Ventas, Inc (
, a real estate investment trust (REIT), reported third quarter
2012 funds from operations (FFO) of $289.7 million or 97 cents
per share compared with $264.2 million or 91 cents in the
year-earlier quarter. Reported FFO in the quarter beat the Zacks
Consensus Estimate by 3 cents.
Excluding the non-recurring items, FFO in the reported quarter
stood at $284.9 million or 96 cents per share, compared with
$255.1 million or 88 cents in the year-ago quarter.
The year-over-year upside in FFO was primarily driven by $1.7
billion worth of year-to-date accretive acquisitions like Cogdell
Spencer, 16 private pay senior living communities from
Sunrise Senior Living, Inc. (
, and rental increases from the company's triple lease portfolio.
However, it was partially offset by higher administrative
expenses and a relatively high number of weighted average shares
outstanding during the quarter.
Total revenue during the quarter was $641.9 million compared with
$555.4 million in the year-earlier quarter. Total revenue during
the reported quarter beat the Zacks Consensus Estimate of $628.0
As of September 30, 2012, Ventas had an operating portfolio of 95
private pay seniors housing communities managed by Sunrise and
117 private pay seniors housing communities managed by Atria.
Total occupancy in these communities increased 140 basis points
sequentially to 90.4%. Net operating income (NOI) before
management fees stood at $118.3 million.
During the third quarter of 2012, total NOI before management
fees for the same-store communities increased 9.7% year over year
to $108.6 million. Same-store occupancy increased 300 basis
points to 90.6%. Same-store cash NOI for the company's total
portfolio (1,222 assets) increased 3.5 % year over year.
Ventas invested $420 million in multiple acquisitions during the
quarter, including 36 high-quality medical office buildings
(MOBs). Additionally, the company opened two MOBs (100% leased)
totaling over 300,000 square feet. Ventas also received loan
proceeds of $87 million during the quarter through various asset
During the quarter, Ventas sold $275 million of 3.25% senior
notes scheduled to mature in 2022. Additionally the company
prepaid fully an unsecured term loan ($200 million) and repaid in
full $73 million of the NHP 8.25% senior notes and $170 million
in mortgage debt. Subsequent to the end of the quarter, the
company closed a $180 million unsecured term loan with a
As of September 30, 2012, the company had $705 million of debt
under its unsecured revolving credit facility, $507 million under
its unsecured term loan facility, and $59.0 million in cash and
cash equivalents. Presently, Ventas has approximately $1.6
billion of borrowing capacity available under its unsecured
revolving credit facility.
At quarter-end, debt to total capitalization stood at 29% and
net-debt-to-adjusted-pro-forma-EBITDA (earnings before interest,
tax, depreciation and amortization) was 5.0x.
With superior quarterly results, Ventas increased its recurring
FFO guidance from the range of $3.70-$3.74 per share to
$3.76-$3.78 for full year 2012. The company expects NOI for its
total Sunrise- and Atria-managed seniors housing operating
portfolio to be in the range of $383 million - $385 million for
Ventas currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on the stock. One of its
HCP Inc (
also holds a Zacks #3 Rank.
HCP INC (HCP): Free Stock Analysis Report
SUNRISE SENIOR (SRZ): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.