Ventas (VTR) posted one of its best quarters in a while for the third quarter, especially on the occupancy front. Year-over-year third quarter same-community occupancy increased by 350 basis points to 87.0% for its 488 communities that were owned in both quarters. Year to date for the first three quarters same-community occupancy increased by 310 basis points. Both numbers far exceed the general market, as disclosed by NIC MAP. This will be important as the operators in the Ventas portfolio begin to enter the winter months. The good news is that they are not seeing any decrease in census so far in the fourth quarter, a typically slow quarter for census increases.
Cash net operating income grew by 15.3% year over year and NOI margin increased by 150 basis points to 26.3% year over year, even though that was 100 basis points lower on a sequential basis. The REIT’s Canadian portfolio hit a record of 96.5% occupancy, a level the U.S. market can only dream of. The operating performance resulted in the REIT increasing its earnings guidance for the third time this year, but it was a small increase this time.
On the acquisition front, Ventas has closed or put under contract $1.7 billion of seniors housing assets year to date. Much of this comes from the acquisition of 20 IL/AL communities with 2,971 units from Chicago Pacific Founders that are managed by Grace Management and will go into VTR’s SHOP portfolio. The purchase price was $725 million, or about $244,000 per unit.
The 20 communities are located in 14 states and have a current occupancy of about 92% and have been at 90% or higher since 2022. The portfolio is approximately 69% IL and 31% AL/MC. The expected year one NOI yield to Ventas is between 7% and 8%, so we calculate that the in-place EBITDAR may be close to $50 million. This is one of the largest transactions in our sector year to date.
Ventas has $4.0 billion in liquidity and has sold 19.8 million common shares under its at-the-market equity offering program raising gross proceeds of about $1.1 billion year to date. It looks like we can expect more deals to come.
