Ventas Earnings: High NOI Growth and High Acquisition Cap Rates for Senior Housing Segment

No-moat Ventas reported second-quarter results that were in line with our expectations, leading us to reaffirm our $69 fair value estimate. Senior housing same-store occupancy improved sequentially by 90 basis points to 85.6%, slightly better than our estimate of a 60-basis-point gain. Average rental rates increased 3.9% year over year, leading to same-store revenue growth of 8.0%, which was slightly below our estimate of 9.5% revenue growth. However, same-store operating expense growth for senior housing was only 4.9%, below our 7.6% growth estimate, leading to same-store net operating income growth of 15.2%, which was slightly better than our 14.1% estimate for the segment. In the second quarter, same-store NOI growth for the medical office segment was 2.8%. For the life science segment, it was 5.5%, and for the triple-net portfolio, it was 2.6%. Combined, the company reported total same-store NOI growth of 7.8% in the quarter, in line with our 7.5% estimate. Ventas reported normalized funds from operations of $0.80 per share, which matches our second-quarter estimate and is 7% higher than the $0.75 Ventas reported in the second quarter of 2023.