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Ventas' (VTR) Q3 FFO Surpasses Estimates, Revenues Climb Y/Y

Zacks Equity Research

Ventas, Inc. VTR reported third-quarter 2019 normalized funds from operations (FFO) of 96 cents, beating the Zacks Consensus Estimate of 94 cents. However, the figure comes in lower than the year-ago tally of 99 cents.

The company witnessed higher rental income from its office and triple-net leased portfolio. Moreover, higher revenues from resident fees and services boosted top-line growth.

In fact, Ventas posted revenues of around $983.2 million, which surpassed the Zacks Consensus Estimate of $947.2 million. The top line also compares favorably with the year-ago number of $936.5 million.

Quarter in Detail

For the third quarter, same-store cash net operating income (NOI) growth for the total property portfolio (1,107 assets) inched up 0.1% year over year. Segment wise, same-store cash NOI for the triple-net leased portfolio grew 2.1%, the office portfolio rose 3.7%, while senior housing operating properties (SHOP) portfolio registered a decline of 5%, year over year.

During the quarter, Ventas completed its investment in a portfolio of 29 Class-A apartment-like senior housing assets and five in-progress developments in the thriving Quebec senior-housing market through an equity partnership with Le Groupe Maurice.

Liquidity

Ventas exited third-quarter 2019 with cash and cash equivalents of around $148.1 million, up from around $82 million recorded as of the prior-quarter end.

Outlook

Ventas revised its 2019 normalized FFO per share outlook to $3.81-$3.85, from the $3.80-3.86 provided earlier. The 2019 Nareit FFO is now projected at $3.82-$3.87, as compared with the prior estimate of $3.90-$3.97. The Zacks Consensus Estimate of the same is pegged at $3.84.

Conclusion

Ventas’ high-quality and accretive investments during the quarter look encouraging. Further, prudent capital-market transactions executed during the quarter strengthened its balance sheet.

However, the choppy senior housing real estate environment impacted the company’s SHOP portfolio during the quarter. Management anticipates this trend to continue for the remaining of 2019 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 Alexandria Real Estate Equities ARE, Vornado Realty Trust VNO and Welltower Inc. WELL. All three companies are scheduled to release their quarterly numbers on Oct 28.

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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