On the Record: John Cobb, Ventas Chief Investment Officer

Senior Housing News recently got the chance to speak with John Cobb, the senior vice president and chief investment officer of Chicago-based Ventas Healthcare REIT (NYSE:VTR). Although he’s only been with Ventas for about a year and a half, Cobb has a longstanding relationship with Ventas president Ray Lewis, with whom he’s worked for about six or seven years. His previous roles include president and CEO of Senior Lifestyle Corporation and a 10-year stint with GE Healthcare Financial Services, where he eventually became the senior managing director. A Florida native, Cobb received a B.A. in finance from Pennsylvania’s Lehigh University, and has spent the past 15 years in Chicago, Ill.

During this exclusive interview with SHN, the Ventas CIO spoke of the REIT’s goal to keep targeting a private-pay audience, affirmed its primary focus on the Seniors Housing asset class, and picked the Superbowl champion—sort of.

Senior Housing News: It seems fair to say that 2011 was the year of the REITs for seniors housing in general. Do you anticipate the same for 2012?


John Cobb: Being a large S&P 500 REIT, we think it’s going to be a good year. It’s hard to predict what the deal flow is. We have a good pipeline, and there’s a fair amount of activity. I think it will be a good year.

SHN: What kinds of deals are you angling for?

JC: One of the things I like about Ventas—we’re a broad, diverse company. We’re highly focused on private pay assets, and we’re constantly looking for transactions, both big and small.


We’ve closed on small deals that are less than $10 million, and we’ve done deals in the billion dollar range. The exciting thing about being here is that we can look at a lot of different transactions. We do have a kind of focus on private pay; we’re looking for that.

[As far as deal size] we’ve looked at small, medium, and large deals.

[RIDEA vs. triple net lease] We’ve looked at both. It depends on our clients. We’re trying to meet the customer’s needs on what they’re looking for. We have the ability to do both, and we’re kind of the leading experience in doing both.

SHN: Any plans for that $2 billion revolving line of credit from last October?

JC: What the line of credit does, is it gives us capacity. It allows us to do acquisitions if we want. We’ve built in great flexibility of our company to find great transactions; if we find them, we have the capacity to do them.

SHN: I’m noticing this trend that the growing senior population is not prepared for retirement and their healthcare costs. How is Ventas planning on adjusting its investments, with this in mind?

JC: For us, what we focus on, is finding the best operators. Ever operator has taken what we’ve said and focused their portfolio for that. Different operators are using different techniques to help out those seniors, and so forth. We’re trying to find the best tenants for our portfolios, and we’ve done that. [The portfolio is] strong with Sunrise and Brookdale; senior housing is much less expensive than hospital costs.

We want to align ourselves with the best, and it’s their focus to do that [adjust]; we’re more just the landlord in the situation.

SHN: In the Q3 earnings conference call, Ray Lewis stated the 70% of Ventas’s NOI is derived from private pay.  Do you feel that this number is not only sustainable but able to increase?

JC: It’s been a strong focus of our company over the last ten years of being here. We’ve gone from– in 2001, almost 100% government reimbursed, and now we’re 70% private pay. I think we will keep moving toward that. We’re at a good balance, and we hope to continue.People like our strategy and are behind us.

SHN: Ventas has 196 Seniors Housing Properties that make up 25% of its NOI.  Why does the seniors housing segment of the portfolio remain attractive to Ventas in the near-term and long-term?

JC: That 196 is referencing our Atria and Sunrise portfolios. We like those because they are the best assets in the best markets with top-tier operators. We believe that those properties will have above-average growth rates. Those portfolios have performed well in the downturn, and they will perform well in the upturn. We like the [seniors housing] market.

SHN: Out of all the asset classes under the Ventas umbrella (MOBs, Seniors Housing, Nursing Homes, etc.), which class do you think represents the area with the most potential for “needle moving” acquisitions?

JC: We just announced a large medical office building purchase we did right around Christmas time—hopefully that will close sometime in the 2nd or 3rd quarter. I think we’re very focused on private pay seniors housing… It’s [currently] our biggest focus.

SHN: In a broadview, what changes do you see (if any) to the capital markets for seniors housing and REITs during the next 2 years?

JC: That’s a pretty tough question. The market’s constantly changing. I’m not sure I could predict what’s going to happen with the capital markets, other than what I can say today: we have good access today. Industry fundamentals are doing great. Our company is strong, and we have a diverse portfolio.

SHN: Do you sense that overall borrowing costs will rise much during the next 18-24 months or will they stay relatively flat?

JC: I don’t know—they’re relatively stable today, but they have the ability to change.

SHN: Chicago Cubs or White Sox?

JC: Cubs!

SHN: Who will be the Superbowl XLII champion?

JC: It’d be nice to see the Giants win, but New England’s pretty darn good. 

Companies featured in this article: