News

Ventas, Inc. VTR recently provided an update on the performance of its portfolio. The update highlights delivering profitable organic growth in the Senior Housing Operating Portfolio (SHOP) with an acceleration of occupancy levels backed by strong demand.

This healthcare REIT is well-prepared for a continued multiyear senior housing NOI growth, led by occupancy and rate growth. The company estimated May quarter-to-date SHOP same-store average occupancy growth of 300+ basis points (bps) year over year, led by the U.S. growing at 360+ bps.

In the first quarter, strong demand drove seasonally elevated move-ins and acceleration in SHOP same-store average occupancy to 240 bps year over year. Supported by strong performance, Ventas re-affirmed its 2024 SHOP same-store average occupancy year-over-year growth guidance of approximately 270 bps.

Ventas is poised to benefit from its focus on serving a large and growing aging population with an emphasis on senior housing. With top-rated tenants and long-lease terms, its high-quality portfolio assures steady growth in cash flows.

The total company same-store cash NOI grew 6.7% in the first quarter of 2024, led by SHOP. VTR raised the total company 2024 same-store cash NOI guidance midpoint to 7.0% from 6.25%, led by SHOP.

Led by the United States growth of approximately 18%, the SHOP segment’s same-store cash NOI grew 15.2% year over year in the first quarter of 2024. In 2024, the SHOP segment's same-store cash NOI is now anticipated to be between 12% and 16%, higher than 10-15% from the prior guidance.

It also expects approximately 5% SHOP same-store revenues per occupied room (RevPOR) growth in 2024.

Ventas’ senior housing portfolio is positioned in markets with favorable demographics, strong net absorption and affordability. Moreover, expert operators who leverage the Ventas OI platform are expected to drive the company’s performance.

In the first quarter of 2024, Ventas reported a normalized FFO per share of $0.78, increasing more than 5% year over year. The company now expects 2024 normalized FFO per share in the range of $3.10-$3.18, revised from $3.07-$3.18 stated earlier. The 2024 normalized FFO per share represents more than 5% year-over-year growth at the midpoint of the guidance range.

The company’s strategy is focused on enhancing portfolio quality and operator diversification and increasing its SHOP scale.

With approximately $19 billion of senior housing loan maturities through 2025, Ventas sees an opportunity to invest in senior housing. Capital markets dislocation is increasing the number of assets with challenged capital structures. Consequently, this makes the right time for Ventas to actively seek out external growth opportunities that will generate substantial value.

Ventas maintains a healthy liquidity position. As of Mar 31, 2024, the company had $3.4 billion of available liquidity. It has a manageable near-term debt maturity profile with a $1.2 billion maturing in 2024.

Its access to diverse capital sources through capital recycling, third party (Ventas Investment Management), on-balance sheet financing and internal cash flow provides financial flexibility. The company’s decent financial flexibility is likely to support its growth endeavors.

Ventas also enjoys credit ratings of BBB+ stable from S&P Global Ratings and Baa1 stable from Moody’s, providing access to the debt market at favorable costs.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 7.2% against the industry’s downside of 7%.

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Cousins Properties CUZ and Rexford Industrial Realty REXR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CUZ’s 2024 funds from operations (FFO) per share has been raised marginally northward over the past week to $2.63.

The consensus estimate for REXR’s current-year FFO per share has moved nearly 1% upward over the past two months to $2.34.

Note: Anything related to earnings presented in this write-up represents 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.