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Flexibility Key to Ventas' Acquisition Strategy

06/05/2013 | By Allen Kenney

Debra Cafaro, chairman and CEO of health care REIT Ventas, Inc. (NYSE: VTR), joined REIT.com for a CEO Spotlight video interview in Chicago at REITWeek 2013: NAREIT's Investor Forum.

Having completed approximately $20 billion in acquisitions since 2004, Cafaro discussed the company’s flexible business model. She said it has helped when it comes to focusing on specific segments of the health care sector that are primed for acquisitions.

"One of the great aspects of the health care REIT model is that we are able to flexibly allocate capital into different sub-sectors at different parts of the cycle, and that has been a way to create value for shareholders," Cafaro said. “Our effort is really to allocate the capital where we see either valuations increasing for multiple expansion and/or valuations increasing because the cash flow is increasing.”

Cafaro added that both senior housing and medical office buildings are poised to continue their upward trends as a result of policy changes, demographics and improving economics.

When it comes to health care reform, Cafaro said that it has a slightly negative impact on Ventas' business overall, but she sees positives as well.

“The positives certainly are that along with the 79 million baby boomers that will be coming into the system and will become Medicare-eligible starting in 2011, they will use our medical offices. In addition, there is a policy drive to treat patients in the lowest-cost, most clinically appropriate setting. We do believe that benefits office and skilled nursing,” she said.

However, she said the negative effect is that some of Ventas’ health care provider tenants in the skilled nursing business are subject to pay for performance. As a result, she said, growth in their reimbursements has been muted.

Cafaro also spoke about being Ventas named to Fortune magazine’s "Most Admired Real Estate Companies" list.

“It was a great honor and tremendous recognition for our team. Our team is long-tenured, very skilled and we work very well together,” she said. “A lot of it is due to the team and, of course, our performance.”