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Ventas' (VTR) Q1 FFO & Revenues Beat Estimates on NOI Growth

Zacks Equity Research

Ventas, Inc. VTR reported first-quarter 2019 normalized funds from operations (FFO) of 99 cents, beating the Zacks Consensus Estimate of 96 cents. However, the figure comes in lower than the year-ago tally of $1.05.

The company witnessed higher rental income from its office and triple net leased portfolio.

Ventas posted revenues of $942.9 million, which surpassed the Zacks Consensus Estimate of $919.2 million. The revenue figure, however, compares unfavorably with the year-ago number of $943.7 million.

Quarter in Detail

For the first quarter, same-store cash net operating income (NOI) growth for the total property portfolio (1,139 assets) inched up 1.1% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 2.2%, the office portfolio rose 3.8%, while seniors-housing operating portfolio registered a decline of 2.2%.

During the quarter, Ventas opened Sutter Van Ness medical office building (MOB), its trophy MOB development in Downtown San Francisco. The property, spanning 239,000 square feet of space is anchored by Sutter Health, is currently 83% leased.

Liquidity

Ventas exited first-quarter 2019 with cash and cash equivalents of around $82.5 million, up from $72.3 million as of the prior-quarter end.

Outlook

Ventas reiterated its 2019 normalized FFO per share outlook of $3.75-$3.85. The 2019 Nareit FFO is expected in the range of $3.70-$3.82.

Our Take

In first-quarter 2019, 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. With this, the company’s university-based R&I investments has increased two-fold to pro forma investment of more than $3.5 billion as compared with its initial investment in 2016. Such strategic investments will likely drive the company’s long-term performance.

Nonetheless, deteriorating fundamentals of the seniors-housing real estate market continue to hamper its bottom-line performance. Going forward as well, elevated supply of seniors housing assets in certain markets is likely to impede rent growth.

Ventas, Inc. Price, Consensus and EPS Surprise
 


Ventas, Inc. Price, Consensus and EPS Surprise | Ventas, Inc. Quote

Currently, Ventas carries a Zacks Rank #3 (Hold). 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 Outfront Media OUT, Vornado Realty Trust VNO and UDR Inc. UDR.

Vornado Realty Trust will release its quarterly figures on Apr 29, UDR on Apr 30 and Outfront Media is scheduled to report on May 7.

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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