Kindred relationship offers insights into Brookdale changes, Cafaro says
Ventas' focus when it comes to improving the return on its investment in Brookdale Senior Living is reminiscent of the real estate investment trust's relationship with Kindred Healthcare, Ventas Chairman and CEO Debra Cafaro said Wednesday to those attending the Bank of America Merrill Lynch Global Real Estate Conference in New York City.
“Like we have done with Kindred and we do with all of our customers, we focus a lot of energy on, ‘Are there things we can do that make you better off and make Ventas better off?' ” she said.
In the case of Kindred, one answer to that question came Aug. 31 when Ventas announced that it had completed the first phase of its pending sale of 36 owned skilled nursing facilities that were operated by Kindred to an affiliate of BlueMountain Capital Management. The move facilitated Kindred's exit from its SNF business. When the transaction is complete (expected by the end of the year), Ventas' percentage of net operating income received from SNFs will be only 1% of its aggregate NOI, according to the REIT.
“Those are complicated questions, but we have, over time, done that [asked them] with Kindred,” Cafaro continued. “We have done so, actually, with Brookdale in some cases, where we are divesting of assets that make the portfolio better, that improve coverage, that make both of us better off.”
Of triple-net leased properties, Brookdale is one of the REIT's largest tenants, according to a company presentation.
“We believe they can and should operate better, and so we focus our efforts on how they can do that,” she said.