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Ventas Completes Investment in Quebec Portfolio With LGM

Zacks Equity Research

Ventas, Inc. VTR recently completed its investment in a portfolio of Class-A apartment-like senior housing assets in the thriving Quebec senior-housing market through an equity partnership with Le Groupe Maurice (“LGM”). LGM will continue to manage the portfolio under its brand. The transaction will help strengthen Ventas’ foothold in Canada. 

The portfolio is valued at $1.8 billion and consists of a highly-occupied stabilized portfolio, communities in lease-up as well as assets under development. Specifically, Ventas has acquired 87% of 34 communities rather than acquiring 85% of 35 communities, as previously announced this June, due to tax and legal structuring considerations. (Read more: Ventas to Buy Seniors Housing Portfolio Worth $1.8B).

The investment is a strategic fit as it will help Ventas diversify its assets, business model and operator base. Additionally, Ventas has the rights to fund and own all additional developments through an exclusive pipeline agreement with LGM. This will create a new platform for growth together with LGM.

The transaction will enable the companies to cater to the growing demand of an outstanding lifestyle for seniors. Additionally, the high-quality portfolio is highly occupied, offers stable cash flows, and built-in growth from existing and new development projects.

On completion of the investment, pro-forma net operating income (NOI) from Ventas’ Canadian senior housing operating property (“SHOP”) portfolio is expected to increase 10 percentage points to 22% of its total annualized SHOP NOI. Further, the company’s Canadian assets will account for 8% of its NOI, while LGM will represent 4% NOI.

The deal is expected to be neutral to 2019 normalized funds from operations (FFO) per share and accretive to 2020 normalized FFO by around 3 cents per share.

Currently, Ventas carries a Zacks Rank #3 (Hold). In the year-to-date period, shares of the company have rallied 27.9%, outperforming the industry’s growth of 26.1%.


 

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OUTFRONT Media Inc. OUT currently sports a Zacks Rank of 1 (Strong Buy). The Zacks Consensus Estimate for 2019 FFO per share has been revised marginally upward to $2.34 over the past month. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crown Castle International Corp. CCI holds a Zacks Rank of 2 (Buy), at present. The Zacks Consensus Estimate for the current-year FFO per share remained unchanged at $5.92 in the past month.

Extra Space Storage Inc EXR is another Zacks #2 Ranked company, currently. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised marginally upward to $4.86 in a month’s time.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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