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REITs' Q3 Earnings Lined Up for Nov 6: VTR, DOC and CLNY

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We are in the final leg of the current reporting cycle and the real estate investment trust (REIT) space is still buzzing with activity, with a number of earnings releases lined up for Nov 6. Among others, Ventas Inc. (VTR - Free Report) , Physicians Realty Trust (DOC - Free Report) and Colony Capital, Inc. (CLNY - Free Report) will release their quarterly numbers on Friday.

REITs invest in all types of properties, from residential, industrial, offices, malls to hospitals, hotels, and data centers and several others. And underlying asset categories as well as location of properties play a crucial role in determining REITs’ performance.

In the present situation, understanding REITs’ asset fundamentals of REITs has become more important, with macroeconomic woes, social-distancing norms and individual states adopting various policies for easing the pandemic-related restrictions. This is because the economic disruption and its impact have been widely varied across different property types.

Particularly, social distancing or rather physical-distancing measures to curb the spread of coronavirus have emerged as one of the important factors governing economic activities around the globe. This has, in fact, resulted in a deviation between different sectors of the economy with one side, involving low face-to-face contact, showing resilience and even gaining, and the other side, with higher risks for infections, significantly bearing the brunt. Similarly, with REITs offering the real estate structure for most economic activities, be it real or virtual, there are pockets of strengths and weaknesses too.

Let’s analyze the factors that are likely to have played key roles in the above-mentioned REITs’ quarterly performance.

Ventas, Inc. is scheduled to release third-quarter results before the bell. Our proven model predicts a positive surprise in terms of funds from operations (FFO) per share for the company this season.

The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a FFO beat. Ventas has the right combination of these two key ingredients with an Earnings ESP of +2.03% and Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Over the preceding four quarters, Ventas outpaced estimates on all occasions, the average beat being 5.05%.

Ventas is likely to reap benefits from its investments in medical office buildings, life-science assets as well as research and innovation (R&I) development business. However, the company’s seniors housing operating portfolio and triple-net lease segment have not been immune to the industry setbacks. Occupancy at its owned seniors housing operating portfolio assets witnessed a continued decline throughout the third quarter.

This is likely to have eroded total revenues for the quarter. The Zacks Consensus Estimate for quarterly revenues is currently pegged at $919.3 million, suggesting a 6.5% decrease from the prior-year period.

Additionally, the company is likely to have seen higher expenses in its seniors housing segment due to higher labor costs and procurement costs related to protective-equipment supplies. The Zacks Consensus Estimate for quarterly FFO per share of 72 cents also indicates a 25% year-over-year decline. (Read more: Low Occupancy, Revenues to Affect Ventas' Q3 Earnings)

Ventas, Inc. Price and EPS Surprise

Ventas, Inc. Price and EPS Surprise

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

You can see the complete list of today’s Zacks #1 Rank stocks here.

Physicians Realty Trust is set to report quarterly numbers before market open. Our proven model does not conclusively predict a positive surprise in terms of FFO per share for this healthcare REIT in the quarter to be reported, as its currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%.

Over the past four quarters, Physicians Realty Trust beat the Zacks Consensus Estimate on two occasions for as many in-line deliveries, the average beat being 1.93%.

The Zacks Consensus Estimate for quarterly revenues is currently pinned at $108.9 million, suggesting a 1.24% increase from the prior-year quarter. However, the Zacks Consensus Estimate of 26 cents for quarterly FFO per share calls for a decline of 3.7%, year on year.

Physicians Realty Trust Price and EPS Surprise

Physicians Realty Trust Price and EPS Surprise

Physicians Realty Trust price-eps-surprise | Physicians Realty Trust Quote

Colony Capital will announce earnings numbers before the opening bell. Our proven model does not conclusively predict a beat in terms of FFO per share for Colony Capital this reporting cycle. The REIT carries a Zacks Rank #4 and has an Earnings ESP of 0.00%, at present.

Over the trailing four quarters, it surpassed the consensus mark on one occasion and missed in the other three, the average negative surprise being 50%.

The Zacks Consensus Estimate for the to-be-reported quarter’s revenues is currently pinned at $23.9 million, suggesting a 40.6% plunge from the prior-year period. The Zacks Consensus Estimate of a negative 1 cent for the quarterly FFO per share calls for a decline from the year-ago quarter’s 19 cents.

COLONY CAPITAL, INC. Price and EPS Surprise

COLONY CAPITAL, INC. Price and EPS Surprise

COLONY CAPITAL, INC. price-eps-surprise | COLONY CAPITAL, INC. Quote

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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