芬塔 (VTR) 2002 Q4 法說會逐字稿

Please stand by. We are about to begin. Good day everyone and welcome to the Ventas Incorporated conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Eddy Jones (ph). Mr. Jones, please go ahead, sir.

Good morning, and welcome to the Ventas conference call to review the company's announcement today regarding its results for the 2002 fourth quarter and year end. These items were the subject of a press release issued this morning. Let me also note that the company previously issued a press release advising that this conference call is open to the general public on a listen-only basis over the internet.

As we start, let me express that all projections and predictions and certain other statements to be made during this conference call may be considered forward-looking statements within the meaning of the Federal Securities laws. These projections, predictions, and statements are based on management's current beliefs as well as on a number of assumptions concerning future events. The forward-looking statements are subject to many risks, uncertainties, and contingencies, and stockholders and others should recognize that actual results may differ materially from the company's expectations, whether expressed or implied. We refer you to the company's reports filed with the Securities and Exchange Commission, including the company's annual report on form 10-K, for the year ended Dec. 31, 2002, which was filed today and the company's other reports filed periodically with the SEC for discussion of these forward-looking statements and other factors that could affect these forward-looking statements.

Many of these factors are beyond the control of the company and its management. The information being provided today is as of this date only, and Ventas expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations. I'll now turn the call over to Debra Cafaro, Chairman, President and Chief Executive Officer. Please go ahead, Debra.

Thank you, Mr. Jones. To our participant's good morning and welcome to our 2002 year end earnings call. I have the pleasure of being joined today [Inaudible] by my Ventas' colleague. Today, we want to recap the developments of the year and discuss our fourth quarter and full year numbers. We will also give you our outlook for 2003. Following our presentation as usual we will be happy to answer your question. As I review 2002, I was struck by the productivity of the company during the year and how much our company has improved over the last 3 years. Ventas was successful during that period in spite of the volatility that has marked the healthcare operating sector.

And while we remain acutely aware of the challenges we faced in 2003. We also feel confident about our position and our ability to produce another quality year for our shareholders. In 2002, we could normalize FFO by 20% over the prior year and increased the dividend payable to our shareholders. From December 2001 to April 2002, we re-capitalized the company's balance sheet and reduced our cost of debt meaningfully. Those debt transactions also gave us financial flexibility and capital availability. The CMDF transaction we closed in December of 2001 was one of the only successful healthcare CMDF deals brought to market since 1998. It generated higher cash flows to the company and was a stepping-stone to other successful refinancing. Our April 2002 high yield deal was the fifth largest fix income deal in the REIT sector this year and the largest healthcare REIT fixed income deal ever. At the same time is our high yield deal reduced our interest expense and speed up asset.

Our new bank line created acquisition capacity and further reduced our borrowing trend. All told [Inaudible] between a 115-200 basis point offer borrowing cost as a result of these transaction. Our December 2002, $100m equity deal caped our capital market activity for the year. That deal enhanced our debt pay down efforts and improved our credit statistics. As promised, Ventas consolidated net debt to EBITDAR ratio for the 12-month ended 12/31/02 improved to about 3.7 times. The equity deal also allowed us to increase availability on our acquisition line which availability now [Inaudible] over $150m to remove the overhang from the tenant share ownership position and still projected about 7% steady state FFO growth for 2003.

During the year we also took our first important step towards diversification with the Trans Healthcare investment. The THI deal showed that we are serious about diversifying our asset base by partnering with quality operators to acquire or finance stabilizes healthcare and senior housing access with positive sustainable cash flow. Because of its complexity and highly structured nature, it also demonstrated how hard we are prepared to work to achieve our diversification and decreasing objective.

For most of the year, we had a very small team at Ventas and importantly during the year, we sold out our senior management team with very experience executive having strong background in real estate and in healthcare financing operation. Finally, during the year we developed and implemented the first stage of our asset management system. As a result of all of these activities our total shareholder return of the year was 7.4% compared to 3.8% for the REIT sector and 7.1% for the NAREIT composite healthcare invest. Over the last three years, Ventas has compounded annual total shareholder return with 62.5% versus 14.5% for the REIT sector and 25% for the NAREIT composite healthcare invest.

During 2002, we experienced two major disruptions and both of them followed from the events that directly affected Kindred, our principal tenant. First Congress adjourned in October 2002 without addressing the so called [Inaudible], which lead to a $30 per day tax in Medicare reimbursement to skilled nursing operators effective Oct. 1, 2001. Today Congress has shown no willingness to restore any Medicare funding to the nursing home operators. Second, as you all know Kindred announced in October that it would add $40m per year and professional liability expense to its earnings run rate due principally to its 18 Florida nursing home. To avoid further losses, Kindred also announced that it intends to access the Florida skilled nursing market. We support Kindred's intentions to the access the Florida skilled nursing market on terms that are acceptable to Ventas and that are consistent with our master leases.

We are in active discussions with Kindred management and its advisors to achieve this objective. Our discussions are ongoing and have been professional in tone. If we succeed in reaching an agreement, Kindred's earnings, cash flow, and credit quality should improve, the value of Kindred's common equity should increase, and the EBITDA-to-rent coverage’s on our leases should improve. I cannot assure you what the outcome of our Florida discussions will be or when we will able to tell you more. As always, litigation between the companies remains the possibility because we are committed to protecting the value of our asset and our shareholder's interest. On balance, however, I remain hopeful that a mutually positive resolution will be reached between the companies.

One final point before we discuss our financial results. Kindred EBITDAR-to-rent coverage’s at our properties remain very strong throughout the year even with Kindred's addition of professional liability expenses. For the 12-month ended 09/30/02, which is the most current period for which we have property level results. Kindred's EBITDAR covered Ventas' rent by 1.8 times after management fees. Each master lease covered at least 1.7 times. If we pro forma the $30 per day Medicare cut on top of Kindred's $10m a quarter additional professional liability expense, the 09/30/02 trailing 12-month EBITDAR-to-rent ratio would be approximately 1.6 times again after fully loading those numbers with Kindred management fees.

This cash flow cushion is well above market and coupled with our pooled multi-facility master leases put that in the best position to weather any continued volatility or margin compression in the healthcare operating business. I'd like to turn the floor to Rick Schweinhart, our CFO, who will now review our fourth quarter and full year 2002 results.

Thank you. Normalized FFO for the fourth quarter totaled $24.2m or 34 cents per diluted share. For the year normalized FFO increased 20% to $1.36 per share from a $1.13 per share in 2001. As always, normalized FFO excludes gains on the sales of property, gains on sale of Kindred equity, and the one-time swap breakage expense incurred in the second quarter. GAAP net income for the quarter was $9.4m or $0.13 cents per diluted share. Before extraordinary items related to our debt pay-down GAAP net income for the quarter was $13.6m or $0.19 cents per dilutes share. Rental revenue for the fourth quarter totaled $48.6m and $189.5m for the year. It increased $6.2m over the net rental revenue in 2001, principally as a result of the May 1 escalators and the acquisition of the THI portfolio.

This quarter, because of the mortgage loan we made a THI in November, we reported net income -- net interest income of $1m. Since we sold the $50m senior loans to another investor in the fourth quarter for a small gain, mortgage interest income should be about $3m for the full year 2003. This will be interest on the $17m THI mezzanine loan that we retained. This quarter, we recorded $1.6m for swap ineffectiveness. For the year this amount was $1.9m. As we discussed in prior quarters, swap ineffectiveness is an accounting construct that requires Ventas to mark-to- market the out of money portion of our swap to the extent the notional amount of the swap exceeds our variable rate debt. It is not a cash charge and it is temporary in nature.

As we grow and finance new investments with variable rate debt, our swap will be effective and this charge will not appear on our income statement. For the year, interest expense on our debt, excluding the ineffectiveness, declined to $76.5m down from $86.2m in 2001. This 11% decrease is the result of savings from the CNBS transaction closed in December 2001, the high yield offering, and our bank revolver, which closed in April of 2002, as well as our continued debt pay-down efforts. 30% of the decrease relates to lower balances and approximately 70% for lower interest rate. For the quarter, interest expense net of the swap ineffectiveness was $19.2m, which is also 11% decrease from last year.

During 2002, we recognized $28.5m gains on sale from the sale two healthcare assets and $5m from the sale of Kindred common stock. Together with the cash generated from assets sales, we also used free cash flow and equity proceeds to continue our [delivering] activity with long-term debt at year-end down to $708m versus $848m at Dec. 31, 2001, and $886m at Dec. 31, 2000. You will see a line on our balance sheet entitled securities settlement due. That is the amount we repaid -- we paid to repurchase some of our bonds at year-end. The actual payment was made in the first week of 2003 and is shown as a liability on the Dec. 31, 2002 balance sheet. Finally, we continued to pay down amounts due on the DOJ settlement where the balance at year-end stood at $44m. In sum, our results for 2002 and the fourth quarter improved significantly over the results for the comparable prior periods. And showed a sustainable earnings power of the Company. Back to You Deby.

Thanks Rich. So looking forward to the rest of 2003, our focus is going to be on diversification and growth of our asset base, growth in FFO, maintaining and improving our financial strength and flexibility, and systematically reducing the risk discount that we believe is currently embedded in our multiples. And of course, we're going to use some of our free cash flow for the benefit of our shareholders as we demonstrated by the recent 13% increase in our quarterly dividend to an expected annual rate of $1.70 per share. As we have previously announced, we expect steady state FFO per share to be between $1.43 and $1.45 in 2003. This represents about 7% year-over-year FFO growth without any acquisitions, divested shares or capital events. Between the dividend and our built in FFO growth, Ventas could, for the fourth consecutive year, deliver a very healthy return to its shareholders in 2003.

Now while we are trying to do our part to continue to improve our company, there are certain macros in the nursing home business that we cannot control. Providers are currently confronting a triple threat of medical types, medicated pressures, and professional liability expenses. And as a result, we may see continued margin pressure at the operating level. The effects of Oct. 1, 2002 Medicare cuts to the nursing home have already been reflected in the fourth quarter earnings at HCR and Beverly, and will show up when Kindred reports its fourth quarter results. With $1.7m Medicare patient base in its nursing home, a $30 per day Medicare cut would be expected to reduce revenues and EBITDA at Kindred by approximately $13m a quarter.

In addition, as I am sure you are all reading, headlines will continue to focus on state budget crisis and potential rate freezes or cuts in Medicaid for the second half of 2003. Nonetheless, the public nursing home operators have indicated that they expect 2-5% Medicaid rate increases for full year 2003. We also expect modest growth in Medicaid rates across our portfolio in 2003. To put Medicaid in perspective though, if there were 1% cut in Medicaid rates across our 32-state nursing home portfolio, that would reduce operator revenue at our facility by only $6.6m per year.

This 1% decrease, again if it occurs, would in turn reduce coverage’s at our portfolio by a mere 0.035. However we believe that the most likely source of near term relief for nursing home operators may be increased Federal funding in favor of the states, which would introduce greater stability into nursing home Medicaid rates for the states fiscal year 2004, most of which begin in July 2003. Furthermore, because Ventas has the benefit of a 37-state portfolio of assets split between hospitals and nursing homes, the impact of any single state Medicaid rate to nursing home providers will not likely be significant. Most importantly, because we are starting out with well above average EBITDAR to rent coverage’s and because we have diversified multi facility master lease structure, we expect our rents to remain reliable. Kindred itself with $230m in cash on hand and one-third of its revenues from the higher margin hospital business is also in a good position to weather these potential variations in Medicare and Medicaid rates.

The biggest wild card to the operators is the impact of actuarially determined professional liability expense at the nursing home. This continues to be an area that neither we, nor Kindred can predict with arithmetic or scientific certainty. Kindred's exit from the Florida skilled nursing market, if and when it occurs, will help a great deal. But the real solution lies in Federal [Inaudible] reforms, which would mitigate professional liability expense as a source of volatility and uncertainty in the provider's results.

So the bottom-line for Ventas is that the nursing home business is here to stay. It's a growing business that has significant barriers to entrants. We believe that our country will continue to need and, in fact, will increase it's utilization of our facilities as the population ages. However, it will continue to be a thin margin business with noticeable volatility in operator earnings. So, we believe that in order to succeed, Ventas must have a good understanding of a sustainable cash flow at our asset, we have to maintain a significant cushion between operator cash flow and our brand, we favor highly structured pool Master Leases that represents the senior most obligation in the operator's capital structure, and obviously favor tenant operators who are capable of managing in a changing and frequently challenging environment. Those were our areas of focus during the Kindred restructuring and they remain the most important criteria as we ramp up our acquisition efforts.

And now on the acquisition front, Ray Lewis and his team have been sourcing a variety of potential acquisitions that need our investment criteria, and provide a good risk return equation for our shareholders. They have been meeting with operators at healthcare and senior housing assets in different sub-sectors of the market who are trying to grow their businesses. And they are rapidly building Ventas's pipeline. Right now, we are evaluating a number of potential investments and we expect to make progress this year on implementing our strategic plan for growth and diversification. So in sum, during 2003, we will make every effort to continue creating long-term shareholder value by protecting our existing asset, by increasing our cash flow and earnings, by maintaining financial strength and flexibility, and by making intelligent decisions about capital allocation and new investments. We really appreciate your attention and would like to open the call for questions.

Thank you Ms. Cafaro. Today's question-and-answer session will be conducted electronically. If you would like to ask a question, please press the "star" key followed by the digit "1" on your touchtone telephone. We will proceed in the order that you signal. If you are using a speakerphone, please make sure your mute function is turned off to allow your signals to reach our equipment. Once gain, if you would like to ask a question at this time, please press "star" "1" now. We will take our first question from Charles Lynch with CIBC World Market. Please go ahead.

Thanks. Good morning.

Hi Charlie.

Two questions. One, you have discussed and we can see in public filings, some of the credit trends around Kindred. I was wondering, although, it's a more recent transaction, if you could talk a little bit about Trans Health and what you are seeing in their operating trends in the couple of months you have been working with them?

Absolutely. We have preliminary information from the portfolio that we did [Inaudible] lease pack on with Trans Healthcare. And we are pleased to see, frankly, that the acquisition is performing in excess of our underwritten numbers. And we do expect Tony Misitano and his group to maximize the performance at this portfolio.

Great. And then second, just I mean for Debby and I don't know if Ray is in the room, but just to add a little bit of color to your thoughts on the acquisition environment. Can you talk a little bit about the various provider sectors you are having talks with, and in two sentences, I am curious about what your proclivity is toward further nursing home investments given the credit trends around there? And second of all, what's proclivity of other operators in the hospital surgery center, other arenas to you as refinancing when they may have, you know, modestly more -- modestly greater access to other forms of capital?

Okay Charlie. Ray is here with me and I am going to ask him to field that question.

Sure. Charlie, we are targeting skill nursing, assisted living, independent living, and hospitals right now. In the marketplace, skill nursing and hospital assets are trading most actively and these operators are looking to recycle equity on their real property to grow their operating platforms. In addition, we are anticipating an increase in assisted living opportunities in 2003, as equity remains scares in that space. On the skilled nursing front, we think there are a number of good opportunities there. The key, as Debby has mentioned previously in her comments, is to focus on coverage and make sure that we are underwriting them with adequate ranked cushions. Thank you.

That's great, thanks a lot.

You are welcome.

We will take out next question from Doug Simpson with Merrill Lynch. Please go ahead.

Good morning everyone. Maybe just following on the Charlie's question, on the AL side, could you just give us a little color in terms of what you are seeing in terms of availability and pricing on a per bed basis, and I know the range is wide, but I am just trying to get a sense for where seller expectations are today versus a year ago? I guess specifically on the AL assets?

Right, I think on the assisted living side, you know, CAP rates are ranging between 10.5 and 12% for stabilized properties. Un-stabilized properties or pre-stabilized properties are trading on a per bed basis, and that varies pretty widely between 45,000 per bed for smaller properties in rural locations to as high as $100,000 per bed for larger high-end properties in infield suburban locations.

Okay. On, I guess, on the stuff [Inaudible] state wise, are you seeing stuff above the $100,000 a bed for those types of assets?

Well clearly if the Sunrise Marriott transaction is any example of where values are trading on, you know, those types of properties can trade upwards of $150,000 a unit. But those are the exception rather than the rule.

Okay and then may be just one technical question. I was just wondering on the balance sheet, you had the $37m of the securities that are not yet settled at the end of the year, and just wondering week later once that it's settled, what was the offset to that item?

Well [we haven't] withdrawn the line to pay the liabilities.

Okay and then where would that leave your availability?

Well we have almost a $160m of availability under the line right now.

The number we gave you before was the current number as opposed to the December 31 number.

The availability now almost a $160m.

All right great thank you.

Great.

We'll take out next question from Jerry Doctrow with Legg Mason. Please go ahead.

Hello.

Good morning Jerry.

Just as a follow up on that, you know $160m line, what was your then debt outstanding after you had made these payments?

We have about $741m in total debt outstanding right now.

Okay, and on the coverage, I just want to make sure that I had heard right, Debby, when you had -- you dropped from 18 to estimate, it was dropping to 16. That was a management fee that had already been taken off. Was it pre or post management fees?

The 16 theory [bakes] in three things. Management fees are already deducted, the professional liability expense is $10m a quarter is layered in, and the cliff at $30 a day is added.

Okay.

So it is 16 after all those deducts if you will, which is still well above market and frankly, Jerry, very good.

I know it's great. Thanks. Do you have any specific sort of dollar goals on acquisitions for this year? You know, I am just trying to a sense of the level that we might expect in terms of diversification.

We don't want to give your model for you, Jerry. But I would say that we are working very hard to implement this diversification plan, and issue really is that we would expect acquisitions to be on a larger side as we do them, and so quite unpredictable, and lumpy if you will. And we haven't -- we don't really know what the actual volume for 2003 will turn out to be. It's probably not unrealistic to model something north of $100m for the year.

Okay and then the tricky part is the timing.

Yes, the timing is tricky.

Okay. And yields you are looking for would we expect like THI or something a little bit more modest than that? I mean, do you have a target in minimum yield or whatever that you are looking for?

Well, it really depends on the assets as well as the credit quality of the operator, the type of assets etc. We would expect -- and it also depends obviously on how competitive the particular transaction may be. So yields really will be anywhere, sort of, it may be in the 10.5 range.

Okay. Do we -- have you had any more or have you done any more work on [LTAC PPS], which is still sort of, I guess looming out there for Kindred, they an actually converted over rights, let me source this correctly.

On [LTAC PPS] I would say that really that is a specific question that would be best handled by Kindred. We haven't changed our view [LTAC PPS] as everyone knows Kindred is going on [LTAC PPS] in September of '03 on a hospital-by-hospital basis and that is supposed to be budget neutral.

And last thing that I have been asking other folks too is just M&A environment, I mean you are seeing valuations -- I think taking some more of a beating I think in the space, is that something that -- is that all on your radar screen looking at that other [Inaudible] out there?

That's a great question Gary. We have always thought that consolidation and M&A conduction could be a very effective way for our shareholders to achieve diversification and growth. And as part of our strategic plan I mean we are always considering potential difference strategic combination.

Okay, great, thank you.

You are welcome.

Once again if you would like to ask a question at this time please press "star”, "1" on your touchtone telephone, and we will go next to Tony Howard (ph) with Hilliard Lyons please go ahead.

Good morning, congratulation on good quarter and we also appreciate the dividend increase.

Thank you Tony.

Couple of clarifications on -- as far as the Medicare cuts, is this going to require any market-to-market the value of any of the assets? And similar kind of question on the Medicaid situation as far as date and going towards [Bush’s] proposal, would that require maybe you get an out of certain states and what you have to -- that might decrease the value of your investments in those states?

Okay, as I understand that those are those questions about whether we could potentially incur impairment in our assets --

Right.

Because of Medicare of Medicaid cuts. The answer is that such impairment is exceedingly unlikely for a variety of reasons, most significantly because our coverage’s would continue to be at or above market, as I have discussed that is Kindred's EBITDAR-to-rent coverage’s. You would imagine that Kindred or another tenant would be likely to continue paying the contract rent and therefore, as a result we would -- those assets would continue to be worth at least what be have among the books for and also I mean you look at these are long-term assets and so you take a long-term view of their valuation. And so we would not expect any impairment particularly in the pooled masterly structure that we have and coupled with the good cash flow coverage’s that we have at the assets.

Okay good. Second question, a clarification I think it's for you. I think you had mentioned that mortgage income forecasted maybe it's around the 3m level for 2003, obviously that is a little bit down from where the fourth quarter was on an annualized basis. Where you do come with the 3m? Well at present some more question as far as the -- where do you forecast your average interest rate and then do you plan on doing any variable debt to fix in 2003?

Okay, on the mortgage income line basically we are holding $70m mezzanine loan, which is a high yielding piece of paper, Tony, and that would equate to about 3m a quarter. It is down from the 3m for the year. It is down from the 1m that we recorded for the fourth quarter because we did dispose off the lower yielding $50m THI investment in the quarter for a small gain.

Okay as far as the debt outstanding as far as your -- fixed any of the variable debt and --

Well our --

What are you using as far as the average interest rate for debt?

Well, all of our variable rate debt is currently synthetically fixed through derivatives -- and the LIBOR rate under those derivatives is currently at under 6% and will step down to 5.385% effective by July 1 and to resolve, we would just take that rate and apply our liable of margin under our revolver which is about - is going to about 250 over to determine a borrowing rate on the line.

Okay. Final question, as far as Kindred stock were versus the remaining that you own, you had mentioned in the past to me and to others that you wouldn't expect yourself that Kindred stock is when it was in the $30-40 range and what the stock is [Inaudible] what you had plan to do that investment?

Well, we have monetized almost 600,000 shares of Kindred equity in over the $40 per share level. We had never really stated a level at which we would be sellers of the equity. We do intend in 2003 to monetize our remaining shares -- although we are not in the market trading Kindred equity at this time. So we will evaluate our holdings regularly and again expect to monetize that state and convert what is a non-income-producing asset into an income-producing asset in 2003.

Okay, thank you and again congratulations.

Thank you, Tony.

We will take our next question from Bernard Selz (ph) with ING Investment Management. Please go ahead.

Hi, Debra, you may have mentioned this, but on the liabilities you have two items for settlement and SEC, I think cause, and when do you think that just paid out?

Well, I think we did mention that. If you are referring to what's caused the security settlement on the balance sheet?

Yes.

That is really just due to broker. We purchased some of our bonds back last week of December and we settled that trade in the first week of January.

Oh, okay.

And all that -- that's not a litigation or SEC issue, it's just due to broker.

And the US settlement?

The government settled the deal date settlement to $44m and we're paying that up quarterly at 6% interest.

But over what period do you pay the principal?

It's -- it will be done in '06 and we pay $60m a year, principal and interest on that.

Okay, thank you.

You are welcome.

We will go next to Ray Garson (ph) with UBS Warburg. Please go ahead.

Thanks. Debra, can I ask you to repeat -- you gave a little Medicaid analysis there was a 1% rate cut and I missed the numbers, could you just quickly review that again?

No I am sorry. Yes, I will be happy to that. If there -- in any event that our whole nursing home portfolio, which is in 32 states -- if the Medicaid rate to Kindred and THI dropped by 1%, there would be a $6.6m diminution in revenue or EBITDAR at those asset.

Great thank you. And then two other quick questions, I mean you talked about THI performing better than your underwritten case if you - are you going to provide the coverage ratios trailing either rank coverage or interest coverage or preferably both?

Not at this time, we do not have THI or Kindred final fourth quarter numbers and we would expect as we report quarterly to give sort of portfolios statistics for our whole portfolio.

Okay, fair enough. And then -- you mean obviously you have done a great job, de-leveraging the balance sheet in '02. I mean looking forward do you anticipate additional debt reduction, any more bond repurchases, as obviously there is still some free cash flow, at least in my [model] at this level of dividend?

I think we've paid our family bondholders enough for the time being in principal anyway. So we are not really planning on buying back any of those bonds this year for the time being, but we do us -- as we have pre-tax flow, we will either [plough] that pre-tax flow into new acquisition or pay down debt with it. In addition, we have some other assets potentially this year for me to tax the refund moneys and/or the Kindred equity state that would give us additional money to allocate either to investments or debt pay down.

That's great, once and you kind of touch them, the next one was just the tax situation, any update with respect to timing is there -- in terms of whether add on the order?

Okay, Yes I mean the audit is going well as you know, this was a routine audit of the 1997-98 period and that the field audit was completed after about 2 years and [IRS] after all that work is determined that we are going to be able to keep the $26m refund we got in '99 and then in addition $1.2m on top of that. So to get that money Ray we would-it would all be in this joint taxes where we have with Kindred the one [inaudible] is that the results of the [IRS] field audit are subject to a final level of review with the committee on joint taxation in Washington, and we hope to have a final answer in the next month or two. And we believe that it will be a positive answer. So if the committee approves the field audit then Kindred and Ventas would split those funds.

Thanks and congrats again.

Thank you.

Once again that's "star" "1" for questions and we will take our next question, which is a follow-up from Charles Lynch with CIBC World Markets. Please go ahead.

Hi. Just one more specific question on the bonds that you repurchased, which -- which issue was that?

Say that again.

In the bonds that you repurchased you mentioned that at the end of the quarter was $37m referenced on the balance sheet. Which issue does that relate to? Which bond issue does that relate to?

Well it is principally related to the 10 years and then there was a small amount that related to the 7 years.

Great, that's it. Thanks.

Okay. Is that it.

And Ms. Cafaro, we have no further questions. I will the turn the call back over to you for closing comments.

Okay Cynthia. Well once again we appreciate all of your attention and your support and we look forward to seeing you and speaking with all of you again soon. Thank you very much for joining.

This does conclude the Ventas, Incorporated conference call. We do thank you for your participation and you may disconnect at this time.