Yahoo Finance Ventas' (VTR) Q4 FFO and Revenues Beat, SHOP NOI Increases
Ventas, Inc. VTR reported fourth-quarter 2022 normalized funds from operations (FFO) per share of 73 cents, outpacing the Zacks Consensus Estimate by a penny. The figure was in line with the prior-year quarter’s tally.
Results reflect better-than-anticipated revenues. Also, the same-store net operating income (NOI) for the senior housing operating portfolio (SHOP) improved year over year on strong pricing power and occupancy growth.
VTR clocked in revenues of $1.05 billion in the fourth quarter, surpassing the Zacks Consensus Estimate by 0.15%. The figure increased 2.8% year over year.
Per Debra A. Cafaro, chairman and CEO of Ventas, “We are pleased to have delivered a strong fourth quarter, which reflects the attractive operating and financial results of our diverse portfolio and the benefits of our key strategic initiatives. Accelerating SHOP top- and bottom-line growth fueled outstanding total Company performance in the fourth quarter.”
In 2022, Ventas reported normalized FFO per share of $2.99, up 3.1% from the prior year’s $2.90. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $2.98. Total revenues of $4.13 billion improved 7.9% year over year and beat the consensus mark of $4.12 billion.
Quarter in Detail
In the fourth quarter, same-store cash NOI growth for the total property portfolio (1,123 assets) increased 8.5% to $404.8 million from the prior-year quarter.
Segment-wise, the same-store cash NOI for the SHOP portfolio (478 assets) increased 19.1% year over year to $150.5 million. The rise was mainly driven by margin expansion and same-store revenue growth of almost 8%.
For the SHOP portfolio, same-store revenues increased 8.3% from the prior-year quarter led by strong pricing power and occupancy growth. The revenue per occupied room (RevPOR) improved more than 6.5% year over year, reflecting robust pricing power and the implementation of early in-place rent increases by certain operators.
The same-store average occupancy expanded 140 basis points (bps) year over year to 82.5% in the fourth quarter for the SHOP portfolio. The upswing was driven by robust demand.
For the office portfolio (331 assets), same-store cash NOI rose 4.3% year over year to $125.3 million. The uptick was backed by continued strong performance in medical office buildings that witnessed same-store occupancy growth of 50 bps to 92%. This marked the highest period-end occupancy since 2017.
The triple-net leased (NNN) portfolio’s (314 assets) same-store cash NOI improved 1.8% year over year to $128.9 million.
Balance-Sheet Position
Ventas exited fourth-quarter 2022 with cash and cash equivalents of $122.6 million, down from $145.1 million as of Sep 30, 2022.
Moreover, it ended the quarter with $2.4 billion of liquidity. As of Dec 31, 2022, the net debt to adjusted pro forma EBITDA was 6.9, unchanged sequentially.
2023 Outlook
Ventas issued its guidance for 2023.
It projects current-year normalized FFO per share in the range of $2.90-$3.04. The Zacks Consensus Estimate for the same is currently pegged at $3.07.
The total same-store cash NOI growth is estimated to be between 6% and 9%. The SHOP segment's same-store cash NOI is anticipated between 15% and 21%, based on year-over-year revenue growth of around 6%, continuation in occupancy gains of 130 bps to 170 bps and strong rate growth.
The office segment's same-store cash NOI is expected in the range of 2-3%, while the triple-net leased same-store cash NOI is projected in the band of 0-1.5%.
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-eps-surprise-chart | Ventas, Inc. Quote
Performance of Other REITs
Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported fourth-quarter 2022 core FFO per share of $2.32, surpassing the Zacks Consensus Estimate of $2.28. The reported number improved 22.1% 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 issued its outlook for 2023.
Healthpeak Properties, Inc. PEAK reported fourth-quarter 2022 FFO as adjusted per share of 44 cents, beating the Zacks Consensus Estimate by a penny. The reported figure was up 7.3% from the year-ago quarter’s 41 cents.
PEAK’s performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company issued its 2023 outlook.
Alexandria Real Estate Equities, Inc. ARE reported fourth-quarter 2022 AFFO per share of $2.14, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.97.
ARE’s results reflected decent leasing activity and rental rate growth during the quarter.
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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