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Ventas' (VTR) Q3 FFO Beat on SHOP NOI Growth, '23 View Revised

Ventas, Inc. VTR reported third-quarter 2023 normalized funds from operations (FFO) per share of 75 cents, outpacing the Zacks Consensus Estimate by a penny. However, the reported figure decreased 1.3% from the prior-year quarter’s tally.

Results reflect better-than-anticipated revenues. Also, Ventas’ same-store cash net operating income (NOI) increased year over year on strong performance across the portfolio. The company revised its outlook for 2023.

VTR clocked in revenues of $1.15 billion in the third quarter, surpassing the Zacks Consensus Estimate of $1.12 billion. Also, the figure increased marginally on a year-over-year basis.

Per Debra A. Cafaro, chairman and CEO of Ventas, “Ventas delivered a strong third quarter, reflecting attractive property growth across all business segments. Consistent with our expectations, our senior housing operating portfolio (“SHOP”) led the way, with outstanding occupancy increases from the beginning to the end of the third quarter, across all geographies and product types, including independent living. Move-ins were approximately 120% of 2019 levels, underscoring powerful demand trends and the benefits our communities offer to residents and their families. The senior housing multiyear growth and recovery cycle is in full swing."

Quarter in Detail

In the reported quarter, same-store cash NOI for the total property portfolio (1,103 assets) increased 7.9% to $417.5 million from the prior-year quarter.

Segment-wise, the same-store cash NOI for the SHOP portfolio (465 assets) climbed 18.2% year over year to $159.2 million, mainly led by the U.S. communities. Revenues per occupied room (RevPOR) growth of 6.2% and moderate operating expenses growth resulted in margin expansion of 230 basis points (bps), aiding the rise in the segment’s same-store cash NOI.

The same-store average occupancy expanded 110 bps year over year to 83.6% in the third quarter for the SHOP portfolio.

For the outpatient medical and research portfolio (344 assets), same-store cash NOI improved 3.1% year over year to $129.3 million. The uptick was backed by continued strong performance in the outpatient medical portfolio that witnessed same-store cash NOI growth of more than 3% in eight of the past nine quarters.

The triple-net leased portfolio’s (294 assets) same-store cash NOI rose 1.7% year over year to $129 million.

Balance Sheet Position

Ventas exited third-quarter 2023 with cash and cash equivalents of $433.9 million, up from $138.6 million as of Jun 30, 2023.

Moreover, it ended the quarter with $3.1 billion of liquidity and a net debt to further adjusted EBITDA ratio of 7.0.

2023 Outlook Revised

Ventas revised its guidance for 2023.

It now expects current-year normalized FFO per share in the range of $2.96-$2.99, revised from $2.92-$3.02 stated earlier. The Zacks Consensus Estimate for the same is currently pegged at $2.99, which lies within the guided range.

The total same-store cash NOI growth is now estimated between 7.5% and 8.5% from 6.5-9.5% projected earlier. The SHOP segment's same-store cash NOI is projected between 17% and 19% from the prior guided range of 15% and 21%.

The Outpatient Medical and Research Portfolio segment's same-store cash NOI was revised to the range of 2.4-2.8% from 2.25-3%, while the estimation for triple-net leased same-store cash NOI was changed to 2.3-2.7% from 2-3%.

Ventas currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ventas, Inc. Price, Consensus and EPS Surprise

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

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

Performance of Other REITs

Healthpeak Properties, Inc. PEAK reported third-quarter 2023 FFO as adjusted per share of 45 cents, beating the Zacks Consensus Estimate by a whisker. The reported figure rose 4.6% from the prior-year quarter.

Results reflect better-than-anticipated revenues. Moreover, growth in same-store portfolio cash (adjusted) net operating income was witnessed across the portfolio. PEAK raised its outlook for the current year.

Welltower Inc.’s WELL third-quarter 2023 normalized FFO per share of 92 cents surpassed the Zacks Consensus Estimate of 89 cents. The reported figure improved 9.5% from the prior-year quarter.

WELL’s results reflect better-than-anticipated revenues. The total same-store NOI increased year over year, driven by SSNOI growth in the seniors housing operating portfolio. The company also raised its guidance for 2023 normalized FFO per share.

Equinix Inc.’s EQIX third-quarter 2023 adjusted funds from operations (AFFO) per share of $8.19 surpassed the Zacks Consensus Estimate of $7.79. The figure improved nearly 6% from the prior-year quarter.

EQIX’s results reflect steady growth in colocation and inter-connection revenues as enterprises and service providers look to integrate artificial intelligence into their strategies and offerings. During the quarter, Equinix’s total interconnections reached 460,500, rising 1% sequentially and 4% year over year. The company also raised its AFFO per share guidance for 2023.

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

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