Analyst Note| Kevin Brown, CFA |
Third-quarter results for Ventas were mixed relative to our expectations, though we didn't see anything in the quarter that would materially change our $64 fair value estimate for the no-moat company. Same-store occupancy for senior housing sequentially improved 230 basis points to 82.2% in the third quarter, which is better than our estimate of 80.0% occupancy. Same-store revenue for senior housing only fell 1.0%, though Ventas saw same-store operating expenses rise 3.6% in the third quarter. As a result, same-store net operating income for the senior housing portfolio fell 12.7% in the third quarter, slightly worse than our forecast. The senior housing triple-net portfolio saw same-store NOI decline 0.8% after excluding a $162 cash payment from Brookdale from the third quarter of 2020. Meanwhile, the medical office portfolio saw same-store NOI growth of 3.2% and the life science portfolio saw 7.1% growth, both of which are slightly ahead of our expectations. Combined, Ventas saw total same-store NOI decline 3.0% after excluding the Brookdale payment. The slight decline in portfolio operations led to Ventas reporting normalized funds from operations of $0.73 in the quarter, which is 2 cents below the $0.75 figure the company reported in the third quarter of 2020.