We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain Ventas Stock in Your Portfolio Now
Read MoreHide Full Article
Ventas’ (VTR - Free Report) senior housing operating portfolio (SHOP) is likely to benefit from the aging population and the rising healthcare expenditures by senior citizens. Its outpatient medical and research portfolio is expected to gain from the favorable outpatient visit trends and the rising need for research related to life-saving vaccines and therapeutics. A healthy balance sheet position is likely to support its growth endeavors. However, dependence on few tenants and high interest rates add to its concern.
Last August, VTR reported its second-quarter 2024 normalized FFO per share of 80 cents, which surpassed the Zacks Consensus Estimate of 79 cents. Results reflected growth in occupancy in the SHOP same-store portfolio, contributing to higher revenue generation. The company also provided an improved outlook for 2024.
Shares of this healthcare real estate investment trust (REIT), carrying a Zacks Rank #3 (Hold), have rallied 31.9% over the past three months, outperforming the industry's upside of 18.9%.
Image Source: Zacks Investment Research
What’s Aiding Ventas?
Per the company’s second-quarter 2024 earnings presentation, the U.S. population aged 80 years and above is expected to grow by more than 24% in the next five years.This age cohort constitutes a major customer base of healthcare services and incurs higher healthcare expenditures than the average population, poising Ventas’ SHOP portfolio well to capitalize on this positive trend.
Ventas is focused on its "Right Market, Right Asset, Right Operator" strategy, enhancing its portfolio quality and operator diversification and increasing its SHOP scale. The company expects favorable supply-demand fundamentals, its well-invested properties and operators supported by its Ventas OI platform to drive growth. Ventas expects its SHOP segment's same-store cash NOI to grow between 13% and 16% in 2024.
Ventas is carrying out accretive investments to enhance its research portfolio, which is essential for the delivery of crucial healthcare services and research related to life-saving vaccines and therapeutics. Its outpatient medical and research (OM&R) assets are aligned with institutional demand with several top-tier research universities and credit tenancy.
With top-rated tenants and long-lease terms, its high-quality portfolio assures steady growth in cash flows. In the OM&R portfolio, Ventas generated more than 3% same-store cash NOI growth in the second quarter of 2024 with strong margins and stable occupancy. Ventas expects the OM&R portfolio's same-store cash NOI to grow in the range of 2.75-3.25% in 2024.
Ventas maintains a healthy balance sheet. It has been making efforts to enhance its liquidity position and financial strength. As of June 30, 2024, the company had approximately $3.3 billion of liquidity and a net debt to further adjusted EBITDA of 6.4X. It has also substantially cleared 2024 debt maturities. Its access to diverse capital sources through capital recycling, third party (VIM), on-balance sheet financing and internal cash flow provides ample financial flexibility and is likely to support its growth endeavors.
What’s Hurting Ventas?
Ventas also faces tenant concentration risk in its triple-net leased property segment. The properties leased to Brookdale Senior Living, Ardent and Kindred accounted for 7.2%, 6.6% and 6.6% of Ventas’ total NOI, respectively, in the second quarter of 2024. In case of no lease renewal, change in lease agreements or any adverse development for these three tenants, Ventas’ financial condition and results are likely to be impacted.
A high interest rate environment is a concern for Ventas. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of June 30, 2024 was approximately $13.18 billion. Moreover, with high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
The Zacks Consensus Estimate for Cousins Properties’ current-year FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved northward marginally over the past two months to $8.09.
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.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Here's Why You Should Retain Ventas Stock in Your Portfolio Now
Ventas’ (VTR - Free Report) senior housing operating portfolio (SHOP) is likely to benefit from the aging population and the rising healthcare expenditures by senior citizens. Its outpatient medical and research portfolio is expected to gain from the favorable outpatient visit trends and the rising need for research related to life-saving vaccines and therapeutics. A healthy balance sheet position is likely to support its growth endeavors. However, dependence on few tenants and high interest rates add to its concern.
Last August, VTR reported its second-quarter 2024 normalized FFO per share of 80 cents, which surpassed the Zacks Consensus Estimate of 79 cents. Results reflected growth in occupancy in the SHOP same-store portfolio, contributing to higher revenue generation. The company also provided an improved outlook for 2024.
Shares of this healthcare real estate investment trust (REIT), carrying a Zacks Rank #3 (Hold), have rallied 31.9% over the past three months, outperforming the industry's upside of 18.9%.
Image Source: Zacks Investment Research
What’s Aiding Ventas?
Per the company’s second-quarter 2024 earnings presentation, the U.S. population aged 80 years and above is expected to grow by more than 24% in the next five years.This age cohort constitutes a major customer base of healthcare services and incurs higher healthcare expenditures than the average population, poising Ventas’ SHOP portfolio well to capitalize on this positive trend.
Ventas is focused on its "Right Market, Right Asset, Right Operator" strategy, enhancing its portfolio quality and operator diversification and increasing its SHOP scale. The company expects favorable supply-demand fundamentals, its well-invested properties and operators supported by its Ventas OI platform to drive growth. Ventas expects its SHOP segment's same-store cash NOI to grow between 13% and 16% in 2024.
Ventas is carrying out accretive investments to enhance its research portfolio, which is essential for the delivery of crucial healthcare services and research related to life-saving vaccines and therapeutics. Its outpatient medical and research (OM&R) assets are aligned with institutional demand with several top-tier research universities and credit tenancy.
With top-rated tenants and long-lease terms, its high-quality portfolio assures steady growth in cash flows. In the OM&R portfolio, Ventas generated more than 3% same-store cash NOI growth in the second quarter of 2024 with strong margins and stable occupancy. Ventas expects the OM&R portfolio's same-store cash NOI to grow in the range of 2.75-3.25% in 2024.
Ventas maintains a healthy balance sheet. It has been making efforts to enhance its liquidity position and financial strength. As of June 30, 2024, the company had approximately $3.3 billion of liquidity and a net debt to further adjusted EBITDA of 6.4X. It has also substantially cleared 2024 debt maturities. Its access to diverse capital sources through capital recycling, third party (VIM), on-balance sheet financing and internal cash flow provides ample financial flexibility and is likely to support its growth endeavors.
What’s Hurting Ventas?
Ventas also faces tenant concentration risk in its triple-net leased property segment. The properties leased to Brookdale Senior Living, Ardent and Kindred accounted for 7.2%, 6.6% and 6.6% of Ventas’ total NOI, respectively, in the second quarter of 2024. In case of no lease renewal, change in lease agreements or any adverse development for these three tenants, Ventas’ financial condition and results are likely to be impacted.
A high interest rate environment is a concern for Ventas. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of June 30, 2024 was approximately $13.18 billion. Moreover, with high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Cousins Properties (CUZ - Free Report) and Lamar Advertising (LAMR - Free Report) , 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 Cousins Properties’ current-year FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved northward marginally over the past two months to $8.09.
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.