Ventas (VTR) to Post Q1 Earnings: What’s in the Offing?

Ventas, Inc. VTR is scheduled to report first-quarter 2021 earnings on May 7, before market open. The company’s resultsare expectedto reflect a year-over-year decline in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Chicago, IL-based healthcare real estate investment trust (REIT) delivered a positive surprise of 13.7% in terms of normalized FFO per share. The office portfolio reported a year-over-year rise in same-store cash net operating income (NOI) growth of 2.9%. However, its senior housing operating assets were severely impacted by the coronavirus pandemic.

Ventas surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 8.71%. The graph below depicts this surprise history:

Ventas, Inc. Price and EPS Surprise

Ventas, Inc. Price and EPS Surprise

Ventas, Inc. Price and EPS Surprise

Ventas, Inc. price-eps-surprise | Ventas, Inc. Quote

Factors to Note

In first-quarter 2021, the pace of vaccine administration among senior housing residents increased. Moreover, the majority of senior housing communities restarted accepting admission and in-person tour activities. In fact, in March, the Centers for Medicare & Medicaid Services relaxed restrictions on senior housing visitations, given the high vaccination rates among senior housing residents.

Since restriction on non-essential visits has been a major bummer for occupancy at senior housing facilities, the relaxation is likely to have been a breather for healthcare REITs like Ventas, Welltower, Inc. WELL, Diversified Healthcare Trust DHC and New Senior Investment Group SNR, which have seniors housing exposures.

This is likely to have supported customer leads and move-in trends at Ventas’ senior housing properties in the last month of the quarter. In fact, as of Feb 12, 2021, all senior housing communities completed at least the first vaccine dose. Moreover, the majority of communities were reopened for move-ins in February. Further, move-in trends and customer leads improved from December to February.

While vaccination has reduced COVID-19 case counts, it has not translated to occupancy revival and this continued to cast a pall on senior housing fundamentals in first-quarter 2021. NIC-MAP’s first-quarter 2021 senior housing data reiterates these concerns, with report indicating seniors housing occupancy plunging to a record-low of 78.8% in first-quarter 2021. This marks a decline of roughly 180 basis points (bps) from the previous quarter. This also marks the sixth consecutive quarter of occupancy decline and the fourth one since the onset of the pandemic.

Moreover, annual rent growth and annual absorption sequentially fell 70 bps and 190 bps to 0.9% and negative 7.4%, respectively.

As for Ventas, we note that a significant portion of its NOI is dependent on seniors housing communities. Hence given the significant exposure, the pandemic has continued to take a toll on the company’s senior housing operations, hindering occupancy and…

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