Ventas Sees Faster Internal Growth Story Following Skilled Nursing REIT Spin-Off

Debra Cafaro, chairman and CEO of Ventas, Inc. (NYSE: VTR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

Cafaro discussed Ventas’ recently announced spin-off of its skilled nursing assets into a new REIT, Care Capital Properties, Inc.

“Our basic strategy is to create two companies that are faster growing and have differentiated strategies,” she explained. Care Capital is a pure-play, skilled-nursing REIT that will focus on local and regional care providers. “It will have a great cost of capital arbitrage with those providers, , while also filling a gap in the market for investors and customers alike. We think it will be a great external growth story.”

Ventas, meanwhile, will have a faster internal growth story, Cafaro added. It will still have “all the scale and great balance sheet that people love… but we’ll be 83 percent private pay and have 83 percent of our NOI coming from the nation’s top 20 operators,” Cafaro explained.

Ventas will also continue to hold its large medical office building portfolio as well as its top-tier senior living business, Cafaro said.

And while Ventas “will have an outstanding portfolio on any metric that you want to look at,” Cafaro noted that the company continues to reinvest in its portfolio in order to get superior returns. For example, Ventas has been adding memory care units to some of its senior living buildings while also refurbishing some of its Brookdale assets, she said.

Despite the flurry of activity at Ventas, including $23 billion in acquisitions since 2011, Cafaro says the company continues to have an active pipeline of acquisition opportunities both at home and abroad.

“The health care real estate market is still in the early innings of the institutionalization and securitization of the asset class. It’s a trillion dollar market. All the REITs together own about 15 percent and we expect to see continued progress of health care and senior living assets moving into Ventas’ hands over the next decade,” Cafaro said.