Debra Cafaro
Chicago-based real estate investment firm Ventas’ business performance in the second quarter was at the high end of expectations, Ventas President and CEO Debra Cafaro said Friday during second-quarter results .
The REIT’s senior housing operating portfolio benefited from strong demand and expanded pricing power, offsetting expected expense growth caused by inflationary pressures, it said. Favorable supply and demand conditions, minimal competition and a growing population of older adults entering the market point to good results for Ventas going forward, according to the company.
Employment, incomes are growing
Overall same-store senior housing portfolio revenue in the second quarter grew more than 10% year-over-year due to positive trends in average occupancy, which grew 390 basis points (3 .9%) up to 83.7% in the second quarter.
“Robust” demand continued a trend of positive net moves in 16 of the past 17 months, according to senior housing executive vice president J. Justin Hutchens. Overall, benefits are up 23% from the first quarter of 2021, inflows are up 11% and outflows are up 2%, he said. Ventas recorded 470 moves through July, 307 more than the same period in 2019 before the pandemic, Hutchens said.
Ventas continues to provide its operating partners with operational and analytical information through its Ventas Operational Insights initiative, Hutchens said. This quarter, Ventas OI addressed digital marketplace capabilities in three modules: website technical audits, user experience evaluation audits, and hyperlocal search engine optimization.
“This initiative is aimed at optimizing our digital lead bank, which is the fastest growing of all our lead sources and now accounts for more than three-quarters of all lead volume,” he said.
Average employment in the second quarter in US Seniors Housing Operating Portfolio it stood at 78.5%, up 470 basis points (4.7%) compared to the second quarter of 2021.
During the first quarter, rent increases of 8% were implemented in US communities (4% in Canadian communities).
Year after year in general, same store operating expenses grew 11% overall to $3.8 million a day, driven by continued inflationary effects on labor, utilities and other expenses. Ventas expects operating expenses to remain elevated in the third quarter, executives said.
Workforce initiatives implemented
Hutchens said he was encouraged by several labor initiatives that managers had implemented after being identified last fall, including centralizing line staff hiring, improving applicant tracking technology and improving the process of request
The result, he said, was improvements in net hiring and a stabilization of the workforce.
Ventas’ senior housing portfolio experienced 11 consecutive months of positive net hiring and reduced agency costs in the second quarter, Hutchens said.
Investments this year total 1.3 billion dollars
Cafaro said the REIT continues to find “attractive” investment opportunities, with $1.3 billion of investment activity to date. The REIT is under contract to acquire HarborChase of Riverwalk, an 88-unit assisted living and memory care community in Rockhill, North Carolina, for $33 million. The deal is expected to close in the third quarter.
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