Ventas' (VTR) Q2 FFO & Revenues Trump Estimates, NOI Up

Ventas, Inc. VTR reported second-quarter 2018 normalized funds from operations (FFO) of $1.08 cents, beating the Zacks Consensus Estimate of $1.02. The figure came in higher than the year-ago quarter tally of $1.06.

Results reflected robust performance of its high quality portfolio.

Ventas posted revenues of $942.3 million, which beat the Zacks Consensus Estimate of $918.7 million. Further, the revenue figure compares favorably with the year-ago number of $895.5 million.

For the second quarter, same-store cash net operating income (NOI) growth for the total portfolio (1,057 assets) inched up 1.3% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 4.9%, seniors-housing operating portfolio registered decline of 3.1%, while the medical office building portfolio rose 1.4%.

Quarter in Detail

During the reported quarter, Ventas invested approximately $300 million for its development and redevelopment projects. It also made advancement in its university-based life-science development business. Notably, it unveiled a development worth $47 million in the St. Louis life-science campus, which is 77% pre-leased. Furthermore, the company’s developments at University of Pennsylvania and Brown University are more than 50% and 80% preleased, respectively.

Liquidity

Ventas exited second-quarter 2018 with cash and cash equivalents of $93.6 million, up from $92.5 million as of the prior-quarter end.

Updated 2018 Outlook

Ventas updated its 2018 normalized FFO per share outlook to $4.02-$4.07 from the previous projection of $3.99-$4.07.

The company updated same-store cash net operating income growth to 0.75-1.5% in 2018 from 0.5-1.5% issued earlier.

Our Take

Ventas is poised to grow on the back of its diversified portfolio and strategic acquisitions. Rising healthcare spending and aging population augur well for long-term growth.

Nonetheless, an elevated supply of seniors’ housing assets in certain markets is likely to impede rent and occupancy growth in the near term. Additionally, the company is exposed to concentration risks since majority of its revenues are generated from a few tenants.

Ventas, Inc. Price, Consensus and EPS Surprise
 

Ventas, Inc. Price, Consensus and EPS Surprise | Ventas, Inc. Quote

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

We now look forward to the earnings releases of other REITs like Vornado Realty Trust VNO, Boston Properties BXP and Extra Space Storage EXR. While Vornado will report Q2 figures on Jul 30, the other two companies are scheduled to release their quarterly numbers on Jul 31.

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.

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