Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ventas Inc (VTR, Financial) reported a strong start to the year with $0.78 of normalized FFO per share and over $2 billion in annualized NOI.
- The company experienced nearly 7% same-store property NOI growth, led by SHOP at over 15%.
- Ventas Inc (VTR) has seen demand-driven occupancy gains in its SHOP portfolio, with a year-over-year increase of 240 basis points.
- The company has closed or placed under contract about $350 million of investments focused on senior housing, meeting target yields and growth expectations.
- Ventas Inc (VTR) raised its 2024 normalized FFO guidance to between $3.10 and $3.18 per share, and increased its full year 2024 total company same-store cash NOI guidance to 7% at the midpoint.
Negative Points
- The Kindred lease for 23 LTAC, representing approximately 5% of Ventas' NOI, remains a concern with stable but not improved trailing rent coverage.
- There is uncertainty around the renewal of the Kindred lease, with discussions ongoing and a recent extension of the lease renewal notice date.
- Ventas Inc (VTR) reported a net loss attributable to common stockholders of $0.04 per share for the first quarter.
- The company faces challenges with certain outpatient medical assets, including a sequential occupancy decline during the quarter.
- Ventas Inc (VTR) is still dealing with high leverage, although there has been a 20-basis-point sequential improvement in net debt-to-EBITDA in the first quarter.
Q & A Highlights
Q: What are the current occupancy trends in Ventas' senior housing portfolio, particularly in assisted living (AL) and independent living (IL)?
A: J. Justin Hutchens, Executive VP of Senior Housing & CIO, noted that most of the NOI growth is coming from AL, which is on the higher end of the average, particularly in the U.S. IL is expected to contribute more significantly in 2025. Occupancy trends have been excellent across the IL portfolio, including communities formerly under Holiday and those operated by Atria.
Q: Can you discuss the impact of price volume optimization and other strategies on the performance of the senior housing portfolio?
A: J. Justin Hutchens highlighted that price volume optimization ensures that communities maintain their market position, adjusting pricing over time based on demand. This strategy, along with CapEx investments and operator execution, has led to significant occupancy growth and improved performance, particularly in well-established operators like Sunrise and Atria.
Q: What are the expectations for RevPOR growth, and how does it relate to occupancy trends?
A: The guidance assumes approximately 5% RevPOR growth, consistent with first-quarter performance. This expectation aligns with occupancy trends, where there is significant upside potential. The strategy includes balancing volume and pricing to maximize total revenue growth and drive NOI.
Q: How does the current investment environment affect Ventas' strategy in senior housing?
A: Debra A. Cafaro, Chairman & CEO, emphasized the compelling investment environment in senior housing, with opportunities to acquire assets at high yields and growth potential. The focus is on expanding senior housing's share in Ventas' portfolio, leveraging strong market fundamentals and the company's platform and access to capital.
Q: What is the status of discussions regarding the Kindred lease renewal?
A: Debra A. Cafaro mentioned active discussions with Kindred and other parties to optimize outcomes for Ventas. The focus is on maximizing enterprise value and NOI from the properties, with ongoing efforts to reach a favorable resolution.
Q: How does Ventas plan to manage its investment pipeline and capital recycling in the context of its growth strategy?
A: Robert F. Probst, Executive VP & CFO, explained that Ventas plans to fund investments through equity and increased disposition proceeds across asset classes. This approach aims to balance financial returns, upgrade the portfolio, and capitalize on growth opportunities in senior housing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
