Despite recent speculation that REIT consolidation could be on the way, Ventas Inc. (NYSE: VTR) CEO and Chairman Debra Cafaro remains bullish that growth in the senior housing industry can sustain more real estate investment trusts.
Speaking as the featured guest at Crain’s Real Estate Forum in Chicago last Thursday, Cafaro said she sees room for more pure-play and diversified REITs in the market.
“We are very bullish on senior housing in the long term,” she said at the Standard Club in Chicago.
Ventas remains optimistic because of fundamentals, Cafaro emphasized, namely the growing number of seniors and the potential to increase the number of seniors moving into communities by targeting an untapped market of older adults who aren’t currently in play for senior housing.
Less than 10% of seniors live in communities, Cafaro said at the forum. Ventas is betting on more opportunity as that penetration figure moves with an aging population. With 10,000 Americans turning 65 every day and becoming eligible for Medicare benefits, this is an industry “with lots of opportunities,” she said.
Earlier in August, Ventas officially finalized a spinoff pure-play skilled nursing facility REIT, Care Capital Properties (CCP). This sparked talk that smaller-cap REITs could potentially consolidate, as the introduction of CCP may have created crowding in the space, according to at least one analyst.
When asked if there was a “REIT bubble” or if overbuilding was a concern in senior housing, Cafaro again pointed to vast opportunities as demand in the sector continues to rise.
“Markets are in balance and could go either way if construction accelerates or drops off,” she said, noting that overbuilding speculations are likely overstated.
Written by Amy Baxter