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

Third-quarter results for no-moat Ventas were slightly better than we expected, giving us confidence in our $69 fair value estimate. Senior housing same-store occupancy increased 140 basis points sequentially to 87%, significantly better than our estimate of a 40-basis-point gain. Average rental rates increased 4.4% year over year, leading to same-store revenue growth of 8.7% that was slightly better than our 8.0% estimate. Same-store operating expenses increased 6.0%, resulting in same-store net operating income growth of 15.3% that beat our estimate of 12.5% growth for the senior housing segment. Ventas also reported same-store NOI growth of 3.2% for the triple-net segment, 1.6% for the medical office portfolio, and 4.7% for the life science portfolio. Combined, total same-store NOI growth for the company was 7.6%, slightly better than our 6.8% growth estimate. Ventas reported normalized funds from operations of $0.80 per share for the third quarter, a penny better than our $0.79 estimate and 6.5% higher than the $0.75 the company reported in the third quarter of 2023.