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Ventas' (VTR) Q3 FFO Surpasses Estimates, Revenues Up Y/Y

Ventas, Inc.VTR reported third-quarter 2018 normalized funds from operations (FFO) of 99 cents, beating the Zacks Consensus Estimate of 97 cents. However, the figure came in lower than the year-ago quarter tally of $1.04.

The company witnessed higher rental income from its office portfolio. Further, same-store cash net operating income (NOI) for its triple net leased portfolio witnessed growth.

Ventas posted revenues of $936.5 million, which beat the Zacks Consensus Estimate of $904.82 million. Further, the revenue figure compares favorably with the year-ago number of $899.9 million.

Quarter in Detail

For the third quarter, same-store cash NOI growth for the total portfolio (1,063 assets) inched up 1.3% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 3%, the office portfolio rose 3.5%, while seniors-housing operating portfolio registered a decline of 2.7%.

During and subsequent to the reported quarter, Ventas made new investments of approximately $100 million. It also made advancement in its university-based life-science development business. Notably, the company unveiled a development at its University of Pennsylvania life-science campus in September, which is nearly 70% leased. It also made new commitments worth $50 million for development and redevelopment projects in its senior housing and office portfolios.

Liquidity

Ventas exited third-quarter 2018 with cash and cash equivalents of $86.1 million, up from $93.6 million as of the prior-quarter end.

Updated 2018 Outlook

Ventas updated its 2018 normalized FFO per share outlook to $4.03-$4.07 from the previous projection of $4.02-$4.07. The Zacks Consensus Estimate for the same is pinned at $4.06 per share.

The 2018 NAREIT FFO is expected in the range of $3.77-$3.83.

Our Take

Ventas is poised to grow on the back of its diversified portfolio and strategic acquisitions. Rising healthcare spending and aging population augur well for long-term growth.

Furthermore, a strong balance sheet indicates the company's financial strength. The company refinanced its debt obligations and issued new notes in a bid to improve maturity schedule and reduce exposure to short-term interest rates.

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 and occupancy growth in the near term.

Ventas, Inc. Price, Consensus and EPS Surprise

Ventas, Inc. Price, Consensus and EPS Surprise | Ventas, Inc. Quote

Currently, Ventas carries a Zacks Rank #3 (Hold). 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 EPR Properties EPR , Vornado Realty Trust VNO and UDR Inc. UDR . All three companies are scheduled to release their quarterly figures on Oct 29.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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