Ventas' (VTR) Q4 FFO & Revenues Top Estimates, NOI Up Y/Y

Ventas, Inc. (NYSE:VTR) reported fourth-quarter 2018 normalized funds from operations (FFO) of 96 cents, beating the Zacks Consensus Estimate of 95 cents. However, the figure comes in lower than the year-ago tally of $1.03.

The company witnessed higher rental income from its office portfolio. However, lower rental income from triple net leased portfolio impacted top-line growth.

Ventas posted revenues of $923.3 million, which surpassed the Zacks Consensus Estimate of $915.4 million. Further, the revenue figure compares favorably with the year-ago number of $895.3 million.

For full-year 2018, normalized FFO per share came in at $4.07, beating the Zacks Consensus Estimate by a whisker. The figure, however,declined 22% year over year. Revenues for full-year 2018 improved 4.8% year over year to $3.7 billion. The revenue figure came in line with the Zacks Consensus Estimate.

Quarter in Detail

For the fourth quarter, same-store cash net operating income (NOI) growth for the total property portfolio (1,064 assets) inched up 0.2% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 2.1%, the office portfolio rose 1.9%, while seniors-housing operating portfolio registered a decline of 3.5%.

During the reported quarter, Ventas completed the acquisition of a senior housing community in Manhattan — Brookdale Battery Park — for $194 million.

In addition, the company combined and extended its leases with Brookdale till 2026. Consequently, the company’s triple-net senior housing portfolio has a weighted average lease term of more than eight years.

Liquidity

Ventas exited fourth-quarter 2018 with cash and cash equivalents of around $72.3 million, down from $86.1 million as of the prior-quarter end.

Outlook

Ventas provided 2019 normalized FFO per share outlook of $3.75-$3.85. The Zacks Consensus Estimate for the same is pinned at $3.90.

The 2019 Nareit FFO is expected in the range of $3.70-$3.82.

Our Take

During 2018, Ventas made strategic efforts to expand its university-based research and innovation development pipeline to more than $1.5 billion. Furthermore, the company unlocked value of its assets through opportunistic disposals and used proceeds to acquire high-quality assets.

Nonetheless, softness in the seniors-housing operating fundamentals continues to hamper the company’s bottom-line performance. Going forward as well, elevated supply of seniors housing assets in certain markets is likely to impede rent growth in the near term.

Ventas, Inc. Price, Consensus and EPS Surprise

Currently, Ventas carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Duke Realty Corporation’s (NYSE:DRE) fourth-quarter 2018 core FFO per share of 35 cents came in line with the Zacks Consensus Estimate. Moreover, the figure came in a penny ahead of the prior-year figure of 30 cents.

Alexandria Real Estate Equities, Inc. (NYSE:ARE) reported fourth-quarter 2018 adjusted FFO of $1.68 per share, missing the Zacks Consensus Estimate by a whisker.

Boston Properties Inc.’s (NYSE:BXP) fourth-quarter 2018 FFO per share of $1.59 also missed the Zacks Consensus Estimate of $1.68. The figure, however, came in 7% higher than the prior-year tally.

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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