Editor’s Note: This is a longer version of “A Few Minutes With” from our August 2019 print issue. Subscription is free to those who qualify; sign up here.
Debra A. Cafaro, chairman and CEO of real estate investment trust Ventas Inc. recently spent a few minutes answering questions for McKnight’s Senior Living about the middle market, sustainability and hockey.
What attracted you to areas such as senior living, healthcare and research, and what keeps you attracted to those areas?
Getting to work in a large, highly successful, respected and innovative firm with great colleagues, and partnering with best in class care providers and top researchers who are literally curing cancer is a pretty great career in my book.
The real estate industry captivated me early on in my career, and I am fortunate to have been a part of the emergence of the modern REIT era that boasts the most entrepreneurial, energetic and authentic personalities of any industry.
My vision in 1999 was that demographics would fuel demand for healthcare real estate, that healthcare real estate was large and desirable enough to become an institutionally prized asset class, and that more healthcare real estate should be owned in public hands, because we are the most compelling owners of that real estate. Sitting as the intersection of healthcare and real estate — each nearly 20% of our GDP — made the potential seem limitless.
That vision has become a reality and is a big reason we’ve delivered over 23% compound annual return to shareholders for 20 years. But the potential is even greater. Today, we are in a needs-based, demographically driven business with a senior population that is undergoing fast and high growth, and it is that future opportunity that continues to attract me.
Within our portfolio, our seniors housing portfolio sees a powerful upside as the 80+ consumer base grows from 12 million today to more than 20 million in 2030. Our medical office and outpatient portfolio plays to the Baby Boomers with more than 10,000 of them turning 65 every day, while our university-focused research and innovation portfolio encompasses those researchers, scientists and entrepreneurs that address chronic conditions and cure diseases.
Through our portfolio of five verticals and in partnering with the best care providers and institutions in the nation, we are an integral part of industries that focus on healing, wellness, care and cures for millions every day. What could be more satisfying?
Everyone in the industry is familiar with the impending “silver wave.” What other trends are you expecting that will affect or shape senior living?
Beyond demographic growth and longevity trends, we will see a continuous increase in awareness and interest in the value proposition of senior housing: a better quality of life that includes socialization and peer-to-peer support, activities and programming, safety and security, hospitality and levels of care that evolve as resident needs change.
Technology, data and analytics are increasingly sophisticated and more deeply integrated into our business. For example, as the second largest owner of senior housing in the country, Ventas uses a proprietary data analytics ecosystem that consolidates billions of data points from our years of experience, portfolio and operator scale to provide proprietary insights to help us excel.
We also foresee more connectivity of senior housing with payers who focus on lower healthcare costs and better health.
Do you see Ventas becoming more involved in trying to serve the so-called middle market in the future?
With the number of middle-income seniors aged 75+ predicted to double over the next decade to more than 14 million people, there is a large middle market that is attractive and that deserves a quality experience at an accessible price. Ventas already serves that market in a portion of our communities, and we recently acquired a very high quality portfolio in Canada, Le Groupe Maurice, that provides an incredible product at an accessible price.
Our consistent focus remains on private-pay customers and partnering with operators who offer a compelling value proposition to residents through their experience at various levels of acuity and price points. Whenever we see the right combination of value to, and care for, the customer, profitability to the operator and returns to Ventas, we will be active in the market.
Congratulations on the many accolades you have received over the course of your career. What career advice would you have for professionals at earlier stages in their work lives?
Thank you for saying so. It’s been and continues to be a great privilege to lead Ventas.
I’d say to professionals at all levels that you should demonstrate a fierce courage and commitment to validate others’ confidence in you by contributing, learning new things and embracing every challenge that comes your way. Be curious, useful and productive. Be the kind of person others want to work for and with, acting with ethics, integrity and contributing at every turn. At the same time, expect others you work with to earn your trust and respect; and when you decide where you want to work, place a high emphasis on being with those who are excellent and who take a sincere interest in you.
What has been the biggest surprise to you in your career?
I didn’t anticipate how exciting and rewarding building a business and being part of a winning team would be, and how fun it is to watch colleagues flourish and succeed. From Ventas’s very challenging beginnings, the valid opportunity that the company could become a $100 billion enterprise continues to surprise and motivate me every day.
Ventas has been recognized for its sustainability efforts. What do you believe are the most important ways that senior living operators can work to improve sustainability?
At Ventas, we have long been committed to fundamental and meaningful sustainability throughout our business, which means running a business that can be successful through cycles, improving the portfolio’s environmental profile, investing in your employees, seeking diversity and making sure to pursue responsible investments and policies.
We embed sustainability into the way we do business and who we do business with. We believe, and have shown, that sustainability efforts are congruent with delivering outsize shareholder value.
Some practical recommendations for senior care providers include making capital and technology investments that reduce operating costs, increase business insights and improve environmental impact such as LED lighting and energy controls. We often partner with our senior living care providers on capital for these types of projects. In addition, it is important to emphasize retention and training of employees at all levels of the organization, which can result in better bottom line results, higher employee engagement and an enhanced resident experience.
These commitments take financial strength and focus, and we want our industry operators to achieve and maintain financial stability and success to enable their long-term sustainability goals.
What is the best part of your day?
Having coffee early in the morning and preparing to take on a day that will be challenging, fun and interesting. Every day, I resolve to be and to try my best and to bring out the best in our team. At that point in the day I get to focus forward, knowing I’ll learn something; I’ll enjoy my colleagues and we’ll discuss new opportunities and solve problems; and I’ll get to talk to some of our partners or board members.
This is off topic, but as an owner of the Pittsburgh Penguins hockey team, what do you think of the team for 2019–2020?
Winning the Stanley Cup — and drinking from it — in my first two years of team ownership (2016–2017) were a dream come true. I can’t wait until hockey season starts in the fall, and I know the championship-caliber Pens will give it their all to win a sixth Stanley Cup this year.