Ventas ‘Bullish’ on 2017 Despite Supply Pressure, Uncertainties

Ventas Inc. (NYSE: VTR) has a bullish outlook for 2017, despite continued supply concerns and an uncertain future for the Affordable Care Act (ACA), company executives revealed Tuesday.

By the end of 2017, the Chicago-based real estate investment trust (REIT) will “essentially” be out of the skilled nursing business, more than 50% of its portfolio will be in the “exciting” senior living business, and approximately 6% of the portfolio will be in life science, Ventas Chairman and CEO Debra Cafaro said during a presentation at the 35th Annual J.P. Morgan Healthcare Conference in San Francisco.

In 2017, Ventas expects to complete approximately $900 million worth of dispositions and roughly $1 billion worth of acquisitions, CFO Bob Probst noted in the presentation.


“We continue to expect to recycle capital,” Probst explained.

Specifically, Ventas expects to receive about $700 million in the second half of 2017 from its planned sale of 36 skilled nursing facilities to Kindred Healthcare (NYSE: KND), Probst said. Kindred currently operates the skilled nursing facilities.

The company also expects to provide about $700 million in secured debt to fund Ardent Health Services’ acquisition of LHP Hospital Group in the first quarter of 2017, as well as to spend about $300 million acquiring, among other things, high-quality life science and innovation centers operated by Wexford Science + Technology, LLC.


Ventas expects normalized FFO per diluted share for 2016 to be between $4.10 to $4.13, according to a press release published Tuesday. That’s at the high end of the company’s guidance.

New Supply to ‘Crest’

Ventas’ growth in 2016 was dampened by supply concerns, Probst noted at the conference. Early last year, the REIT identified about 30% of its senior housing portfolio as being exposed to supply pressures. Company leadership fully expects 2017 to similarly be impacted by pressure from new supply.

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“The crest, if you like, of the deliveries are coming in 2017, as we see it,” he explained, citing data released Monday from the National Investment Center for Seniors Housing & Care (NIC). “Our outlook for 2017 incorporates a view that there will be a crest of new deliveries.”

It remains to be seen whether the ACA will be repealed or replaced in 2017, but Cafaro expressed confidence that Ventas can move forward accordingly.

“We feel good about where we are,” Cafaro said. She expects whatever plan the Trump administration settles on to be implemented over a period of 2 to 4 years — no less.

“There’s a lot of baseball to be played in terms of where the federal policy goes,” she said, adding that there will be “a lot of time to figure it out.”

The REIT expects normalized FFO per diluted share to be between $4.12 and $4.18 for 2017, according to a press release.

Written by Mary Kate Nelson

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