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Ventas (VTR) Q1 FFO & Revenues Surpass Estimates, NOI Declines

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Ventas, Inc. (VTR - Free Report) reported first-quarter 2020 normalized funds from operations (FFO) per share of 97 cents, beating the Zacks Consensus Estimate of 87 cents. However, the figure was 2% lower than the year-ago quarter’s 99 cents.

The company generated revenues of $1.01 billion in the first quarter, which surpassed the Zacks Consensus Estimate of $967.5 million. The top line also compared favorably with the year-ago number of $942.9 million.

In a separate announcement issued today, Ventas completed a transaction with the affiliates of Holiday Retirement, terminating its lease with the latter relating to Ventas’s 26 independent living assets. Ventas also entered a new, terminable management agreement with Holiday Management Company. Ventas received $100 million, consisting of cash and secured notes for the transaction. This enables the company to retain upside at the properties and preserve operational flexibility.

Quarter in Detail

For the first quarter, same-store cash net operating income (NOI) growth for the total property portfolio (1,094 assets) edged down 0.6% year over year. Segment wise, though same-store cash NOI for the triple-net (NNN) leased portfolio grew 3.9% and the office portfolio rose 5.8%, the senior housing operating properties (SHOP) portfolio reported a decline of 10.4% year over year.

Ventas completed the acquisition of two fully-occupied life science buildings for $80 million in February. The company also generated $109 million in proceeds from loan repayments and asset sales in the quarter.


Ventas exited first-quarter 2020 with cash and cash equivalents of $2.8 billion, up from the $106.4 million recorded as of the prior quarter end. Further, as of March 31, 2020, its net debt to EBITDA ratio sequentially improved by 40 basis points to 5.7.

To strengthen its balance sheet position amid the virus outbreak, in March 2020, the company drew down $2.75 billion under its existing $3 billion revolving credit facility. Subsequent to the March-quarter end, the company raised $0.5 billion through a senior note offering.

As a result of the efforts, Ventas had $3.2 billion in cash and cash equivalents on hand as of May 6, with no commercial paper outstanding.


In light of the coronavirus outbreak, the company has provided updates for April.

Its SHOP operators restricted access to communities in March. Consequently, April move-ins were around 25% of usual levels. Further, since mid-March, “spot” SHOP occupancy declined at a rate of around 70 basis points (bps) per week. Also, as of May 1, spot occupancy was projected at 80.7%, indicating a 330-bps decline since April.

April cash rent receipts from the company’s NNN senior housing tents were reduced by nearly $3 million as tenants were offered a 25% rent deferral program.

Benefitting from government financial support, NNN healthcare tenants paid out substantially all rent due in April. Lastly, in April, the company received 96% of expected rent for the month in its office segment.

Ventas Inc Price, Consensus and EPS Surprise

Ventas currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

SL Green Realty Corp. (SLG - Free Report) reported first-quarter 2020 FFO per share of $2.08, surpassing the Zacks Consensus Estimate of $1.70. The figure also compared favorably with the year-ago quarter’s $1.68.

Equinix Inc.’s (EQIX - Free Report) first-quarter 2020 AFFO per share was $6.21, beating the Zacks Consensus Estimate of $5.98. The figure also improved 13% from the year-ago quarter’s $5.95.

Vornado Realty Trust (VNO - Free Report) reported first-quarter 2020 FFO plus assumed conversions as adjusted of 72 cents per share, missing the Zacks Consensus Estimate of 76 cents. The reported figure declined 8.9% year over year.

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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