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Ventas' (VTR) FFO Beats Estimates in Q1, SHOP Occupancy Rises

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Ventas, Inc. (VTR - Free Report) reported first-quarter 2022 normalized funds from operations (FFO) per share of 79 cents, beating the Zacks Consensus Estimate of 77 cents. Moreover, the figure climbed 9.7% year over year from 72 cents.

VTR generated revenues of $1.02 billion in the first quarter, increasing 11.8% year over year. However, it lagged the Zacks Consensus Estimate of $1.04 billion.

The quarterly results reflect improvement in occupancy and pricing power for the Senior Housing Operating Portfolio (SHOP) segment. Additionally, the triple-net leased and office portfolios witnessed growth in same-store net operating income (NOI) due to contractual escalators.

Quarter in Detail

In the first quarter, same-store cash NOI growth (excluding the HHS Grants) for the total property portfolio (984 assets) increased 5.8% to $371.4 million from the prior-year quarter.

Segment-wise, the same-store cash NOI (excluding the HHS Grants) for the SHOP portfolio (321 assets) increased 14.2% year over year to $113.9 million. This was attributable to continued robust demand, increased occupancy and pricing power, which outdid inflationary expense pressures and the continuing impacts of COVID-19 in the quarter.

In the first quarter, same-store revenues increased 10% from the prior-year quarter due to the positive trends in occupancy and revenue per occupied room (RevPOR). The same-store RevPOR improved 4.2% year over year. This was backed by a strong in-place resident rate and improving re-leasing spreads.

The SHOP portfolio’s same-store average occupancy expanded 420 basis points (bps) year over year to 83% in the first quarter of 2022.

The triple-net leased (NNN) portfolio’s (331 assets) same-store cash NOI (excluding the HHS Grants) inched up 0.6% year over year to $132.8 million. This was due to contractual escalators, partially offset by reduced payments from select senior housing tenants due to the continued pandemic impact.

For the office portfolio (332 assets), same-store cash NOI (excluding the HHS Grants) rose 4.6% year over year to $124.7 million. This was driven by contractual escalators, strong leasing, collection of holdover rent and continued recovery in parking revenues.

Portfolio Activity

In February 2022, the company acquired Mangrove Bay, a Class A senior housing community in Jupiter, FL market, for $107 million at an in-place yield of nearly 6%.

Balance-Sheet Position

Ventas exited first-quarter 2022 with cash and cash equivalents of $149.6 million, nearly unchanged sequentially.

The company’s net debt as of Mar 31, 2022, totaled $12.3 billion. For the same period, net debt to adjusted pro forma EBITDA was 6.9X, down from 7.2X as of Dec 31, 2021.

Outlook

Ventas projects second-quarter 2022 normalized FFO per share in the range of 69-73 cents. The Zacks Consensus Estimate for the same is pegged at 74 cents.

The total same-store cash NOI growth is expected between 0% and 3%. The SHOP segment same-store cash NOI is estimated between 2% and 10% based on expected growth in occupancy of 400 bps and improved rates.

The office segment same-store cash NOI is expected in the range 1.75% to 2.25% while the triple-net leased same-store cash NOI is projected between -3% and -1.5%.

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

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Performance of Other REITs

Healthpeak Properties, Inc. (PEAK - Free Report) reported first-quarter 2022 FFO as adjusted per share of 43 cents, marginally surpassing the Zacks Consensus Estimate of 42 cents. The reported figure was up 7.5% from the year-ago quarter’s 40 cents.

PEAK generated revenues of $498.4 million, outpacing the Zacks Consensus Estimate of $489 million. The figure was 9.5% higher than the prior-year quarter’s $455.3 million.

The performance was backed by solid revenue growth. Same-store portfolio cash (adjusted) NOI also witnessed growth due to overall improvement in all its segments, namely life-science, medical office and continuing care retirement communities (CCRC).

Host Hotels & Resorts, Inc. (HST - Free Report) came out with better-than-anticipated first-quarter 2022 results in terms of adjusted FFO per share and revenues, mainly driven by leisure travel with strong rates at resort properties. Additionally, urban markets witnessed improvements with group revenues increasing sequentially.

The hotel REIT reported an adjusted FFO per share of 39 cents, surpassing the Zacks Consensus Estimate of 26 cents. HST had reported adjusted FFO per share of 1 cent in the prior-year quarter.

HST generated total revenues of $1.07 billion, beating the Zacks Consensus Estimate of $948 million. The top line also improved significantly from the prior-year quarter’s $399 million.

Realty Income Corporation’s (O - Free Report) first-quarter 2022 adjusted FFO per share of 98 cents marginally surpassed the Zacks Consensus Estimate of 97 cents. The reported figure increased 14% from the prior-year quarter’s 86 cents.

Results reflect a better-than-expected improvement in revenues. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.

O’s total revenues in the reported quarter came in at $807.3 million, exceeding the Zacks Consensus Estimate of $761.2 million. The top line also jumped 82.5% year over year.

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.