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Ventas Inc VTR

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Ventas Reports Mixed Results in Q3 as the Company Completes New Senior Acquisition

Kevin Brown, CFA Equity Analyst

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.

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Company Profile

Business Description

Ventas owns a diversified healthcare portfolio of 1,200 in-place properties spread across the senior housing, medical office, hospital, life science, and skilled nursing/post-acute care. The portfolio includes over 40 properties in both Canada and the United Kingdom as the company looks for additional investment opportunities in countries with mature healthcare systems that operate similarly to the United States. The firm also owns mortgages and other loans, contributing about 3% of NOI.

353 North Clark Street, Suite 3300
Chicago, IL, 60654
T +1 877 483-6827
Sector Real Estate
Industry REIT - Healthcare Facilities
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 448