Ventas (VTR) Beats Q2 FFO & Revenue Estimates, Raises View
Zacks Investment Research | Jul 25, 2019 09:21PM ET
Ventas, Inc. (NYSE: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”).
Liquidity
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.
Outlook
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
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