Ventas Earnings: Strong NOI Growth and High Cap Rates on Acquisitions for Senior Housing Segment

First-quarter results for no-moat Ventas were slightly better than we anticipated, giving us confidence in our $70 fair value estimate. Same-store occupancy for the senior housing portfolio fell 20 basis points sequentially to 84.6%, though we recognize that the first quarter frequently sees a decline. Meanwhile, rental rates increased 4.7% year over year, leading to same-store revenue growth of 7.8%, better than our estimate of 5.3% growth. Same-store operating expenses were only up 4.6%, leading to same-store net operating income, or NOI, growth of 15.2% that was better than our 12.3% estimate. Ventas also reported same-store NOI growth of 4.7% for the medical office portfolio, 5.5% for the life science portfolio, and a 2.0% decline for the triple-net portfolio. Combined, the total same-store NOI increased 6.7%, slightly better than our estimate of 5.9% growth. Ventas reported normalized funds from operations of $0.78 per share in the first quarter, two cents better than our $0.76 estimate.