Ventas Expects Higher NOI - Analyst Blog

By Zacks | January 23, 2013 AAA

Ventas, Inc. (VTR) has hiked its net operating income (NOI) expectations for 2012. The company now anticipates its NOI after management fees to exceed $386 million as against the prior projection of $383-385 million for its private pay seniors housing communities managed by Atria and Sunrise.

Ventas also disclosed that fourth quarter same-store occupancy in these communities climbed both sequentially and year over year. This increase in guidance for NOI and enhanced occupancy levels further instill investors' confidence in the company and its solid operating platform and hence we remain encouraged.

Notably, the preliminary results exclude NOI from communities purchased in Dec 2012 to maintain consistency with the prior issued outlook for the same properties. However, it includes NOI from discontinued operations.

Same store occupancy in the fourth quarter increased 360 basis points year over year to 91.9%. Further, occupancy in the same-store portfolio climbed 30 basis points sequentially to 91.7%.

In December, Ventas inked a deal with Atria Senior Living Inc., through which Ventas along with the management team of Atria Senior Living, Inc. gained complete ownership over Atria. The company also disclosed the accomplishment of new investments worth $950 million during the fourth quarter. Such strategic investments augur well going forward.

Ventas, primarily engaged in the business of financing, owning and leasing healthcare related and senior housing facilities, boasts one of the largest and most diversified portfolios in the healthcare sector with exposure to all types of facilities.

The product diversity of the company allows it to capitalize on opportunities in different markets based on individual market dynamics, and provides a hard-to-replicate competitive advantage over its peers. Also, the healthcare sector is relatively immune to the downturn in the economy, and provides a steady source of income that insulates the company from short-term market volatility.

Ventas is scheduled to release its fourth-quarter 2012 results on Feb 15, 2013, prior to the opening bell. The Zacks Consensus Estimate for the company's fourth-quarter earnings is currently pegged at 97 cents per share.

Zacks Earnings ESP (Expected Surprise Prediction) (Read: Zacks Earnings ESP: A Better Method) for Ventas is +1.03% for the fourth quarter. This, along with its Zacks Rank #2 (Buy), make us confident of a positive earnings surprise call.

A number of companies that are also performing well in the same industry and deserve a look include Digital Realty Trust Inc. (DLR), Brandywine Realty Trust (BDN) and Diamondrock Hospitality Co. (DRH), all carrying Zacks Rank #2 (Buy).

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