Ventas Not Worried about Non-Traded REIT Competition in Senior Housing

Ventas, Inc. (NYSE:VTR) is taking a ‘hakuna matata’ approach to its ability to compete with a growing number of non-traded real estate investment trusts entering the senior housing and healthcare market.

“Our sector is large, it’s growing, it’s highly fragmented, and there are lots of opportunities,” said Ventas CEO Debra Cafaro during the REIT’s fourth quarter earnings call on Friday. “We have a track record of having executed our growth strategy in a very compelling way and we feel confident about our ability to continue to do that.”

The senior housing and healthcare sectors’ attractiveness to investors has always translated to competition, Cafaro continued, which can take “different forms in different times” of the market—including non-traded REITs.


While the timing of acquisitions has been “lumpy” in the past few quarters and “impossible to predict,” she continued in response to an analyst on the call, Ventas is prepared for opportunities.

“We’re in a great sector where we have different segments where we can allocate capital intelligently at the right time and in different cycles… I feel very confident in our team’s ability to go out there and take care of business,” she said.

At the end of the day, the REIT’s job is to create value for shareholders, Cafaro noted, and Ventas logged yearly and monthly growth in revenues, net operating income, funds from operations, and earnings per common share, according to year-end and fourth-quarter results.


Normalized funds from operations for the Chicago-based REIT increased 9% to $1.2 billion for the year ended Dec. 31, 2013, or $4.14 per diluted share, compared to 2012.

Ventas attributed its FFO growth to the REIT’s $1.8 billion of investments in 2013, along with the full-year benefit of its 2012 acquisitions, strong same-store growth in its senior housing operating portfolio, rental increases from its triple-net lease portfolio, and lower weighted average interest rates.

Fourth-quarter normalized FFO grew 7% to $313.6 million compared to the same quarter in 2012.

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By the end of 2013, Ventas’ senior housing operating portfolio numbered 237 communities, including two that were acquired in the fourth quarter. Of those, Atria manages 142 and Sunrise manages 95.

Total net operating income for 2013 in the senior housing operating portfolio was $449 million, up 5.6% on an annual same-store basis, with occupancy up 130 basis points. Fourth quarter NOI was $115.9 million.

Ventas invested $1.9 billion in 2013, including $96 million in development and redevelopment. Ventas is currently evaluating another $200 million of redevelopment and development projects in its pipeline.

The REIT’s $1.8 billion of acquisitions was comprised of 47% triple-net leased assets; 43% senior housing operating communities managed by Atria; and 10% medical office buildings, with an expected first-year NOI of more than 7%.

A major 2013 investment is Ventas’ $790 million acquisition of 26 independent living communities managed by Holiday Retirement. Properties managed by Holiday now generate about 2% of Ventas’ revenue and 4% of NOI, according to fourth quarter supplemental information.

Looking ahead, Ventas expects its 2014 normalized FFO per diluted share—excluding the impact of unannounced acquisitions, divestitures, and capital transactions—to range between $4.31 and $4.37, a range that represents approximately 5.5-7% per share growth.

NOI in 2014 for the Atria and Sunrise-managed portfolio is expected to be between $488 million and $500 million, an approximately 4-6% same-store growth.

Written by Alyssa Gerace

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