Ventas, Inc.VTRNYSE

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DCF Valuation

DCF Valuation Summary

Buy

Fair Value: $103.19 per share(market-calibrated)

+19.3%

Upside to Fair Value

Current

$86.50

Pure Model

$105.09

Fair Value

$103.19

Bull Case

$137.25

Bear Case

$78.41

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

1.80%

Calibrated Growth

2.32%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $105.09.

What's Driving This Ratingfor VTR

↓

CapEx normalizing toward maintenance

Historical CapEx is 4.50% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$180M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 12.58% — below the sector mature average of 30.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.3B (25.43% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 11.13% in Year 1 to 2.50% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

✓

Model and market roughly agree

Market-implied terminal growth of 1.80% is close to the model's 2.50% (only 70bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 82.00% indicates efficient cash generation. FCF reaches $3.3B by Year 10 (36.83% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.76

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.92%

Cost of Debt

Pre-tax Cost of Debt4.08%

Tax Rate21.00%

After-tax Cost of Debt3.22%

Equity Weight (E/V)74.86%

Debt Weight (D/V)25.14%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (74.86% × 7.92%) + (25.14% × 3.22%)

= 6.74%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.5B	$7.5B	$8.0B	$8.4B	$9.0B
EBIT	$816M	$949M	$1.3B	$1.8B	$2.3B
Tax	$171M	$199M	$268M	$370M	$481M
NOPAT	$644M	$750M	$1.0B	$1.4B	$1.8B
+ Depreciation	$1.3B	$1.5B	$1.5B	$1.6B	$1.8B
- Capex	$292M	$306M	$287M	$265M	$225M
- Δ NWC	$65M	$53M	$19M	$20M	$22M
Free Cash Flow	$1.6B	$1.9B	$2.3B	$2.7B	$3.3B
Discount Factor	0.937	0.822	0.722	0.633	0.521
Present Value	$1.5B	$1.5B	$1.6B	$1.7B	$1.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.3B

Terminal Growth Rate2.50%

WACC6.74%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$80.1B

PV of Terminal Value$41.7B

Exit Multiple Method

Year 10 EBITDA$4.0B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$88.9B

PV of Terminal Value$46.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$16.3B

PV of Terminal Value$41.7B

Enterprise Value$58.0B

(-) Net Debt$12.5B

Equity Value$45.5B

Shares Outstanding455M

Price per Share$100.06

Exit Multiple Method

PV of Projected FCFs$16.3B

PV of Terminal Value$46.3B

Enterprise Value$62.6B

(-) Net Debt$12.5B

Equity Value$50.1B

Shares Outstanding455M

Price per Share$110.12

Pure Model Fair Value

$105.09

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.74%	$145.76	$159.28	$178.85	$186.99	$178.34
5.74%	$116.13	$123.08	$132.18	$144.60	$162.56
6.74%	$95.98	$100.05	$105.09	$111.48	$119.84
7.74%	$80.97	$83.57	$86.67	$90.42	$95.05
8.74%	$69.16	$70.91	$72.95	$75.34	$78.19

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$78.41

-9.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.95

Base Case

$105.09

21.5% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.76

Bull Case

$137.25

58.7% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.65

Key Assumptions & Drivers• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth11.13%

Year 3 Revenue Growth7.60%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin12.58%

Terminal EBIT Margin30.00%

Tax Rate21.00%

Historical Capex / Rev4.50%

Terminal Capex / Rev2.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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