Ventas reported fourth-quarter funds from operations 15% higher than analysts expected Thursday, coming in at 83 cents per share. These better-than-anticipated results largely were due to the receipt of $34 million in Coronavirus Aid, Relief, and Economic Security Act Provider Relief Funds to help offset COVID-19 expenses.
Same-property earnings in the Chicago-based real estate investment trust’s seniors housing operating portfolio declined by 25% year-over-year but would have declined by 45% without the relief funds. Revenues also declined sequentially by 2.9% in the fourth quarter as a result of occupancy declines together with heightened intentional discounting and incentives necessitated by the pandemic.
Although the operating environment remains challenging for Ventas’ seniors housing portfolio, Chairman and CEO Debra A. Cafaro said that the firm’s diversification strategy and the population’s aging demographics will help keep it strong and stable.
“Over the long term, resilient demand for senior housing and the strong value proposition senior housing offers to residents and their families, together with our high quality, diversified portfolio, position Ventas favorably to deliver value to our stakeholders,” Cafaro said during the REIT’s fourth-quarter earnings call Thursday.
In addition, with first doses of the COVID vaccine already administered at virtually all of its senior living communities and almost 90% of them scheduled to receive second doses this month, the road to recovery can’t be long off, said Kyle Sanders, CFA, CPA, a financial services analyst at Edward Jones.
Sanders told the McKnight’s Business Daily that although he expects that funds from operations will continue to decline in 2021 before recovering in 2022, vaccines and COVID treatments “will help enable the business’ path to recovery.”
“Additionally, the choppy seniors housing results are being somewhat offset by continued strength in the medical office and life sciences segments,” Sanders said. “We believe Ventas’ financial position remains solid, and will be further strengthened by anticipated asset sales.”
For additional coverage of Ventas’ fourth-quarter and year-end earnings, visit McKnight’s Senior Living.
