Ventas, Inc (VTR) reported first quarter 2012 funds from operations (FFO) of $214.8 million or 74 cents per share compared with $101.0 million or 62 cents per share in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to net income.
Excluding the non-recurring items, FFO in the reported quarter stood at $263.9 million or 91 cents per share, compared with $121.0 million or 75 cents per share in the year-ago quarter. The recurring FFO per share beat the Zacks Consensus Estimate by 2 cents.
The year-over-year upside in FFO was primarily on the back of accretive acquisitions like Nationwide Health Properties Inc. and Atria Senior Living Group, Inc., and rental increases from the company's triple lease portfolio, partially offset by higher weighted average diluted shares outstanding during the quarter.
Total revenue during the reported quarter was $573.7 million compared with $268.4 million in the year-earlier quarter. Total revenue also beat the Zacks Consensus Estimate of $568.0 million.
Total net operating income (NOI) increased 3.8% year over year during the first quarter of 2012. For the total portfolio, same-store cash NOI growth was 3.5% during the reported quarter.
As of March 31, 2012, Ventas had an operating portfolio of 79 private pay seniors housing communities managed by Sunrise and 119 private pay seniors housing communities managed by Atria.
Ventas completed the acquisition of Cogdell Spencer Inc. (Cogdell) and its 72 high quality medical office buildings (MOBs) and has emerged as the largest owner of MOBs in the U.S. with over 21 million square feet of owned properties.
Additionally, the company entered into an agreement to acquire 16 high-quality, private pay seniors living communities managed by Sunrise for $362 million and the acquisition is expected to close in the second quarter of 2012.
During the reported quarter, Ventas invested over $56 million, including an assumption of $16.5 million in debt in one MOB and one senior housing community. Also, Ventas sold nine assets for a total consideration of $121.3 million.
As of March 31, 2012, the company had $73.0 million in borrowings outstanding under its unsecured revolving credit facility, $500 million in borrowings outstanding under its unsecured term loan facility, and $53 million in cash and cash equivalents.
At the end of the quarter, debt to total capitalization stood at 28% and net-debt-to-adjusted-pro-forma-EBITDA (earnings before interest, tax, depreciation and amortization) was 4.7x.
With superior quarterly results, Ventas expects FFO in the range of $3.63-$3.69 per share for fiscal 2012.
Ventas currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, HCP Inc. (HCP) also holds a Zacks #3 Rank.
To read this article on Zacks.com click here.
Zacks Investment Research