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Ventas' (VTR) Q1 FFO and Revenues Beat, SHOP NOI Increases

Ventas, Inc. VTR reported first-quarter 2023 normalized funds from operations (FFO) per share of 74 cents, outpacing the Zacks Consensus Estimate of 70 cents and our estimate of 69 cents. The bottom line was, however, lower than the prior-year quarter’s tally of 79 cents, which included a benefit of $33 million from net Health and Human Services (HHS) grants.

Results reflect better-than-anticipated revenues. Ventas’ same-store cash net operating income (NOI) for the senior housing operating portfolio (SHOP) increased year over year on strong pricing power and margin expansion. SHOP occupancy also improved from the prior-year period. The company maintained its outlook for 2023.

VTR clocked in revenues of $1.08 billion in the first quarter, surpassing the Zacks Consensus Estimate and our estimate of $1.05 billion. The figure increased 5.9% year over year.

Per Debra A. Cafaro, chairman and CEO of Ventas, “Our impressive SHOP performance was fueled by robust growth in the U.S. and bolstered by our high-quality, highly occupied Canadian communities. Our senior housing portfolio continues to exhibit significant pricing power, reflecting strong demand and attractive positioning in the marketplace. With favorable demographic demand providing tailwinds across our businesses, our company is in a strong position to excel, and we are re-affirming our Normalized FFO guidance range for the full year.”

Quarter in Detail

In the first quarter, same-store cash NOI growth for the total property portfolio (1,146 assets) increased 8.1% to $419.5 million from the prior-year quarter.

Segment-wise, the same-store cash NOI for the SHOP portfolio (507 assets) climbed 17.4% year over year to $158.6 million, mainly led by the United States communities. The rise was driven by same-store revenue growth of almost 8% and margin expansion of 200 basis points (bps). Moreover, the revenue per occupied room (RevPOR) for the total SHOP segment improved more than 6.8% year over year, a record high.

The same-store average occupancy expanded 80 bps year over year to 81.3% in the first quarter for the SHOP portfolio. The upswing was driven by robust demand.

For the office portfolio (327 assets), same-store cash NOI improved 2.1% year over year to $125.4 million. The uptick was backed by continued strong performance in medical office buildings (MOBs) that witnessed same-store cash NOI growth of more than 3% in six of the past seven quarters. Also, the year-over-year same-store occupancy growth of 50 bps to 91.8% in the MOB segment was a contributing factor.

The triple-net leased (NNN) portfolio’s (312 assets) same-store cash NOI rose 4.3% year over year to $135.5 million.

Balance Sheet Position

Ventas exited first-quarter 2023 with cash and cash equivalents of $145.4 million, up from $122.6 million as of Dec 31, 2022.

Moreover, it ended the quarter with $2.41 billion of liquidity. As of Mar 31, 2023, the net debt to further adjusted EBITDA was 6.9, unchanged from the year-ago period.

2023 Outlook Maintained

Ventas reaffirmed its guidance for 2023.

The current-year normalized FFO per share was maintained in the range of $2.90-$3.04. The Zacks Consensus Estimate for the same is currently pegged at $2.96, which lies within the guided range.

The total same-store cash NOI growth was unchanged between 6% and 9%. The SHOP segment's same-store cash NOI was retained between 15% and 21%, based on expected year-over-year revenue growth and continuation in occupancy gains.

The office segment's same-store cash NOI was maintained in the range of 2-3%, while the estimation for triple-net leased same-store cash NOI was unchanged at 0-1.5%.

Ventas currently carries a Zacks Rank #4 (Sell).

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

Performance of Other REITs

Welltower Inc.’s WELL first-quarter 2023 normalized FFO per share of 85 cents surpassed the Zacks Consensus Estimate of 82 cents. It also beat our estimate of 81 cents for the quarter. The reported figure improved 3.7% from the prior-year quarter’s actual.

WELL’s results reflected better-than-anticipated revenues. The total same-store NOI (SSNOI) increased year over year, driven by SSNOI growth in the seniors housing operating portfolio. The company also raised its guidance for 2023 FFO per share.

Healthpeak Properties, Inc. PEAK reported first-quarter 2023 FFO as adjusted per share of 42 cents, in line with the Zacks Consensus Estimate. The reported figure, however, fell short of the year-ago quarter’s 43 cents.

PEAK’s results reflected better-than-anticipated revenues. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company reaffirmed its 2023 outlook for FFO as adjusted per share.

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported first-quarter 2023 core FFO per share of $2.28, surpassing the Zacks Consensus Estimate of $2.25. Moreover, the reported figure climbed 15.7% year over year.

This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also raised its outlook for 2023 core FFO per share.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

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