After Welltower’s solid fourth quarter performance, all eyes were on Ventas, which has not pursued the aggressive growth path that Welltower has. Operating metrics were up in its SHOP portfolio of seniors housing communities, but not up as much as investors would have hoped. But that is not the fault of Ventas; rather, it is the fault of the operators that are underperforming.
Same-community occupancy increased 170 basis points in the fourth quarter, year over year, to 84.9%. Revenue was up year over year by 7.0% while expenses were up just 4.2%. This drove a 15.0% increase in cash NOI and a 180-basis point increase in the NOI margin to 25.4%, and this is after management fees. Not bad, especially in a quarter that has not always seen great performance.
The properties in the portfolio that continue to rock it are the ones in Canada. The 83 same-community Canadian portfolio posted a year-over-year occupancy increase of 130 basis points in the fourth quarter, reaching 95.7% while average RevPOR increased by 5.0% to $2,815. That monthly RevPOR is about 50% lower than what the U.S. communities achieve.
But the U.S. communities, while improving, are still lagging behind the overall U.S. market. The same-community U.S. portfolio posted a 180-basis point increase in census, but the increase took them to just 80.9%. The biggest jump was in the secondary markets, where year-over-year occupancy increased by 360 basis points to 82.4%. The laggard was the primary markets sector, which increased by 150 basis points year over year but posted an average in the fourth quarter of just 79.9%. That has got to increase, but will be difficult if the first quarter has its traditional census slump.
Investors were not thrilled with the news, sending the share price down 3% in the opening hours. Perhaps some of their operators need a little injection of the Sevy and Bobby potion.
