Market Overview

Ventas Reports 2019 Second Quarter Results


Ventas, Inc. (NYSE:VTR) today announced its results for the second quarter ended June 30, 2019.

"Ventas had a highly productive second quarter as we delivered strong results, executed on our near term development pipeline in our exciting university-based research & innovation business, and captured accretive and attractive external investments, including with Le Groupe Maurice," said Debra A. Cafaro, Ventas Chairman and CEO.

"Building on our strong momentum in 2019, we are increasing our guidance for the year. With our powerful combination of a large, diverse high quality portfolio, which is benefitting from strong demand; our best in class partners; and our collaborative, experienced and results-oriented team, we are well positioned to meet our objectives in 2019 and pivot to growth in 2020. We look forward to the positive impact of an upcycle in senior housing from the expected combination of increasing demographic demand and reduced community openings, the completion and lease-up of our promising R&I development assets, growth in our core portfolio and accretive investment activity," Cafaro added.

Second Quarter 2019 Company Performance

  • Net income attributable to common stockholders per diluted share for second quarter 2019 was $0.58 compared to $0.46 in the same period in 2018. The year-over-year increase from 2018 was due principally to growth in second quarter 2019 property-level operating income and a non-cash income tax benefit in the quarter. The second quarter 2019 also benefitted from cash natural disaster recoveries, the recognition of cash profit on warrants held in the Company's Research & Innovation ("R&I") business, and a $21 million second quarter 2018 non-cash expense (the "2018 Non-Cash Brookdale Expense") incurred in connection with a mutually beneficial Brookdale Senior Living, Inc. ("Brookdale") lease extension. These benefits were partially offset by lower gains on real estate asset dispositions and lower interest income from loans and investments in the second quarter 2019 mainly due to the second quarter 2018 full payoff of the Ardent Health Services ("Ardent") loans and related fee recognition.
  • Reported Funds from Operations per share, as defined by the National Association of Real Estate Investment Trusts ("Nareit FFO") was $1.13 compared to $0.98 in the same period in 2018. The change from 2018 results was due to the factors described above, adjusted to exclude the impact of lower gains from the sale of real estate assets in the second quarter of 2019.
  • Normalized Funds from Operations ("FFO") per share for second quarter 2019 was $0.97 compared to $1.08 in 2018. The change from 2018 was primarily the result of the second quarter 2018 full payoff of the Ardent loans and recognition of related fees as described above. The second quarter 2019 non-cash tax benefit, cash natural disaster recoveries and the 2018 Non-Cash Brookdale Expense are excluded from the Company's normalized FFO results for their respective periods.

Second Quarter 2019 Portfolio Performance

  • For the second quarter 2019, the Company's quarterly same-store total property portfolio (1,104 assets) cash net operating income ("NOI") was in line with expectations and rose 0.3 percent compared to the same period in 2018. Excluding the impact of a cash fee of $2.5 million received by the Company in the second quarter of 2018 from Brookdale, the Company's portfolio grew same-store NOI 0.9 percent. Reported same-store cash NOI performance by segment for the second quarter 2019 is as follows:








Same-Store Cash NOI




Q2 2019




Reported Growth





Triple-Net ("NNN")




Senior Housing Operating Properties ("SHOP")








Total Company




  • Second quarter year-over-year changes in the Company's same-store property results were driven by:
    • NNN portfolio: Growth was primarily the result of net in-place lease escalations. Excluding the 2018 $2.5 million cash fee noted above from Brookdale, the NNN portfolio grew 2.9 percent.
    • SHOP portfolio: As expected, same-store SHOP performance was driven by the impact of continued 2019 elevated new community openings in select markets, which affected rate and occupancy. In addition, average occupancy compared to last year trended in accordance with the Company's expectations. Despite significant new openings, absorption growth was robust and the positive trend of lower new construction starts continued during the quarter.
    • Office portfolio: Growth was led by excellent performance in the Company's university-based R&I properties and complemented by solid growth in the Company's medical office building ("MOB") portfolio, which is benefitting from the implementation and success of operational and sustainability initiatives.

2019 Investment Highlights

The Company demonstrated momentum in its accretive external investment activity, announcing nearly $3.5 billion in new investments:

  • Portfolio Investment with Le Groupe Maurice ("LGM"): Ventas, in partnership with LGM, a best-in-class, fully integrated designer, developer and operator of senior housing, agreed to invest in a Class-A portfolio of 31 high quality, apartment-like senior housing communities and certain in-progress developments valued at US$1.8 billion in the attractive Quebec market. Key aspects of the partnership, transaction and portfolio include:
    • Expected 5.5 percent stabilized yield on the 31 communities, representing an attractive price. The communities are vibrant and contain top-tier amenities to encourage an active lifestyle. Average length of stay approximates six years.
    • The existing portfolio is comprised of 28 stable communities and three newly constructed lease-up communities. Ventas expects a four percent NOI cumulative average growth rate over the next five years from these 31 communities.
    • Five additional in-progress developments are currently underway, which are expected to be additive to NOI growth. Total expected project costs are C$0.5 billion and targeted stabilized cash yield approximates 6.5 percent.
    • Ventas will have exclusive rights to jointly develop and own all current and future communities under a pipeline agreement with LGM. The Company expects LGM to commence an additional two to three communities per year, consistent with its historical growth.
    • The Quebec senior housing market is compelling, with the senior population expected to double in the next twenty years and the penetration rate for senior housing robust at 18 percent.
    • In June 2019, the Company signed a definitive agreement to acquire the 31 communities and in-progress developments in an 85/15% partnership with the principal of LGM. The portfolio will continue to be managed by LGM.
    • In July 2019, the Company closed the first phase of the acquisition by funding US$723 million to LGM. Completion of the second phase of the investment is expected to occur in the third quarter of 2019, subject to customary closing conditions.
  • R&I Development Pipeline: As part of its pivot to growth, Ventas has announced a $1.5 billion proprietary pipeline of university-based R&I developments with its leading partner, Wexford Science & Technology ("Wexford"). Year-to-date, the Company has announced five specific projects totaling nearly $900 million with top-tier universities. The developments will be utilized for groundbreaking research, academic medicine and innovation. Additionally, the developments are with new and existing Ventas/Wexford university relationships, and establish or expand Knowledge Communities. These five projects include:
    • Pitt Immune Transplant & Therapy Center: Creation of a research, academic medicine and innovation hub anchored by a new relationship with University of Pittsburgh to house cutting-edge immunotherapy research in collaboration with the University of Pittsburgh Medical Center ("UPMC") and co-located with UPMC's Shadyside Hospital.
    • One uCity: Expansion of the flourishing Philadelphia uCity Square Knowledge Community associated with the University of Pennsylvania.
    • College of Nursing and Health Professions ("CNHP"), Drexel University: State-of-the-art academic medicine facility, also in uCity Square, which will provide CNHP students, faculty and staff with immediate access to Drexel's full suite of on-campus resources.
    • Cortex Innovation Tower: Expansion of the vibrant Cortex Innovation Community associated with Washington University in St. Louis.
    • Arizona State University: Class-A, fully lab-enabled research & innovation center anchored by Arizona State University and focused on biomedical discovery and innovation in health outcomes.
    • The above total 1.5 million square feet in aggregate, are approximately 40 percent pre-leased and are expected to generate over a seven percent cash and eight percent GAAP yield, respectively, upon stabilization.
  • Colony Financing: Demonstrating execution consistent with Ventas's investment framework, including well structured, higher yielding investments, Ventas closed on a $490 million financing to subsidiaries of Colony Capital, Inc. (with its subsidiaries, "Colony") in June as part of a successful $1.5 billion Colony loan (the "New Colony Loan"). Ventas's investment bears interest at LIBOR plus 6.4 percent, representing a current all-in cash and GAAP rate of nine percent. The New Colony Loan is supported by a diverse pool of collateral, including 156 U.S. healthcare properties comprised of medical office buildings, senior housing properties and other healthcare assets. Ventas previously held a $282 million tranche of Colony debt that was fully retired with proceeds from the New Colony Loan. Ventas's investment in the New Colony Loan is expected to add five cents per share of normalized FFO accretion on a full year basis funded on a leverage neutral basis.
  • Duke Health: In June, expanding on the Company's footprint with Duke University and increasing its investment in academic medicine, Ventas completed an $80 million fee simple acquisition of an asset 100 percent leased for 13 years to Duke University Health System and Duke's affiliated faculty physician group. Annual cash lease escalators are 2.2 percent. This asset enhances Ventas's leading MOB portfolio, and extends its relationship with Duke University and Duke School of Medicine, which is an anchor tenant in the Company's Chesterfield R&I building.

Second Quarter 2019 and Recent Operational and Capital Market Highlights

  • Office Excellence: Ventas's Office business delivered exceptional performance and achievements year to date:
    • R&I Business Highlights:
      • Validating the robust demand for well-located and designed on-campus research space, Penn Medicine occupied 38,000 square feet of lab space at the Company's 3711 Market Street, replacing the Science Center, who expanded by leasing 50,000 square feet in the Company's newly completed building at 3675 Market Street. Both buildings, located in the uCity Knowledge Community in Philadelphia, are now over 97 percent leased.
      • Reinforcing the attractiveness of Ventas's tenants in its R&I business, Paragon Bioservices, Inc ("Paragon") a leading life sciences company located in the Company's University of Maryland, Baltimore Knowledge Community, was recently acquired for $1.2 billion by Catalent Inc. and the Company received $9 million from warrants it held in Paragon equity.
    • MOB Portfolio Recognition: Sutter Van Ness received LEED Gold Certification in the second quarter. Ventas's trophy 239,000 square foot medical office building development opened in the first quarter of 2019, is currently 83 percent leased, and is anchored by Sutter Health (Moody's Aa3).
  • Financial Strength Enhanced by Excellent Capital Markets Execution:
    • Ventas's net debt to adjusted pro forma EBITDA ratio improved sequentially to 5.2x, principally as a result of Ventas equity raised in June in advance of the July closing of the first phase of the LGM transaction.
    • Second quarter and recent activity include:
      • During the second quarter, the Company completed a public offering of common stock for 12.65 million shares that raised $794 million in gross proceeds at an average price of $62.75 per share, principally used to fund the Company's LGM investment.
      • After the second quarter, the Company issued and sold under its "at the market" equity offering program a total of 1.1 million shares of common stock at an average gross issuance price of $70.41 per share, resulting in nearly $78 million in gross proceeds, used to fund the Company's investments.
      • After the second quarter, the Company extended its maturity profile and managed interest rate risk via the attractive issuance of $450 million of 2.65% Senior Notes due 2025, proceeds of which were used to retire $397 million of 2.70% Senior Notes due 2020.
    • The Company has robust available liquidity from cash on hand and existing credit facility totaling $2.6 billion at the end of the second quarter 2019, net of outstanding commercial paper.

People & Culture Driving Continued Success

  • Sean P. Nolan Appointed to Board of Directors
    • Sean P. Nolan, former Chief Executive Officer of AveXis, Inc. (NASDAQ:AVXS), a clinical-stage gene therapy company acquired for $8.7 billion in 2018 by Novartis, has been appointed as an independent member of the Company's Board of Directors, effective immediately. With three decades of extensive experience in the biopharmaceutical industry and a proven track record of business results, Mr. Nolan will contribute unique and complementary insights to enhance the Company's business, especially its rapidly growing R&I business.
  • Demonstrated Leadership Excellence
    • Robert F. Probst, Ventas Executive Vice President and Chief Financial Officer, was named Financial Executives International's 2019 Public Company Financial Executive of the Year. The national award is presented annually to a CFO who has made a major impact within their company, achieved success in the company's growth and profitability, and shown exemplary leadership skills throughout their career.
  • Ventas Named as a Founding Partner of The Global Institute on Innovation Districts ("GIID")
    • Ventas was named a Founding Partner in GIID, a practitioner-led and empirically grounded not-for-profit organization designed to strategically advance innovation districts worldwide through the creation of a global network and focused research initiatives.

Second Quarter Dividend

The Company paid its second quarter 2019 dividend of $0.7925 per share on July 12, 2019 to stockholders of record on July 1, 2019.

2019 Guidance Improved

After a strong first half of 2019, Ventas is raising its outlook for 2019 per share net income attributable to common stockholders, Nareit FFO and normalized FFO, as described below. The Company also re-affirms its previous overall and segment level same-store cash NOI growth guidance.



Improved FY 2019 Guidance



Previous Per Share


Current Per Share



















Net Income Attributable to Common Stockholders

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