Investors did not like what they heard about Ventas for the third quarter, despite an earnings beat.
So, when we first heard that Ventas was announcing that third quarter earnings were going to exceed estimates, we thought, ho-hum, so what else is new, they always beat estimates. The press release was glowing about all the accomplishments during the quarter. They revised guidelines for the full year slightly upward. I didn’t get a chance to listen in live to the earnings call, but I did notice how the share price dropped by 5%. What, on an earnings beat? And then it dropped a little more. It was the revenue miss and concerns about growth that sent investors to the exits. Since then, there has been a negative story about twice a day on either what ails Ventas, or whether they know something we don’t know. Or is there a big transaction coming soon, or no transactions? One thing was clear from the management discussions: seniors housing transactions will be harder to come by, and employee turnover at some of its RIDEA properties has been a growing concern. In addition, they seem to want to expand their hospital platform at a time when their major competitor, Welltower (formerly Health Care REIT), has stated that their acquisitions and partnerships will stop at the front door of the hospital. Ventas’ stock price may look cheap right now, especially with a 5.3% dividend yield, but the bruising it has taken in the market may have less to do with Ventas and its prospects, and more to do with changing investor attitudes about health care, seniors housing and real estate. Otherwise, they all look too cheap right now.
