Ventas, Inc. VTR announced that Brookdale Senior Living opted not to exercise its right to extend the Master Lease between the companies for a renewal term beginning Jan. 1, 2026. As a result, Brookdale is no longer entitled to extend the lease term for any assets that fall under the Master Lease.

Brookdale is required to fulfill its obligation of paying the complete contractual rent as outlined in the Master Lease until the existing lease term that concludes on Dec. 31, 2025. Currently, the Master Lease encompasses 120 senior housing communities. For 2025, the annual cash rent specified in the Master Lease is $113.6 million.

This healthcare real estate investment trust (REIT) is set to deploy its Ventas OI platform and playbook to convert some or all of the attractive senior housing communities currently included in the Master Lease into its Senior Housing Operating Portfolio (SHOP) structure. It also enables proven market-driven operators to manage these communities effectively.

Ventas' initiatives aim to enhance the performance and value of these communities while simultaneously expanding its SHOP presence. This expansion seeks to elevate Ventas' growth rate in light of an unprecedented multiyear growth opportunity driven by the secular demand associated with the growing aging population. Moreover, the company may also consider selling, leasing or undertaking other measures regarding a portion of the currently leased portfolio, guided by its Right Market, Right Asset, Right Operator approach.

Conclusion

Ventas’ diverse portfolio of healthcare real estate assets in the key markets of the United States and the United Kingdom is well-poised to capitalize on the favorable industry fundamentals. The company is well-prepared for a compelling multiyear growth opportunity. With long-term leases and agreements, its high-quality portfolio assures steady growth in cash flows.

Shares of this Zacks Rank #3 (Hold) company have gained 26.1% in the past six months compared with the industry’s 14.3% growth.

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Welltower WELL and CareTrust REIT CTRE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Welltower’s 2024 FFO per share is pinned at $4.26, implying year-over-year growth of 17%.

The Zacks Consensus Estimate for CareTrust’s 2024 FFO per share is pegged at $1.50, indicating an increase of 6.4% from the year-ago figure.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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