08/13/2020 | by Sarah Borchersen-Keto

Ventas, Inc. (NYSE: VTR) is starting to look at opportunities in the medical office and life science real estate sectors, Chairman and CEO Debra Cafaro said.

Speaking Aug. 12 during an NYU Schack REIT Leadership Workshop webinar, Cafaro noted that while Ventas is focused on ensuring it has a steady foundation and strong balance sheet, “we will continue to be active acquirers as one element of the Ventas total return to shareholders story.”

At the start of March, Ventas established an open end fund focused on medical office and life science real estate.

“That’s an incredible tool that we can use with institutional third party capital to continue to expand our footprint and leverage our team and our expertise, even though cap rates have continued to stay pretty tight in our space,” Cafaro said. She added that the current level of cap rates, however, is a “good sign that people do believe in the near-term and intermediate term performance of our asset classes.”

Ventas has been an “incredible consolidator,” doing both public-to-public transactions as well as acquiring private portfolios and bringing them to the public sphere, Cafaro said.

“The REIT model really is a great long-term model for the ownership of income-producing real estate,” Cafaro said. She added that the private sector still owns 75-80% of the real estate market, “and that’s one reason we have established our fund because we want to offer investors access to both and have different tools in the toolkit.”

Turning to senior housing, Cafaro said the intermediate term prospects for Ventas remain “very positive.” During the second quarter, leading indicators on move-ins and clinical results for keeping seniors safe all continued to show improvement, although they are still off levels seen last year. “A lot’s going to depend on what our public health response is and how the virus spreads or is contained in the second half of this year,” she explained.

Meanwhile, Cafaro described telemedicine as a “good, cost-effective way” to see physicians for ordinary health issues. “We think it will change some of the utilization patterns for medical office, but we’ve positioned our portfolio to be in areas where you must go see your physician.”

Cafaro also said health care real estate is estimated to be worth at least $1 trillion. Ventas believes the institutionalization of the asset class is still in its early days, she added.