Ventas' (VTR) Q4 FFO In Line With Estimates, Revenues Beat

Ventas, Inc. (NYSE:VTR) reported fourth-quarter 2017 normalized funds from operations (FFO) of $1.03 per share, in line with the Zacks Consensus Estimate. The figure also matched the year-ago quarter tally.

Results reflect improved property performance and accretive investments.

The bottom line for full-year 2017 came in at $4.16 per share, surpassing the Zacks Consensus Estimate by a penny. Further, the figure came in above the full-year 2016 FFO of $4.13 per share.

The company posted revenues of $895.3 million in the fourth quarter, comfortably beating the Zacks Consensus Estimate of $878.6 million. Further, it compared favorably with the year-ago tally of $875.7 million.

For full-year 2017, revenues came in at $3.57 billion, up from the 2016 tally of $3.44 billion. Moreover, it surpassed the Zacks Consensus Estimate of $3.53 billion.

For the fourth quarter, same-store cash net operating income (NOI) growth for total portfolio (1,068 assets) climbed 2% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 4.2%, seniors housing operating portfolio dipped 0.1% and medical office building portfolio rose 1.5%.

Quarter in Detail

During the year, Ventas funded investments, development and redevelopment projects of around $1.8 billion.

Furthermore, the company disposed properties and obtained final repayments on loans receivable for proceeds of over $900 million. This realized gains of $700 million for the company.

Liquidity

At present, the company enjoys liquidity with $2.7 billion of available borrowing capacity and $100 million of cash on hand.

2018 Outlook

Ventas expects 2018 normalized FFO per share outlook in the range of $3.95-$4.05.

The company anticipates same-store cash net operating income growth of 0.5-2.0% in 2018.

Our Take

We believe Ventas’ adequate size and scale would help it capitalize on opportunities such as increasing healthcare spending and aging population. Further, in order to strengthen operational platform, the company recently transitioned the management of a portfolio of senior housing communities to Eclipse Senior Living.

However, elevated supply of seniors housing assets in certain markets is likely to moderate rent and occupancy growth in the near-term. Further, the company is exposed to concentration risks since majority of its revenues are generated from a few tenants. Further, hike in interest rate is a concern for the company. This is because it has substantial exposure to long-term leased assets. These restrict the company’s scope to drive top-line growth.

Ventas, Inc. Price, Consensus and EPS Surprise

Currently, Ventas carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like HCP (NYSE:HCP) , CubeSmart (NYSE:CUBE) and EPR Properties (NYSE:EPR) . HCP and CubeSmart are scheduled to release results on Feb 13 and Feb 15, respectively, while EPR Properties is slated to report numbers on Feb 28.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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