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Ventas (VTR) Q4 FFO Beats Estimates, Revenues Improve Y/Y

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Ventas, Inc. VTR reported fourth-quarter 2019 normalized funds from operations (FFO) per share of 93 cents, beating the Zacks Consensus Estimate of 92 cents. However, the figure comes in lower than the year-ago tally of 96 cents.

Results reflect solid performance of its Medical Office, Healthcare and Research & Innovation (R&I) portfolios, though the Senior Housing business faced a choppy market environment.

The company generated revenues of around $996 million in the fourth quarter, which surpassed the Zacks Consensus Estimate of $979.5 million. The top line also compares favorably with the year-ago number of $923.3 million.

For full-year 2019, the company reported normalized FFO per share of $3.85, down 5.4% from the prior year’s $4.07. Revenues for the full year also climbed 3.4% year on year to $3.87 billion.

Quarter in Detail

For the fourth quarter, same-store cash net operating income (NOI) growth for the total property portfolio (1,102 assets) edged down 0.6% year over year. Segment wise, though same-store cash NOI for the triple-net leased portfolio grew 2.1% and the office portfolio rose 3.8%, the senior housing operating properties (SHOP) portfolio reported a decline of 7.5%, year on year.

Notably, the same-store SHOP NOI performance in the fourth quarter reflects the cumulative impact of new competition that affected SHOP occupancy and rate. Nevertheless, same-store growth of the triple-net leased portfolio was driven by in-place lease escalations, specifically in its growing triple-net leased healthcare portfolio of acute and post-acute assets. Moreover, solid growth of the office portfolio was fueled by Ventas’ university-based R&I portfolio and healthy growth in its Medical Office Building (MOB) portfolio.

Liquidity

Ventas exited fourth-quarter 2019 with cash and cash equivalents of $106.4 million, up from the $148.1 million recorded as of the prior-quarter end. In addition, the company’s available liquidity from cash on hand and existing credit facilities aggregated $2.6 billion, net of $567 million of outstanding commercial paper at the end of 2019.

Outlook

Ventas expects its 2020 normalized FFO per share of $3.56-$3.69. The 2020 Nareit FFO per share is projected at $3.79-$3.94. The Zacks Consensus Estimate for the same is pinned at $3.72.

The full-year projection of the company is backed by same-store cash NOI growth assumption of a 1.5-2.5% year-over-year increase for the tripple-net leased portfolio and a 3-4% jump for the office portfolio. However, the company expects a 4-9% decline for the SHOP portfolio, reflecting lower occupancy start point in January 2020 as well as the impact of cumulative supply.

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

We, now, look forward to the earnings releases of other REITs like Public Storage PSA, American Tower Corporation AMT and Mack-Cali Realty Corporation CLI, all of which are slated to report their quarterly numbers next week.

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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