Ventas’ third quarter results are in and were less than optimal for its seniors housing operating portfolio (SHOP). Comparing the third quarter of 2019 with the same quarter in 2018, same-store cash NOI for its SHOP fell by 5.0%. Occupancy figures were not pretty either, with the quarter ending approximately 115 basis points lower than the end of the third quarter of 2018. The average third quarter occupancy compared with the average of Q3:18 was a less drastic 70-basis point drop. The company acknowledged that overbuilding in some markets led to price competition and pressure on revenues (a refreshingly honest admission when compared with other public companies), which contributed to the loss in NOI. The news initially sent the share price down 8.2% ended the day at $66.00, down 8.9% on 3.5x normal trading volume.

Ventas noted that with construction slowing in the assisted living market, they remained optimistic, but the absorption of the current supply and the supply that is still under construction will take time. With that, Ventas reduced its 2019 property level guidance for its SHOP from a projected -3% to 0% change in FY2019 same-store cash NOI to a -5% to -4% drop. CEO Debra Cafaro also noted that they expect to return to enterprise growth for the SHOP after 2020. If this is any indicator, as an industry, we could be in for one difficult 2020.