) second-quarter 2013 normalized funds from operations (FFO) per
share of $1.01 missed the Zacks Consensus Estimate by a penny but
rose 6.3% year over year from 95 cents.
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VENTAS INC (VTR): Free Stock Analysis Report
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Including the non-recurring items, FFO in the reported quarter
stood at $1.03 per share, up 27.2% from 81 cents in the year-ago
While a rise in share count, elevated debt levels and an increase
in net cash balances acted as dampeners for the quarter, Ventas'
results benefited from strategic investments made in 2012.
In particular, the company experienced an uptick in net operating
income in its private pay seniors housing communities, triple-net
lease portfolio and medical office building segment. Also, the
company benefited from a decline in weighted average interest
Ventas has raised it outlook for full-year 2013, backed by its
solid business model, strategic efforts and accretive
Total revenue during the quarter reached $685.8 million,
escalating 12.1% year over year. Revenues also exceeded the Zacks
Consensus Estimate of $677 million.
Behind the Headline Numbers
As of Jun 30, 2013, Ventas had an operating portfolio of 132
seniors housing communities managed by Atria (7 of them acquired
in Q2) and 95 seniors housing communities managed by Sunrise,
leading to a total of 227 seniors housing operating portfolio.
Net Operating Income (NOI) for this portfolio after management
fees stood at $110.1 million.
Total same-store cash flow grew 3% and the company renewed or
transitioned all 89 healthcare assets whose leases expired during
Average unit occupancy for the 196 private pay seniors housing
communities climbed 160 basis points year over year to 90.8% in
the quarter under review. Same-store NOI after management fees
escalated 6.9% while REVPOR (revenue per occupied room) increased
3.7% year over year.
Since the beginning of the second quarter, Ventas made
investments worth around $419 million (of which $96 million was
made in Q3). It disposed assets, received final repayments on
outstanding loans and investments aggregating $160 million ($70
million of this in Q3). Moreover, around $400 million of
additional investments are under contract for Ventas.
As of Jun 30, 2013, Ventas had $260 million of borrowings
outstanding under its unsecured revolving credit facility and $62
million of cash and cash equivalents. During the reported
quarter, Ventas generated $77.4 million as proceeds from its
"at-the-market" equity offering program.
Moreover, 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 5.3x.
Ventas now projects normalized FFO per share in the range $4.06 -
$4.10, up from the prior range of $3.99 - $4.07. The current
projections include the impact of around $400 million worth of
NOI for its total Sunrise- and Atria-managed seniors housing
operating portfolio are expected in the range of $430 million -
$440 million for 2013, reflecting around 5% - 8% same-store NOI
We believe that going forward, the company's diversified
portfolio, strategic acquisitions and decent balance sheet would
provide the tempo for riding on the growth trajectory. Yet, a
large portion of its revenue originates from a few tenants, which
exposes it to concentration risk.
Ventas currently has a Zacks Rank #3 (Hold).
Similar to Ventas,
Taubman Centers Inc.
) FFO per share of 75 cents rose 2.7% year over year but the
figure came 5.1% short of the Zacks Consensus Estimate. The miss
is mainly due to the lower-than-expected revenues generated in
We now look forward to the results of the other healthcare REITs
Healthcare Realty Trust Inc.
) that are scheduled to report next week.
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.