After closing the deal to acquire the facilities of HCR ManorCare for $6.1 billion in cash, Jay Flaherty, chairman, president and CEO of HCP (NYSE: HCP) says demand for health care facilities is approaching a point where it will outstrip supply.
Speaking with REIT.com during REITWeek2011, Flaherty said the growing number of baby boomers will continue to drive demand.
“There’s virtually nothing that would stop that demand driver – not for this year, not for the next decade, not for the next several decades,” Flaherty said. “At some point, there’s not enough supply to absorb that demand.”
HCP has its hand full with all the properties it acquired from HCR ManorCare, but it currently has development or re-developments going as test cases for when the market really heats up.
“If you add all these up, they’re very fine development and redevelopment opportunities, but they’re not of a scale in the aggregate that is really going to move the needle for our company,” he said. “To a certain extent, we’re doing this as a little bit of an experiment. They will have very fine returns on the dollars invested by our shareholders, but we’re really looking to fine tune what our actual strategy will be over the next couple years.”
Flaherty added that he sees the most opportunities in the senior housing and post acute areas of business.
View the interview at the link below.