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Health Care REIT Strives to Add Value

06/17/2013 | By Mitch Irzinski

George Chapman, chairman and CEO of Health Care REIT (NYSE: HCN), joined REIT.com for a CEO Spotlight video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.

Chapman discussed the various property segments in which his company invests and their prospects for growth going forward.

“We really like private pay,” he said. “We prefer to avoid the volatility inherent in a lot of reimbursement, so we really emphasize senior housing. We think in the last five years in a tough economic time, it has really proven its resiliency and will continue to do so even going forward. And then medical office buildings are another strong segment -- 65 percent of our nation’s care is delivered in outpatient facilities, so the larger, newer, customer-friendly medical office buildings are our other area of focus.”

Chapman talked about how the acquisition of Sunrise Senior Living will enhance his company’s portfolio.

“In a way, Sunrise epitomizes what we’re trying to do best,” he said. “And what’s really unique about Sunrise properties are that 90 percent of them are mansion style.  They’re in the best markets in the country. They’re eight years on average old. Their market rent is about two times the average rent in the country – these are very high end.”

Chapman also described his strategy with regard to joint venture relationships.

“Our JV strategy is just part of our overall strategy,” he said. “That is, for years we have been a partner of choice.  We’ve tried to add value, and so easily over 60 percent of our deals every year are from existing deals. The JV opportunities came about with the RIDEA legislation, and it allows us to have another arrow in our quiver, because some of the operators just want to align interests even more. They want a piece of the action on real estate, we want a piece of the action on operations.  So we think these kinds of facilities will give us greater growth and allow us to interact even more with those operators.“