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Ventas (VTR) Beats Q2 FFO & Revenue Estimates, Raises View

Zacks Equity Research

Ventas, Inc. VTR reported second-quarter 2019 normalized funds from operations (FFO) of 97 cents, beating the Zacks Consensus Estimate of 96 cents. However, the figure comes in lower than the year-ago tally of $1.08.

The company witnessed higher rental income from its office and triple net leased portfolio. Additionally, growth in same-store cash net operating income (NOI) aided results. 

Ventas posted revenues of $950.7 million, which surpassed the Zacks Consensus Estimate of $936.6 million. The bottom line also compares favorably with the year-ago number of $942.3 million.

Quarter in Detail

For the second quarter, same-store cash NOI growth for the total property portfolio (1,104 assets) inched up 0.3% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 1.5%, the office portfolio rose 2.9%, while seniors-housing operating portfolio registered a decline of 2.9%.

During the quarter, Ventas announced a definitive deal to invest in a portfolio of 31 purpose-built seniors housing communities and four in-progress developments in the growing Quebec market. The transaction is valued at $1.8 billion. For this transaction, the company has entered into an 85%/15% equity partnership with Le Groupe Maurice (“LGM”).


Ventas exited second-quarter 2019 with cash and cash equivalents of around $81.9 million, down from the $82.5 million recorded as of the prior-quarter end.


Ventas raised its 2019 normalized FFO per share outlook to $3.80-3.86 from the $3.75-$3.85 provided earlier. The 2019 Nareit FFO is now projected at $3.90-$3.97, up from the prior estimate of $3.70-$3.82.

Our Take

In the April-June quarter, Ventas made strategic efforts to expand its university-based research and innovation, with a development pipeline of more than $1.5 billion in new investments. Decent NOI growth in the office portfolio, during the quarter, validates the robust demand for well-located and on-campus research space.

Nevertheless, given the softness in the seniors housing fundamentals, Ventas witnessed a decline in same-store cash NOI from its seniors-housing operating portfolio. We believe supply headwinds in the seniors housing market will continue to torment the company’s performance, in the near future as well.

Ventas, Inc. Price, Consensus and EPS Surprise

Ventas, Inc. Price, Consensus and EPS Surprise

Ventas, Inc. price-consensus-eps-surprise-chart | Ventas, Inc. Quote

Currently, Ventas carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Iron Mountain Incorporated IRM, Vornado Realty Trust VNO and Boston Properties BXP.

Vornado Realty Trust will release its quarterly figures on Jul 29, Boston Properties on Jul 30 and Iron Mountain is scheduled to report the same on Aug 1.

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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