Ventas just released its fourth quarter earnings as well as full-year 2022, and its seniors housing portfolio is looking up.
Year-over-year same-community performance improved in all categories. Average occupancy increased by 140 basis points to 82.5%. While this is not a great increase for a 12-month period given the lows they were coming from, we’ll take it. Same-community cash net operating income increased year over year by 19.1% to $150.5 million, and the operating margin expanded by 220 basis points to 24.5%. Now, this is not even close to the old days, but a nice pickup. We believe, however, that these numbers include the various government payments which are going away, so the comparison to this year may be a little like apples to oranges.
On a sequential basis, same-community occupancy increased by 30 basis points to 82.2%, total cash NOI increased by 4.3% to $151.2 million, and operating margin increased by 60 basis points to 23.6%. This sequential group includes 34 more communities than in the year-over-year comparison, which accounts for some of the differences.
Perhaps more importantly, the sequential operating expenses increased by just 0.9% on a 1.7% increase in revenues. Year over year, expenses increased by 5.1% compared with an 8.3% increase in revenues. This represents a decent spread, and is good news for Ventas, its operators and the industry.
However, and this is a big however, the strength appears to be in the Canadian portfolio, which had a slightly lower increase in occupancy than in the U.S., but same-community occupancy north of the border is now 94.5%, compared with 78.5% in the U.S., which is much larger market for Ventas than Canada. Interestingly, in the U.S. primary markets, occupancy is 78.1%, compared with 78.6% in secondary markets and 79.4% in all other U.S. markets. All three are up by 130 to 180 basis points year over year, but the U.S. markets still have a lot of needed
recovery.
Ventas’ share price dropped a bit in early trading today, 2/10, but that may be more the mood of the market recently than anything else. In addition, their forecast for 2023 was not as robust as investors would like to see, which would also put a damper on the share price. But they have been conservative before.
