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Ventas sees no FFO growth in 2020, 'very disappointed' in seniors housing in Q3

Ventas Inc. suffered from weak results in its seniors housing operating portfolio in the third quarter and is deferring growth expectations for its overall business beyond 2020.

Chairman and CEO Debra Cafaro said in an earnings conference call that the company is "very disappointed" with the quarterly results, and intends to make "necessary adjustments and decisions" that will improve performance.

The company's share price was down roughly 7% in early trading.

The seniors housing operating portfolio, in which the company is exposed directly to fluctuations in operating revenue, represents 25% of Ventas' enterprise and 33% of the company's net operating income, executives said. Same-store NOI in the portfolio declined 5% year over year in the third quarter.

CFO Bob Probst said revenue in the portfolio was weaker in the quarter from the cumulative effect of new, competing properties in a "dynamic competitive market." Average occupancy in the portfolio grew sequentially in the quarter to 86.7%, but an expected occupancy boost, typical in the third quarter, did not materialize. The occupancy gap widened "sharply" in September, with period-end occupancy roughly 115 basis points lower than a year earlier, Probst said.

"What absolutely is a fact is the market changed pretty rapidly in the third quarter," he said.

In releasing third-quarter earnings, the company maintained the midpoint of its normalized funds from operation per-share guidance for 2019. Yet, when asked to confirm that the company is not expecting FFO growth in 2020, Cafaro replied: "Directionally, yes. The growth will be deferred past 2020."

Ventas did not provide formal guidance for the first quarter or full year 2020.