Ventas Sees ‘exceptional’ Opportunities For More Growth In 2024

Ventas (NYSE: VTR) has a runway for growth in North America and the U.K. – but opportunities to expand in the U.S. are “exceptional right now,” according to CEO Debra Cafaro.

“This is one the first times in my career where I’ve seen high going-in cash yields on quality assets in good markets that also [have] embedded growth that leads to low- to mid-teens unlevered IRR expectations,” Cafaro said during an interview Tuesday at the 2024 Nareit REITweek Investor Conference in New York City. “We’re very excited about that.”

She added that Ventas in 2024 expects to invest $750 million on external growth funded with equity, with $350 million of that already closed. The company’s investments this year have so far centered on senior housing.

Today, the company has 1,400 properties across North America and the U.K., including 581 properties in its senior housing operating portfolio (SHOP), according to recent financial disclosures.

The company is specifically looking for senior living communities with yields of 7% to 8% and unlevered internal rates of return (IRR) in the “low- to mid-teens.” The real estate investment trust (REIT) also is searching for properties that can be acquired below replacement value, with campuses that have multiple unit types for residents.

“Generally these communities are on the newer side and have occupancies that are mid-80s or so,” said Executive Vice President of Senior Living Justin Hutchens. “It is a unique opportunity to buy in the U.S., have yield and growth combined, and it’s really leading our pipeline at this stage.”

Ventas has grown its number of operating partners to 24 as of this year, up from 10 in 2020, he added. Affordability of services has been a top criteria as the company has grown, especially with the incoming baby boomer generation at the industry’s doorstep.

“We’ve had a couple of really good opportunities to pick up new Northeast-based regional operators – we picked up benchmark last year, LCB this year,” Hutchens said. “The decision really is not around the size of the company, it’s their track record in a specific market.”

Beyond growing the REIT’s footprint externally, Ventas’ top leaders are also focused on growing occupancy and margins in the years ahead. The company has a three-pronged strategy to capture organic senior housing growth, grow its data analytics functions and “execute and drive cash flow in the rest of our portfolio,” according to Cafaro.

Hutchens added he sees potential to use that strategy and grow average senior housing occupancy 10 percentage points higher in the next few years.

“We believe that we can meet and potentially exceed low-90s occupancy, which is what the last peak was in 2014,” he added.

Also giving the company’s leaders confidence on the year ahead was the recent hiring of Lindsay Casillas as senior vice president and chief revenue officer.

“I’m really excited about Lindsay joining the team because she has a good solid background in hospitality, and before that, a solid background in senior housing,” Hutchens said. “She’ll lead the SHOP performance and have a special emphasis on top-line growth.”

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