The business performance of Chicago-based real estate investment trust Ventas during the second quarter was at the high end of expectations, Ventas Chairman and CEO Debra Cafaro said Friday during a second-quarter earnings.
The REIT’s senior housing operating portfolio benefited from strong demand and expanded pricing power, offsetting anticipated expense growth caused by inflationary pressures, she said. Favorable supply and demand conditions, minimal competition and a growing population of older adults entering the market place point to strong results for Ventas in the future, according to the company.
Occupancy, revenues grow
Overall same-store senior housing operating portfolio revenue in the second quarter grew year over year by more than 10% due to positive trends in average occupancy, which grew by 390 basis points (3.9%) to 83.7% in the second quarter.
“Robust” demand continued a trend of positive net move-ins in 16 of the past 17 months, according to Executive Vice President of Senior Housing J. Justin Hutchens. Overall, leads are up 23% from the first quarter of 2021, move-ins are up 11% and move-outs up 2%, he said. Ventas netted 470 move-ins through July, which is 307 higher than the same period in 2019 before the pandemic, Hutchens said.
Ventas continues to provide its operating partners with operational and analytical information through its Ventas Operational Insights initiative, Hutchens said. This quarter, Ventas OI addressed digital market capabilities in three modules: technical website audits, user experience evaluation audits and hyper-local search engine optimization.
“This initiative is meant to optimize our digital lead bank, which is the fastest growing of all our lead sources and now represents over three-quarters of all lead volume,” he said.
Second-quarter average occupancy in the US senior housing operating portfolio was at 78.5%, up 470 basis points (4.7%) compared with the second quarter of 2021.
In-place rent increases of 8% were implemented at U.S. communities — 4% in Canadian communities — during the first quarter.
Year over year overall same-store operating expenses grew 11% overall at $3.8 million per day, driven by continued inflationary effects on labor, utilities and other expenses. Ventas expects operating expenses to remain elevated into the third quarter, executives said.
Workforce initiatives implemented
Hutchens said he was encouraged by several labor initiatives that managers had implemented after they were identified last fall, including centralizing line staff recruitment, enhancing applicant tracking technology and improving the application process.
The result, he said, was improvements in net hiring and a stabilization of the workforce.
The Ventas senior housing portfolio experienced 11 consecutive months of positive net hiring and a reduction in agency costs in the second quarter, Hutchens said.
Investments this year total $1.3 billion
Cafaro said that the REIT continues to find “compelling” investment opportunities, with $1.3 billion of investment activity year to date. The REIT is under contract to acquire HarborChase of Riverwalk, an 88-unit assisted living and memory care community in Rockhill, NC, for $33 million. The deal is expected to close in the third quarter.
