Ventas (VTR) has a strong flexible balance sheet and excellent liquidity. Its capital structure is 67% equity and 33% debt. 12% of its debt is unsecured bank debt, 75% is in the form of unsecured public bonds, and 13% is in the form of non-recourse mortgages. The majority of the company’s debt will mature after 2019.
VTR has a “BBB+” rating from Fitch and S&P, which among its peers is only matched by Welltower (HCN). These ratings help in the debt maturity schedule and help in getting better costs.
In 3Q17, Ventas closed a $400 million revolving construction credit facility. This increases the company’s liquidity, which helps in funding its other development projects with its platform partners.
Peer group multiples
As discussed in the previous article, VTR has an excellent fixed-charge ratio that beats all of its peers. However, VTR lags slightly behind Welltower (HCN) in terms of its net-debt-to-adjusted EBITDA ratio of 5.5x, while VTR has a ratio of 5.7x. Among the other players in the industry, Simon Property Group (SPG) and Equity Residential (EQR) have a ratio equal to VTR of 5.7x.
VTR’s secured debt by gross asset value stands at 5%, only behind HCP (HCP) at 2%. While HCN has a ratio of 9%, SPG and EQR have a ratio of 18% and 14%, respectively.
VTR forms 2.4% of the iShares Core U.S. REIT ETF (USRT).