Issuer with one or more other Subsidiaries of Ventas, Inc. shall not constitute a breach of this Section 4.06.”
(d)      Pursuant to Section 2.02(14) of the Base Indenture, Article 4 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 4.07 through 4.11, in each case to read as follows:

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“ Section 4.07 Taxes . Ventas, Inc. will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
Section 4.08 Stay, Extension and Usury Laws . Each of Ventas, Inc. and the Issuer covenants (to the extent that they may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of the Indenture; and each of Ventas, Inc. and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.
Section 4.09 Limitations on Incurrence of Debt .
(a)    Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Debt if, immediately after giving effect to the Incurrence of such additional Debt and any other Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the aggregate principal amount of all outstanding Debt would exceed 60% of the sum of (without duplication) (i) Total Assets as of the end of the Latest Completed Quarter and (ii) the purchase price of any Real Estate Assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire Real Estate Assets or mortgages receivable or to reduce Debt), since the end of the Latest Completed Quarter.
(b)    Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Secured Debt if, immediately after giving effect to the Incurrence of such additional Secured Debt and any other Secured Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the aggregate principal amount of all outstanding Secured Debt would exceed 50% of the sum of (without duplication) (i) Total Assets as of the end of the Latest Completed Quarter and (ii) the purchase price of any Real Estate Assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire Real Estate Assets or mortgages receivable or to reduce Debt), since the end of the Latest Completed Quarter.

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(c)    Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Debt if, immediately after giving effect to the Incurrence of such additional Debt and any other Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the ratio of Consolidated EBITDA to Interest Expense for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter would be less than 1.50 to 1.00 on a pro forma basis and calculated on the assumption (without duplication) that:
(i)    the additional Debt and any other Debt Incurred by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination, which was outstanding at the date of determination, had been Incurred at the beginning of that period and continued to be outstanding throughout that period, and the application of the net proceeds of such Debt, including to refinance other Debt, had occurred at the beginning of such period; provided , that in determining the amount of Debt so Incurred, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period;
(ii)    the repayment or retirement of any other Debt repaid or retired by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination had occurred at the beginning of that period; provided , that in determining the amount of Debt so repaid or retired, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period; and
(iii)     in the case of any acquisition or disposition of any asset or group of assets (including, without limitation, by merger, or stock or asset purchase or sale) or the placement of any assets in service or removal of any assets from service by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination, the acquisition, disposition, placement in service or removal from service and any related repayment or refinancing of Debt had occurred as of the first day of such period, with the appropriate adjustments to Consolidated EBITDA and Interest Expense with respect to the acquisition, disposition, placement in service or removal from service being included in that pro forma calculation.
Section 4.10 Maintenance of Unencumbered Assets . Ventas, Inc. and its Subsidiaries shall maintain at all times Unencumbered Assets of not less

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than 150% of the aggregate principal amount of all outstanding Unsecured Debt.”
ARTICLE IV
SUCCESSORS
Section 4.01      Amendments to Article 5 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, Section 5.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 5.01    Consolidation, Amalgamation, Merger, or Sale of Assets .
Ventas, Inc. may not, directly or indirectly: (a) consolidate, amalgamate or merge with or into another Person (whether or not Ventas, Inc. is the surviving corporation); or (b) sell, assign, transfer, convey, lease (other than to an unaffiliated operator in the ordinary course of business) or otherwise dispose of all or substantially all of the properties or assets of Ventas, Inc. and its Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:
(1)    either:
(i)    Ventas, Inc. is the surviving corporation; or
(ii)    the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Ventas, Inc.) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia;
(2)    the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Ventas, Inc.) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all of Ventas, Inc.’s obligations under the Notes and the Indenture pursuant to agreements reasonably satisfactory to the Trustee; and
(3)    immediately after such transaction, on a pro forma basis giving effect to such transaction or series of transactions (and treating any obligation of Ventas, Inc. or any Subsidiary incurred in connection with or as a result of such transaction or series of transactions as having been incurred at the time of such transaction), no Default or Event of Default exists under the Indenture.

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Notwithstanding anything to the contrary in this Section 5.01, Ventas, Inc. may consolidate, amalgamate or merge with or into the Issuer, or sell and/or transfer to the Issuer all or substantially all of its assets, in each case, without compliance with any of the requirements set forth in this Article 5.”
(b)      Pursuant to Sections 2.02(14) of the Base Indenture, Article 5 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 5.03 and 5.04, in each case to read as follows:
“ Section 5.03    Assumption by a Subsidiary of the Guarantor .
A Subsidiary of the Guarantor that is organized and existing under the laws Canada or any Province thereof, may, without the consent of the Holders, directly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of and interest on all the Notes and the performance of every covenant of the Indenture on the part of the Issuer to be performed or observed. Upon any such assumption, the Subsidiary shall succeed to, and be substituted for and may exercise every right and power of, the Issuer under the Indenture with the same effect as if the Subsidiary had been named as the Issuer herein and the Issuer shall be released from liability as obligor on the Notes.
Section 5.04    Termination of the Guarantee .
The obligations of the Guarantor under the Indenture shall terminate at such time the Guarantor merges, amalgamates or consolidates with the Issuer or at such other time as the Issuer acquires all of the assets and partnership interests of the Guarantor.”
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01      Amendments to Article 6 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, Section 6.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 6.01. Events of Default .
Each of the following is an “Event of Default”:
(1)      Ventas, Inc. or the Issuer does not pay the principal or any premium on any Note when due and payable;

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(2)      Ventas, Inc. or the Issuer does not pay interest on any Note within 30 days after the applicable due date;
(3)      Ventas, Inc. or its Subsidiaries remain in breach of any other term of the Indenture for 90 days after they receive a notice of Default stating they are in breach. Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Notes then Outstanding may send the notice;
(4)      except as permitted by the Indenture and the Notes, the Securities Guarantee by Ventas, Inc. shall cease to be in full force and effect or Ventas, Inc. shall deny or disaffirm its obligations with respect thereto;
(5)      the Issuer, Ventas, Inc. or any of its Significant Subsidiaries default under any of their third party indebtedness (including a default with respect to Securities of any series under the Indenture other than the Notes) in an aggregate principal amount exceeding US$50.0 million after the expiration of any applicable grace period, which default results in the acceleration of the maturity of such indebtedness. Such default is not an Event of Default if the other indebtedness is discharged, or the acceleration is rescinded or annulled, within a period of 30 days after the Issuer, Ventas, Inc. or any such Significant Subsidiary, as the case may be, receives notice specifying the default and requiring that they discharge the other indebtedness or cause the acceleration to be rescinded or annulled. Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Notes then Outstanding may send the notice, with a copy to the Trustee if the Holders send the notice;
(6)      the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary:
(i)      commence a voluntary case;
(ii)      consent to the entry of an order for relief against them in an involuntary case;
(iii)      consent to the appointment of a custodian of them or for all or substantially all of their property;
(iv)      make a general assignment for the benefit of their creditors; or
(v)      generally are not paying their debts as they become due; or
(7)      a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i)      is for relief against the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case;

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(ii)      appoints a custodian of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, or for all or substantially all of the property of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or
(iii)      orders the liquidation of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days;”
(b)      Pursuant to Section 2.02(14) of the Base Indenture, Section 6.02 of the Base Indenture is hereby amended with respect to the Notes by (i) deleting the first sentence thereof in its entirety and inserting in its place the following:
“In the case of an Event of Default specified in clause (6) or (7) of Section 6.01, with respect to the Issuer, Ventas, Inc. or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all Outstanding Notes will become due and payable immediately without further action or notice.”
and (ii) adding to the end of Section 6.02 the following:
“Notwithstanding anything to the contrary contained in the Indenture, the sole remedy for an Event of Default relating to a failure to comply with any of the provisions of Section 4.03 hereof shall consist exclusively of the right to receive additional interest on the Notes at an annual rate equal to 0.25% of the outstanding principal amount of the Notes. This additional interest will be payable in the same manner and on the same dates as the stated interest payable on the Notes and will accrue on all Outstanding Notes from and including the date on which such Event of Default first occurs to, but not including, the date on which such Event of Default shall have been cured or waived.”
(c)      Pursuant to Section 2.02(14) of the Base Indenture, Section 6.08 of the Base Indenture is hereby amended with respect to the Notes by deleting from the first line thereof the reference to clause (3) of Section 6.01 of the Base Indenture.

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ARTICLE VI
TRUSTEE
Section 6.01      Amendments to Article 7 . Pursuant to Section 2.02(14) of the Base Indenture, Section 7.06(e) of the Base Indenture is hereby amended with respect to the Notes by changing the references to Section 6.01(7) or (8) therein to Section 6.01(6) or (7).
ARTICLE VII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 7.01      Applicability of Defeasance Provisions . Pursuant to Sections 2.02(17) and 8.01 of the Base Indenture, so long as any of the Notes are Outstanding, Sections 8.02 and 8.03 of the Base Indenture shall be applicable to the Notes.
Section 7.02      Determinations Under Section 8.03 . For the purposes of Sections 2.02(17) and 8.03 of the Base Indenture, Section 8.03 of the Base Indenture shall apply to Sections 4.09 and 4.10.
Section 7.03      Determination Under Section 8.07 . For the purposes of Sections 8.07 and 12.02 of the Base Indenture, the provisions of Section 8.07 of the Base Indenture shall apply to the Notes.
Section 7.04      Amendments to Article 8 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, the last sentence of Section 8.03 of the Base Indenture is hereby amended with respect to the Notes by changing the references to Sections 6.01(4) through 6.01(6) therein to Sections 6.01(3) through 6.01(5).
(b)      Pursuant to Section 2.02(14) of the Base Indenture, Section 8.04(e) of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“(e)    such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture in respect of the Notes) to which Ventas, Inc. or the Issuer is a party or by which Ventas, Inc. or the Issuer is bound;”
ARTICLE VIII
SECURITIES GUARANTEES
Section 8.01      Applicability of Guarantee Provisions .
(a)      Pursuant to Sections 2.02(1) and 11.01 of the Base Indenture, so long as any of the Notes are Outstanding, Article 11 shall be applicable to the Notes.

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(b)      To evidence its Guarantee in accordance with Section 11.03 of the Indenture, the Guarantor agrees that a notation of such Guarantee substantially in the form attached as Exhibit B hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that the Indenture has been executed on behalf of such Guarantor by one of its Officers.
ARTICLE IX
MISCELLANEOUS
Section 9.01      Determination Under Section 14.08 . For the purposes of Section 14.08 of the Base Indenture, the agreements of the Guarantor will bind its successors except as otherwise provided in Article 11 of the Base Indenture.
Section 9.02      Application of First Supplemental Indenture; Ratification .
(a)      Each and every term and condition contained in this First Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Base Indenture shall apply only to the Notes created hereby and not to any future series of Securities established under the Indenture.
(b)      The Base Indenture, as supplemented and amended by this First Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture and this First Supplemental Indenture shall be read, taken and construed as the same instrument.
(c)      In the event of any conflict between this First Supplemental Indenture and the Base Indenture, the provisions of this First Supplemental Indenture shall prevail.
Section 9.03      Benefits of First Supplemental Indenture . Nothing contained in this First Supplemental Indenture shall or shall be construed to confer upon any Person other than a Holder of the Notes, the Issuer, the Guarantor or the Trustee any right or interest to avail itself of any benefit under any provision of the Base Indenture or this First Supplemental Indenture.
Section 9.04      Effective Date . This First Supplemental Indenture shall be effective as of the date first above written and upon the execution and delivery hereof by each of the parties hereto.
Section 9.05      Governing Law . This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein, except in respect of Article VIII hereof and the Guarantee, without regard to conflicts of laws principles thereof. Article VIII of this First Supplemental Indenture and the Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of laws principles thereof.

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Section 9.06      Counterparts . This First Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed by their respective officers hereunto duly authorized, all as of the day and year first above written.
VENTAS CANADA FINANCE LIMITED

By: /s/ Brian K. Wood                
Name:
Brian K. Wood
Title:    Secretary and Treasurer
VENTAS, INC.
By: /s/ Richard A Schweinhart            
Name:
Richard A Schweinhart
Title:
Executive Vice President and
Chief Financial Officer


[Signature Page to First Supplemental Indenture between Ventas Canada Finance Limited, Ventas, Inc. and Computershare]


COMPUTERSHARE TRUST COMPANY OF CANADA
By: /s/ Lisa M. Kudo            
Name:    Lisa M. Kudo
Title:    Corporate Trust Officer

By: /s/ Raji Sivalingam        
Name:    Raji Sivalingam
Title:    Associate Trust Officer
    

[Signature Page to First Supplemental Indenture between Ventas Canada Finance Limited, Ventas, Inc. and Computershare]
            

Exhibit 4.3

SECOND SUPPLEMENTAL INDENTURE

by and among

Ventas Canada Finance Limited, as Issuer
Ventas, Inc., as Guarantor

and

Computershare Trust Company of Canada,
as Trustee


Cdn$250,000,000
4.125% Senior Notes, Series B due 2024

___________________

Dated as of September 24, 2014

Supplement to Indenture dated as of September 24, 2014 (Senior Debt Securities)






TABLE OF CONTENTS

Page
ARTICLE I CREATION OF THE SECURITIES    2
Section 1.01    Designation of the Series; Securities Guarantee    2
Section 1.02    Form of Notes    2
Section 1.03    No Limit on Amount of Notes    2
Section 1.04    Ranking    2
Section 1.05    Certificate of Authentication    3
Section 1.06    No Sinking Fund    3
Section 1.07    No Additional Amounts    3
Section 1.08    Definitions    3

ARTICLE II REDEMPTION    10
Section 2.01    Amendment to Article 3    10

ARTICLE III COVENANTS    11
Section 3.01    Amendments to Article 4    11

ARTICLE IV SUCCESSORS    14
Section 4.01    Amendments to Article 5    14

ARTICLE V DEFAULTS AND REMEDIES    16
Section 5.01    Amendments to Article 6    16

ARTICLE VI TRUSTEE    18
Section 6.01    Amendments to Article 7    18

ARTICLE VII LEGAL DEFEASANCE AND COVENANT DEFEASANCE    18
Section 7.01    Applicability of Defeasance Provisions    18
Section 7.02    Determinations Under Section 8.03    18
Section 7.03    Determination Under Section 8.07    18
Section 7.04    Amendments to Article 8    18

ARTICLE VIII SECURITIES GUARANTEES    19
Section 8.01    Applicability of Guarantee Provisions    19

ARTICLE IX MISCELLANEOUS    19
Section 9.01    Determination Under Section 14.08    19
Section 9.02    Application of Second Supplemental Indenture; Ratification    19
Section 9.03    Benefits of Second Supplemental Indenture    20
Section 9.04    Effective Date    20
Section 9.05    Governing Law    20
Section 9.06    Counterparts    20

 



SCHEDULE 1
Real Estate Revenues

EXHIBIT A
Form of Note
EXHIBIT B
Form of Notation of Securities Guarantee




 


THIS SECOND SUPPLEMENTAL INDENTURE, dated as of September 24, 2014 (the “ Second Supplemental Indenture ”), is by and among Ventas Canada Finance Limited, a Nova Scotia company, as issuer (the “ Issuer ”), Ventas, Inc., a Delaware corporation, as Guarantor, and Computershare Trust Company of Canada, as trustee (the “ Trustee ”), having a Corporate Trust Office at 11th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y, as Trustee under the Indenture (defined below).
WHEREAS, Ventas, Inc., the Issuer and the Trustee are parties to that certain indenture dated as of September 24, 2014 (the “ Base Indenture ” and, as amended and supplemented by this Second Supplemental Indenture and as further amended and supplemented from time to time, the “ Indenture ”), providing for the issuance by Ventas, Inc. or by the Issuer together from time to time of their respective senior debt securities (the “ Securities ”);
WHEREAS, Sections 2.02 and 9.01 of the Base Indenture provide, among other things, that, without the consent of the Holders of the Securities, one or more indentures supplemental to the Base Indenture may be entered into to establish the form or terms of Securities of any series or to change or eliminate any of the provisions of the Base Indenture; provided that any such change or elimination shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provisions;
WHEREAS, Ventas Inc., the Issuer and the Trustee are concurrently with this Second Supplemental Indenture entering into a First Supplemental Indenture dated as of the date hereof pursuant to which the Issuer will be issuing Cdn$400,000,000 aggregate principal amount of 3.00% Senior Notes, Series A due 2019;
WHEREAS, the Issuer, acting in its capacity as issuer under the Base Indenture, desires to issue a series of its Securities under the Base Indenture, and has duly authorized the creation and issuance of such Securities and the execution and delivery of this Second Supplemental Indenture to modify the Base Indenture and to provide certain additional provisions in respect of such Securities as hereinafter described;
WHEREAS, the Issuer desires to issue such Securities with the benefit of a guarantee provided by Ventas, Inc. on the terms set forth in the Base Indenture, as supplemented by this Second Supplemental Indenture;
WHEREAS, the Issuer, Ventas, Inc. and the Trustee deem it advisable to enter into this Second Supplemental Indenture for the purposes of establishing the terms of such Securities and guarantee and providing for the rights, obligations and duties of the Trustee with respect to such Securities;
WHEREAS, concurrently with the execution hereof, the Issuer has delivered to the Trustee an Officers’ Certificate and has caused its counsel to deliver to the Trustee an Opinion of Counsel or a reliance letter upon an Opinion of Counsel satisfying the requirements of Section 2.03 of the Base Indenture;




WHEREAS, all conditions and requirements of the Base Indenture necessary to make this Second Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto, and the execution and delivery hereof have been in all respects duly authorized by the parties hereto; and
WHEREAS, the foregoing recitals are made as statements of fact by the Issuer and the Guarantor and not by the Trustee.
NOW, THEREFORE, for and in consideration of the premises and agreements herein contained, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of such Securities, as follows:
ARTICLE I
CREATION OF THE SECURITIES
Section 1.01      Designation of the Series; Securities Guarantee .
(a)      The changes, modifications and supplements to the Base Indenture effected by this Second Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes (as defined below), which shall not apply to any other Securities that have been or may be issued under the Base Indenture unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements. Pursuant to the terms hereof and Sections 2.01 and 2.02 of the Base Indenture, the Issuer hereby creates a series of Securities designated as the “4.125% Senior Notes, Series B due 2024” (the “ Notes ”), which Notes shall be deemed “ Securities ” for all purposes under the Base Indenture. Except as otherwise provided in the Base Indenture, the Notes shall form their own series for voting purposes, and shall not be part of the same class or series as any other Securities issued by the Issuer or by Ventas, Inc.
(b)      Each of the Notes will be guaranteed by the Guarantor in accordance with Article 11 of the Base Indenture and Article VIII of this Second Supplemental Indenture. For clarity, the Issuer shall not be considered a Guarantor for purposes of the Indenture or the Notes.
Section 1.02      Form of Notes . The Notes will be issued in definitive form and the definitive form of the Notes shall be one or more Global Securities substantially in the form set forth in Exhibit A attached hereto, which is incorporated herein and made a part hereof. The Notes shall bear interest, be payable and have such other terms as are stated in the form of definitive Note or in the Indenture. The stated maturity of the principal of the Notes shall be September 30, 2024.
Section 1.03      No Limit on Amount of Notes . The Trustee shall authenticate and deliver on September 24, 2014, Notes for original issue in an aggregate principal amount of up to Cdn$250,000,000. Notwithstanding the foregoing, the aggregate principal amount of the Notes shall be unlimited; provided , that the terms of all Notes issued under this Second Supplemental Indenture (other than the date of issuance) shall be the same. The Issuer may, upon the execution and delivery of this Second Supplemental Indenture or from time to time thereafter, execute and

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deliver the Notes to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Notes upon an Authentication Order and delivery of an Officers’ Certificate and Opinion of Counsel as contemplated by Section 2.03 of the Base Indenture, without further action by the Issuer.
Section 1.04      Ranking . The Notes will be the Issuer’s unsecured and unsubordinated obligations and rank equal in right of payment with all of the Issuer’s existing and future unsecured and unsubordinated indebtedness.
Section 1.05      Certificate of Authentication . The Trustee’s certificate of authentication to be included on the Notes shall be substantially as provided in the form of Note attached hereto as Exhibit A .
Section 1.06      No Sinking Fund . No sinking fund will be provided with respect to the Notes (notwithstanding any provisions of the Base Indenture with respect to sinking fund obligations).
Section 1.07      No Additional Amounts . No Additional Amounts will be payable with respect to the Notes (notwithstanding any provisions of the Base Indenture with respect to Additional Amount obligations), except those Additional Amounts payable by the Guarantor pursuant to Section 11.01(f) of the Base Indenture as and when such Additional Amounts are payable.
Section 1.08      Definitions .
(a)      Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in the Base Indenture.
(b)      Solely for purposes of this Second Supplemental Indenture and the Notes, the following definitions in Section 1.01 of the Base Indenture are hereby amended in their entirety to read as follows:
“ Business Day ” means any day other than a Saturday or Sunday or a day on which banking institutions in the City of Toronto are required or authorized by law to close.
“ Debt ” means, as of any date (without duplication), (1) all indebtedness and liabilities for borrowed money, secured or unsecured, of Ventas, Inc. and its Subsidiaries, including mortgages and other notes payable (including the Notes to the extent outstanding from time to time), but excluding any indebtedness, including mortgages and other notes payable, which is secured by cash, cash equivalents or marketable securities or defeased (it being understood that cash collateral shall be deemed to include cash deposited with a trustee with respect to third party indebtedness) and (2) all Contingent Liabilities of Ventas, Inc. and Subsidiaries, excluding in each of clauses (1) and (2) Intercompany Debt and all liabilities associated with customary exceptions to non-recourse indebtedness, such as for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar exceptions.

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It is understood that Debt shall not include any redeemable equity interest in Ventas, Inc.
“ Default ” means, with respect to the Indenture and the Notes, any event that is, or with the passage of time or giving of notice would be, an Event of Default.
“ GAAP ” means generally accepted accounting principles in the United States, consistently applied, as in effect from time to time.
“ Incur ” means, with respect to any Debt or other obligation of any Person, to create, assume, guarantee or otherwise become liable in respect of such Debt or other obligation, and “Incurrence” and “Incurred” have the meanings correlative to the foregoing.
“ Interest Payment Date ” has the meaning set forth in the Indenture and the Notes.
“ Lien ” means (without duplication) any lien (statutory or otherwise), mortgage, hypothec, trust deed, deed of trust, deed to secure debt, pledge, security interest, assignment for collateral purposes, deposit arrangement, or other security agreement, excluding any right of setoff but including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and any other like agreement granting or conveying a security interest; provided , that for purposes hereof, “Lien” shall not include any mortgage that has been defeased by Ventas, Inc. or any of its Subsidiaries in accordance with the provisions thereof through the deposit of cash, cash equivalents or marketable securities (it being understood that cash collateral shall be deemed to include cash deposited with a trustee with respect to third party indebtedness).
“ Significant Subsidiary ” means each Subsidiary that is a “significant subsidiary”, if any, of Ventas, Inc., as such term is defined in Regulation S-X under the Securities Act.
(c)      Solely for purposes of this Second Supplemental Indenture and the Notes, the following terms shall have the indicated meanings:
“ Canada Yield Price ” means in respect of any redemption of the Notes, a price calculated to provide a yield to maturity, compounded semi-annually and calculated in accordance with generally accepted financial practice, equal to the Government of Canada Yield on the date on which the Issuer gives notice of redemption of such Notes to the Holders pursuant to the Indenture, plus 47.5 basis points.
“ Consolidated EBITDA ” means, for any period of time, the net income (loss) of Ventas, Inc. and its Subsidiaries, determined on a consolidated basis in accordance with GAAP for such period, before deductions for (without duplication):
(1)     Interest Expense;
(2)     taxes;

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(3)     depreciation, amortization, and all other non-cash items, as determined reasonably and in good faith by Ventas, Inc., deducted in arriving at net income (loss);
(4)     extraordinary items;
(5)     non-recurring items or other unusual items, as determined reasonably and in good faith by Ventas, Inc. (including, without limitation, all prepayment penalties and all costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed));
(6)     noncontrolling interests;
(7)     income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; and
(8)     gains or losses on dispositions of depreciable real estate investments, property valuation losses and impairment charges.
For purposes of calculating Consolidated EBITDA, all amounts shall be as determined reasonably and in good faith by Ventas, Inc., and in accordance with GAAP except to the extent that GAAP is not applicable with respect to the determination of all non-cash and non-recurring items.
“ Consolidated Financial Statements ” means, with respect to any Person, collectively, the consolidated financial statements and notes to those financial statements, of that Person and its subsidiaries prepared in accordance with GAAP.
“ Contingent Liabilities of Ventas, Inc. and Subsidiaries ” means, as of any date, those liabilities of Ventas, Inc. and its Subsidiaries consisting of (without duplication) indebtedness for borrowed money, as determined in accordance with GAAP, that are or would be stated and quantified as contingent liabilities in the notes to the Consolidated Financial Statements of Ventas, Inc. as of the date of determination.
“ Government of Canada Yield ” on any date means the yield to maturity on such date, compounded semi-annually and calculated in accordance with generally accepted financial practice, which a non-callable Government of Canada bond would carry if issued, in Canadian dollars in Canada, at 100% of its principal amount on such date with a term to maturity equal to the remaining term to maturity, calculated as of the redemption date, of the Notes, such yield to maturity being the average of the yields provided by two major Canadian investment dealers selected by the Issuer.
“ Guarantor ” means Ventas, Inc. and its successors and assigns; provided , however, that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Guarantee of the Notes is released in accordance with the terms of the Indenture.

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“ Intercompany Debt ” means, as of any date, Debt to which the only parties are Ventas, Inc. and any of its Subsidiaries as of such date; provided , however, that with respect to any such Debt of which the Issuer or the Guarantor is the borrower, such Debt is subordinate in right of payment to the Notes.
“ Interest Expense ” means, for any period of time, the aggregate amount of interest recorded in accordance with GAAP for such period by Ventas, Inc. and its Subsidiaries, but excluding (i) interest reserves funded from the proceeds of any loan, (ii) prepayment penalties, (iii) amortization of deferred financing costs, and (iv) non-cash swap ineffectiveness charges, in all cases as reflected in the applicable Consolidated Financial Statements.
“ Issue Date ” means September 24, 2014.
“ Issuer ” has the meaning stated in the preamble.
“ Latest Completed Quarter ” means, as of any date, the then most recently ended fiscal quarter of Ventas, Inc. for which Consolidated Financial Statements of Ventas, Inc. have been completed, it being understood that at any time when Ventas, Inc. is subject to the informational requirements of the Exchange Act, and in accordance therewith files annual and quarterly reports with the Commission, the term “Latest Completed Quarter” shall be deemed to refer to the fiscal quarter covered by Ventas, Inc.’s most recently filed Quarterly Report on Form 10-Q, or, in the case of the last fiscal quarter of the year, Ventas, Inc.’s Annual Report on Form 10-K.
“ Notes ” has the meaning stated in Section 1.01 hereof.
“ Obligations ” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt.
“ Property EBITDA ” means for any property owned by Ventas, Inc. or any of its Subsidiaries as of the date of determination, for any period of time, the net income (loss) derived from such property for such period, before deductions for (without duplication):
(1)     Interest Expense;
(2)     taxes;
(3)     depreciation, amortization, and all other non-cash items, as determined reasonably and in good faith by Ventas, Inc., deducted in arriving at net income (loss);
(4)     general and administrative expenses that are not allocated by management to a property segment, as reflected in Ventas, Inc.’s Consolidated Financial Statements available for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter;
(5)     extraordinary items;

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(6)     non-recurring items or other unusual items, as determined reasonably and in good faith by Ventas, Inc. (including, without limitation, all prepayment penalties and all costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed));
(7)     noncontrolling interests;
(8)     income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; and
(9)    property valuation losses and impairment charges;
in each case attributable to such property.
For purposes of calculating Property EBITDA, all amounts shall be determined reasonably and in good faith by Ventas, Inc., and in accordance with GAAP except to the extent that GAAP is not applicable with respect to the determination of all non-cash and non-recurring items.
Property EBITDA shall be adjusted (without duplication) to give pro forma effect:
(x)     in the case of any assets having been placed-in-service or removed from service since the first day of the period to the date of determination, to include or exclude, as the case may be, any Property EBITDA earned or eliminated as a result of the placement of such assets in service or removal of such assets from service as if the placement of such assets in service or removal of such assets from service occurred as of the first day of the period; and
(y)     in the case of any acquisition or disposition of any asset or group of assets since the first day of the period to the date of determination, including, without limitation, by merger, or stock or asset purchase or sale, to include or exclude, as the case may be, any Property EBITDA earned or eliminated as a result of the acquisition or disposition of those assets as if the acquisition or disposition occurred as of the first day of the period.
“ Second Supplemental Indenture ” has the meaning stated in the preamble.
“ Secured Debt ” means, as of any date, that portion of the aggregate principal amount of all outstanding Debt of Ventas, Inc. and its Subsidiaries as of that date that is secured by a Lien on properties or other assets of Ventas, Inc. or any of its Subsidiaries.
“ Stabilized Development Asset ” means, as of any date, a new construction or development Real Estate Asset at such date that, following the first four consecutive fiscal quarters occurring after substantial completion of construction or development, either (i) an additional six consecutive fiscal quarters have occurred or (ii) such Real Estate Asset is at least 90% leased, whichever shall first occur.

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“ Subsidiary ” means, with respect to any Person, a corporation, partnership association, joint venture, trust, limited liability company, unlimited liability company or other business entity which is required to be consolidated with such Person in accordance with GAAP.
“ Total Assets ” means, as of any date, in each case as determined reasonably and in good faith by Ventas, Inc., the sum of (without duplication):
(1)      with respect to Real Estate Assets that were owned by Ventas, Inc. and its Subsidiaries as of April 17, 2002 and that continue to be owned as of the date of determination, the annualized rental revenues specified for such Real Estate Assets on Schedule 1 attached to this Second Supplemental Indenture, divided by 0.0900, plus any annualized incremental rental revenue generated by such Real Estate Assets as a result of, arising out of or in connection with annual rent escalations or rent reset rights of Ventas, Inc. and its Subsidiaries with respect to such Real Estate Assets (whether by agreement or exercise of such right or otherwise), divided by 0.0900; for the purpose of this clause (1), “annualized incremental rental revenue” in respect of a Real Estate Asset shall mean the increase in daily rental revenue generated by such Real Estate Asset as a result of, arising out of or in connection with such annual rent escalations or rent reset rights over the daily rental revenue generated by such Real Estate Asset immediately prior to the effective date of such increase, annualized by multiplying such daily increase by 365;
(2)      with respect to all other Real Estate Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination (except as set forth in clause (3) below), the cost (original cost plus capital improvements before depreciation and amortization) thereof, determined in accordance with GAAP;
(3)      with respect to Stabilized Development Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination, the aggregate sum of all Property EBITDA for such Stabilized Development Assets for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter divided by (i) 0.0900, in the case of a government reimbursed property and (ii) 0.0700 in all other cases; provided , however, that if the value of a particular Stabilized Development Asset calculated pursuant to this clause (3) is less than the cost (original cost plus capital improvements before depreciation and amortization) of such Real Estate Asset, as determined in accordance with GAAP, such cost shall be used in lieu thereof with respect to such Real Estate Asset;
(4)      the proceeds of the Debt, or the assets to be acquired in exchange for such proceeds, as the case may be, incurred since the end of the Latest Completed Quarter;
(5)      mortgages and other notes receivable of Ventas, Inc. and its Subsidiaries, determined in accordance with GAAP;
(6)      cash, cash equivalents and marketable securities of Ventas, Inc. and its Subsidiaries, but excluding all cash, cash equivalents and marketable securities securing, or applied to defease or discharge, in each case as of that date, any

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indebtedness, including mortgages and other notes payable (including cash deposited with a trustee with respect to third party indebtedness), all determined in accordance with GAAP; and
(7)      all other assets of Ventas, Inc. and its Subsidiaries (excluding goodwill), determined in accordance with GAAP.
“ Unencumbered Assets ” means, as of any date, in each case as determined reasonably and in good faith by Ventas, Inc., the sum of (without duplication):
(1)      with respect to Real Estate Assets that were owned by Ventas, Inc. and its Subsidiaries as of April 17, 2002 and that continue to be owned as of the date of determination, but excluding any such Real Estate Assets that are serving as collateral for Secured Debt, the annualized rental revenues specified for such Real Estate Assets on Schedule 1 attached to this Second Supplemental Indenture, divided by 0.0900, plus any annualized incremental rental revenue generated by such Real Estate Assets as a result of, arising out of or in connection with annual rent escalations or rent reset rights of Ventas, Inc. and its Subsidiaries with respect to such Real Estate Assets (whether by agreement or exercise of such right or otherwise), divided by 0.0900; for the purpose of this clause (1), “annualized incremental rental revenue” in respect of a Real Estate Asset shall mean the increase in daily rental revenue generated by such Real Estate Asset as a result of, arising out of or in connection with such annual rent escalations or rent reset rights over the daily rental revenue generated by such Real Estate Asset immediately prior to the effective date of such increase, annualized by multiplying such daily increase by 365;
(2)      with respect to all other Real Estate Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination (except as set forth in clause (3) below), but excluding any such Real Estate Assets that are serving as collateral for Secured Debt, the cost (original cost plus capital improvements before depreciation and amortization) thereof, determined in accordance with GAAP;
(3)      with respect to Stabilized Development Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination, excluding any such Stabilized Development Assets that are serving as collateral for Secured Debt, the aggregate sum of all Property EBITDA for such Stabilized Development Assets for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter divided by (i) 0.0900, in the case of a government reimbursed property and (ii) 0.0700 in all other cases; provided , however, that if the value of a particular Stabilized Development Asset calculated pursuant to this clause (3) is less than the cost (original cost plus capital improvements before depreciation and amortization) of such Real Estate Asset, as determined in accordance with GAAP, such cost shall be used in lieu thereof with respect to such Real Estate Asset;
(4)      the proceeds of the Debt, or the assets to be acquired in exchange for such proceeds, as the case may be, incurred since the end of the Latest Completed Quarter;

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(5)      mortgages and other notes receivable of Ventas, Inc. and its Subsidiaries, except any mortgages or other notes receivable that are serving as collateral for Secured Debt, determined in accordance with GAAP;
(6)      cash, cash equivalents and marketable securities of Ventas, Inc. and its Subsidiaries, but excluding all cash, cash equivalents and marketable securities securing, or applied to defease or discharge, in each case as of that date, any indebtedness, including mortgages and other notes payable (including cash deposited with a trustee with respect to third party indebtedness), all determined in accordance with GAAP; and
(7)      all other assets of Ventas, Inc. and its Subsidiaries (excluding goodwill), other than assets pledged to secure Debt, determined in accordance with GAAP; provided , however, that Unencumbered Assets shall not include net real estate investments in unconsolidated joint ventures of Ventas, Inc. and its Subsidiaries.
For the avoidance of doubt, cash held by a “qualified intermediary” in connection with proposed like-kind exchanges pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, which may be classified as “restricted” for GAAP purposes shall nonetheless be included in clause (6) above, so long as Ventas, Inc. or any of its Subsidiaries has the right to (i) direct the qualified intermediary to return such cash to Ventas, Inc. or such Subsidiary if and when Ventas, Inc. or such Subsidiary fails to identify or acquire the proposed like-kind property or at the end of the 180-day replacement period or (ii) direct the qualified intermediary to use such cash to acquire like-kind property.
“ Unsecured Debt ” means, as of any date, that portion of the aggregate principal amount of all outstanding Debt of Ventas, Inc. and its Subsidiaries as of that date that is neither Secured Debt nor Contingent Liabilities of Ventas, Inc. and its Subsidiaries.
ARTICLE II
REDEMPTION
Section 2.01      Amendment to Article 3 . Pursuant to Sections 2.02(7) and 2.02(8) of the Base Indenture, Article 3 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 3.09, 3.10 and 3.11, in each case to read as follows:
“ Section 3.09 Optional Redemption .
(a)    The Issuer may, at its option, redeem the Notes at any time prior to maturity, in whole or from time to time in part.
(b)    The redemption price for any redemption of the Notes will be equal to: (i) prior to June 30, 2024, the greater of: (1) 100% of the principal amount of the Notes to be redeemed, and (2) the Canada Yield Price, in each case plus accrued and unpaid interest thereon to the

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redemption date; and (ii) on or after June 30, 2024, 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon to the redemption date.
(c)    Any redemption pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.07 of the Indenture.
Section 3.10 Mandatory Redemption . The Issuer is not required to make mandatory redemption payments with respect to the Notes.
Section 3.11 Purchase of Notes. The Issuer may purchase, at any time or from time to time, all or any of the Notes in the market (which shall include purchase from or through an investment dealer or a firm holding membership on a recognized stock exchange) or by invitation for tenders or by private contract at such price or prices as may be determined by the Issuer.”
ARTICLE III
COVENANTS
Section 3.01      Amendments to Article 4 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, Section 4.03 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 4.03 Reports . Whether or not required by the Commission, so long as any Notes are outstanding, Ventas, Inc. shall file with the Trustee, within 15 days after it files the same with the Commission (or if not subject to the periodic reporting requirements of the Exchange Act, within 15 days after it would have been required to file the same with the Commission had it been so subject):
(1)      all quarterly and annual financial information that is required to be contained in filings with the Commission on Forms 10-Q and 10-K, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by Ventas, Inc.’s certified independent accountants; and
(2)      all current reports that are required to be filed with the Commission on Form 8-K.
For so long as any Notes remain outstanding, if at any time Ventas, Inc. is not required to file with the Commission the reports required by the preceding paragraph of this Section 4.03, Ventas, Inc. shall furnish to the

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Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
The availability of the foregoing materials on the Commission’s website or on Ventas, Inc.’s website shall be deemed to satisfy the foregoing delivery obligations.”
(b)      Pursuant to Section 2.02(14) of the Base Indenture, Section 4.04 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 4.04 Compliance Certificate . “Ventas, Inc. shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of Ventas, Inc. and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether Ventas, Inc. has kept, observed, performed and fulfilled its obligations under the Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, Ventas, Inc. has kept, observed, performed and fulfilled each and every covenant contained in the Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of the Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action Ventas, Inc. is taking or proposes to take with respect thereto) and that to the best of his or her knowledge, no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Securities of any series is prohibited or if such event has occurred, a description of the event and what action Ventas, Inc. is taking or proposes to take with respect thereto. For purposes of this Section 4.04, such compliance shall be determined without regard to any period of grace or requirement of notice under the Indenture.”
(c)      Pursuant to Section 2.02(14) of the Base Indenture, Section 4.06 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 4.06 Corporate Existence . Except as permitted by Article 5 and Section 11.04, Ventas, Inc. and the Issuer shall do all things necessary to preserve and keep their existence, rights and franchises; provided , however, that neither Ventas, Inc. nor the Issuer shall be required to preserve any such right or franchise if Ventas, Inc. or the Issuer, as applicable, shall determine reasonably and in good faith that the preservation thereof is no longer desirable in the conduct of its business; and provided, further, for clarity, the amalgamation or other combination of

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the Issuer with one or more other Subsidiaries of Ventas, Inc. shall not constitute a breach of this Section 4.06.”
(d)      Pursuant to Section 2.02(14) of the Base Indenture, Article 4 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 4.07 through 4.11, in each case to read as follows:
“ Section 4.07 Taxes . Ventas, Inc. will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
Section 4.08 Stay, Extension and Usury Laws . Each of Ventas, Inc. and the Issuer covenants (to the extent that they may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of the Indenture; and each of Ventas, Inc. and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.
Section 4.09 Limitations on Incurrence of Debt .
(a)    Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Debt if, immediately after giving effect to the Incurrence of such additional Debt and any other Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the aggregate principal amount of all outstanding Debt would exceed 60% of the sum of (without duplication) (i) Total Assets as of the end of the Latest Completed Quarter and (ii) the purchase price of any Real Estate Assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire Real Estate Assets or mortgages receivable or to reduce Debt), since the end of the Latest Completed Quarter.
(b)    Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Secured Debt if, immediately after giving effect to the Incurrence of such additional Secured Debt and any other Secured Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the aggregate principal amount of all outstanding Secured Debt would exceed 50% of the sum of (without duplication) (i) Total Assets as of the end of the Latest Completed Quarter

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and (ii) the purchase price of any Real Estate Assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire Real Estate Assets or mortgages receivable or to reduce Debt), since the end of the Latest Completed Quarter.
(c)    Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Debt if, immediately after giving effect to the Incurrence of such additional Debt and any other Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the ratio of Consolidated EBITDA to Interest Expense for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter would be less than 1.50 to 1.00 on a pro forma basis and calculated on the assumption (without duplication) that:
(i)    the additional Debt and any other Debt Incurred by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination, which was outstanding at the date of determination, had been Incurred at the beginning of that period and continued to be outstanding throughout that period, and the application of the net proceeds of such Debt, including to refinance other Debt, had occurred at the beginning of such period; provided , that in determining the amount of Debt so Incurred, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period;
(ii)    the repayment or retirement of any other Debt repaid or retired by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination had occurred at the beginning of that period; provided , that in determining the amount of Debt so repaid or retired, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period; and
(iii)     in the case of any acquisition or disposition of any asset or group of assets (including, without limitation, by merger, or stock or asset purchase or sale) or the placement of any assets in service or removal of any assets from service by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination, the acquisition, disposition, placement in service or removal from service and any related repayment or refinancing of Debt had occurred as of the first day of such period, with the appropriate adjustments to Consolidated EBITDA and Interest Expense with respect to the acquisition, disposition,

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placement in service or removal from service being included in that pro forma calculation.
Section 4.10 Maintenance of Unencumbered Assets . Ventas, Inc. and its Subsidiaries shall maintain at all times Unencumbered Assets of not less than 150% of the aggregate principal amount of all outstanding Unsecured Debt.”
ARTICLE IV
SUCCESSORS
Section 4.01      Amendments to Article 5 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, Section 5.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 5.01    Consolidation, Amalgamation, Merger, or Sale of Assets .
Ventas, Inc. may not, directly or indirectly: (a) consolidate, amalgamate or merge with or into another Person (whether or not Ventas, Inc. is the surviving corporation); or (b) sell, assign, transfer, convey, lease (other than to an unaffiliated operator in the ordinary course of business) or otherwise dispose of all or substantially all of the properties or assets of Ventas, Inc. and its Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:
(1)    either:
(i)    Ventas, Inc. is the surviving corporation; or
(ii)    the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Ventas, Inc.) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia;
(2)    the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Ventas, Inc.) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all of Ventas, Inc.’s obligations under the Notes and the Indenture pursuant to agreements reasonably satisfactory to the Trustee; and
(3)    immediately after such transaction, on a pro forma basis giving effect to such transaction or series of transactions (and treating any

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obligation of Ventas, Inc. or any Subsidiary incurred in connection with or as a result of such transaction or series of transactions as having been incurred at the time of such transaction), no Default or Event of Default exists under the Indenture.
Notwithstanding anything to the contrary in this Section 5.01, Ventas, Inc. may consolidate, amalgamate or merge with or into the Issuer, or sell and/or transfer to the Issuer all or substantially all of its assets, in each case, without compliance with any of the requirements set forth in this Article 5.”
(b)      Pursuant to Sections 2.02(14) of the Base Indenture, Article 5 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 5.03 and 5.04, in each case to read as follows:
“ Section 5.03    Assumption by a Subsidiary of the Guarantor .
A Subsidiary of the Guarantor that is organized and existing under the laws Canada or any Province thereof, may, without the consent of the Holders, directly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of and interest on all the Notes and the performance of every covenant of the Indenture on the part of the Issuer to be performed or observed. Upon any such assumption, the Subsidiary shall succeed to, and be substituted for and may exercise every right and power of, the Issuer under the Indenture with the same effect as if the Subsidiary had been named as the Issuer herein and the Issuer shall be released from liability as obligor on the Notes.
Section 5.04    Termination of the Guarantee .
The obligations of the Guarantor under the Indenture shall terminate at such time the Guarantor merges, amalgamates or consolidates with the Issuer or at such other time as the Issuer acquires all of the assets and partnership interests of the Guarantor.”
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01      Amendments to Article 6 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, Section 6.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“ Section 6.01. Events of Default .
Each of the following is an “Event of Default”:

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(1)      Ventas, Inc. or the Issuer does not pay the principal or any premium on any Note when due and payable;
(2)      Ventas, Inc. or the Issuer does not pay interest on any Note within 30 days after the applicable due date;
(3)      Ventas, Inc. or its Subsidiaries remain in breach of any other term of the Indenture for 90 days after they receive a notice of Default stating they are in breach. Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Notes then Outstanding may send the notice;
(4)      except as permitted by the Indenture and the Notes, the Securities Guarantee by Ventas, Inc. shall cease to be in full force and effect or Ventas, Inc. shall deny or disaffirm its obligations with respect thereto;
(5)      the Issuer, Ventas, Inc. or any of its Significant Subsidiaries default under any of their third party indebtedness (including a default with respect to Securities of any series under the Indenture other than the Notes) in an aggregate principal amount exceeding US$50.0 million after the expiration of any applicable grace period, which default results in the acceleration of the maturity of such indebtedness. Such default is not an Event of Default if the other indebtedness is discharged, or the acceleration is rescinded or annulled, within a period of 30 days after the Issuer, Ventas, Inc. or any such Significant Subsidiary, as the case may be, receives notice specifying the default and requiring that they discharge the other indebtedness or cause the acceleration to be rescinded or annulled. Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Notes then Outstanding may send the notice, with a copy to the Trustee if the Holders send the notice;
(6)      the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary:
(i)      commence a voluntary case;
(ii)      consent to the entry of an order for relief against them in an involuntary case;
(iii)      consent to the appointment of a custodian of them or for all or substantially all of their property;
(iv)      make a general assignment for the benefit of their creditors; or
(v)      generally are not paying their debts as they become due; or
(7)      a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

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(i)      is for relief against the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case;
(ii)      appoints a custodian of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, or for all or substantially all of the property of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or
(iii)      orders the liquidation of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days;”
(b)      Pursuant to Section 2.02(14) of the Base Indenture, Section 6.02 of the Base Indenture is hereby amended with respect to the Notes by (i) deleting the first sentence thereof in its entirety and inserting in its place the following:
“In the case of an Event of Default specified in clause (6) or (7) of Section 6.01, with respect to the Issuer, Ventas, Inc. or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all Outstanding Notes will become due and payable immediately without further action or notice.”
and (ii) adding to the end of Section 6.02 the following:
“Notwithstanding anything to the contrary contained in the Indenture, the sole remedy for an Event of Default relating to a failure to comply with any of the provisions of Section 4.03 hereof shall consist exclusively of the right to receive additional interest on the Notes at an annual rate equal to 0.25% of the outstanding principal amount of the Notes. This additional interest will be payable in the same manner and on the same dates as the stated interest payable on the Notes and will accrue on all Outstanding Notes from and including the date on which such Event of Default first occurs to, but not including, the date on which such Event of Default shall have been cured or waived.”
(c)      Pursuant to Section 2.02(14) of the Base Indenture, Section 6.08 of the Base Indenture is hereby amended with respect to the Notes by deleting from the first line thereof the reference to clause (3) of Section 6.01 of the Base Indenture.

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ARTICLE VI
TRUSTEE
Section 6.01      Amendments to Article 7 . Pursuant to Section 2.02(14) of the Base Indenture, Section 7.06(e) of the Base Indenture is hereby amended with respect to the Notes by changing the references to Section 6.01(7) or (8) therein to Section 6.01(6) or (7).
ARTICLE VII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 7.01      Applicability of Defeasance Provisions . Pursuant to Sections 2.02(17) and 8.01 of the Base Indenture, so long as any of the Notes are Outstanding, Sections 8.02 and 8.03 of the Base Indenture shall be applicable to the Notes.
Section 7.02      Determinations Under Section 8.03 . For the purposes of Sections 2.02(17) and 8.03 of the Base Indenture, Section 8.03 of the Base Indenture shall apply to Sections 4.09 and 4.10.
Section 7.03      Determination Under Section 8.07 . For the purposes of Sections 8.07 and 12.02 of the Base Indenture, the provisions of Section 8.07 of the Base Indenture shall apply to the Notes.
Section 7.04      Amendments to Article 8 .
(a)      Pursuant to Section 2.02(14) of the Base Indenture, the last sentence of Section 8.03 of the Base Indenture is hereby amended with respect to the Notes by changing the references to Sections 6.01(4) through 6.01(6) therein to Sections 6.01(3) through 6.01(5).
(b)      Pursuant to Section 2.02(14) of the Base Indenture, Section 8.04(e) of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:
“(e)    such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture in respect of the Notes) to which Ventas, Inc. or the Issuer is a party or by which Ventas, Inc. or the Issuer is bound;”
ARTICLE VIII
SECURITIES GUARANTEES
Section 8.01      Applicability of Guarantee Provisions .
(a)      Pursuant to Sections 2.02(1) and 11.01 of the Base Indenture, so long as any of the Notes are Outstanding, Article 11 shall be applicable to the Notes.

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(b)      To evidence its Guarantee in accordance with Section 11.03 of the Indenture, the Guarantor agrees that a notation of such Guarantee substantially in the form attached as Exhibit B hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that the Indenture has been executed on behalf of such Guarantor by one of its Officers.
ARTICLE IX
MISCELLANEOUS
Section 9.01      Determination Under Section 14.08 . For the purposes of Section 14.08 of the Base Indenture, the agreements of the Guarantor will bind its successors except as otherwise provided in Article 11 of the Base Indenture.
Section 9.02      Application of Second Supplemental Indenture; Ratification .
(a)      Each and every term and condition contained in this Second Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Base Indenture shall apply only to the Notes created hereby and not to any future series of Securities established under the Indenture.
(b)      The Base Indenture, as supplemented and amended by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture and this Second Supplemental Indenture shall be read, taken and construed as the same instrument.
(c)      In the event of any conflict between this Second Supplemental Indenture and the Base Indenture, the provisions of this Second Supplemental Indenture shall prevail.
Section 9.03      Benefits of Second Supplemental Indenture . Nothing contained in this Second Supplemental Indenture shall or shall be construed to confer upon any Person other than a Holder of the Notes, the Issuer, the Guarantor or the Trustee any right or interest to avail itself of any benefit under any provision of the Base Indenture or this Second Supplemental Indenture.
Section 9.04      Effective Date . This Second Supplemental Indenture shall be effective as of the date first above written and upon the execution and delivery hereof by each of the parties hereto.
Section 9.05      Governing Law . This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein, except in respect of Article VIII hereof and the Guarantee, without regard to conflicts of laws principles thereof. Article VIII of this Second Supplemental Indenture and the Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of laws principles thereof.

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Section 9.06      Counterparts . This Second Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed by their respective officers hereunto duly authorized, all as of the day and year first above written.
VENTAS CANADA FINANCE LIMITED

By: /s/Brian K. Wood                
Name:
Brian K. Wood
Title:    Secretary and Treasurer
VENTAS, INC.
By: /s/ Richard A Schweinhart            
Name:
Richard A Schweinhart
Title:
Executive Vice President and
Chief Financial Officer


[Signature Page to Second Supplemental Indenture between Ventas Canada Finance Limited, Ventas, Inc. and Computershare]


COMPUTERSHARE TRUST COMPANY OF CANADA
By: /s/ Lisa M. Kudo            
Name:    Lisa M. Kudo
Title:    Corporate Trust Officer


By: /s/ Raji Sivalingam        
Name:    Raji Sivalingam
Title:    Associate Trust Officer


[Signature Page to Second Supplemental Indenture between Ventas Canada Finance Limited, Ventas, Inc. and Computershare]



Exhibit 12.1

STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
 
 
 
(dollars in thousands)
 
For the Nine Months Ended September 30, 2014
Income before income from unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
 
$
354,781

Interest expense
 
 
Senior notes payable and other debt
 
277,811

Distributions from unconsolidated entities
 
5,387

Earnings
 
$
637,979

Interest
 
 
Senior notes payable and other debt expense
 
$
277,811

Interest capitalized
 
603

Fixed charges
 
$
278,414

 
 
 
Ratio of Earnings to Fixed Charges
 
2.29







Exhibit 31.1
I, Debra A. Cafaro, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ventas, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report, any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 24, 2014
/s/ DEBRA A. CAFARO
Debra A. Cafaro
  Chairman and Chief Executive Officer




Exhibit 31.2

I, Richard A. Schweinhart, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ventas, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report, any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 24, 2014

/s/ RICHARD A. SCHWEINHART
Richard A. Schweinhart
  Executive Vice President and Chief Financial Officer





Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Ventas, Inc. (the "Company") for the period ended September 30, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Debra A. Cafaro, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 24, 2014
/s/ DEBRA A. CAFARO
Debra A. Cafaro
  Chairman and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.





Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Ventas, Inc. (the "Company") for the period ended September 30, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard A. Schweinhart, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 24, 2014
/s/ RICHARD A. SCHWEINHART
Richard A. Schweinhart
  Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.