Ventas CEO: Hurricanes reveal the value of senior living
NASA-NOAA's Suomi NPP satellite captured this nighttime infrared image of Hurricane Irma over central Florida on Sept. 11 at 3:21 a.m. EDT. (Credit: NOAA/NASA Goddard Rapid Response Team)
Though challenging to operators — and everyone — as they are occurring, natural disasters such as hurricanes get older adults and their families thinking about the benefits of living in a senior living community, Debra Cafaro, chairman and CEO of real estate investment trust Ventas, said Wednesday afternoon to those attending the Bank of America Merrill Lynch Global Real Estate Conference in New York City.
“We typically do see an uptick in inquiries about moving in after these kinds of natural disasters, as people realize the value of health and wellness and safety that can be brought to their loved ones,” she said.
Weather events such as hurricanes also are a welcome reminder to companies like Ventas of why they are in business, Cafaro said.
“We're proud to be part of something bigger than ourselves,” she said. “While we are always focused on value creation and financial results, and will continue to be, I do think it's important to step back sometimes and realize we are doing this for the greater good as well.”
Hurricanes Harvey and Irma also reiterated the benefit of a portfolio that has “leading operators,” Cafaro said, singling out in her comments Kindred Healthcare and Atria Senior Living's handling of recent weather events.
“We emphasize over and over again doing business with leading operators as an important component of what we bring as investors and capital allocators to our business,” she said. “I do think the hurricanes cast those decisions in sharp relief.”
Atria evacuated about seven buildings in Florida, relocating “very frail” residents to hotels, Cafaro said. She noted the logistics involved in a “very stressful and life-threatening” resident move.
When talk show host Jimmy Kimmel saw on social media that actress Kristen Bell was interacting with some of the Atria residents evacuated to the Walt Disney World Swan and Dolphin Resort, where she also was staying, he invited her to appear on his show via live feed. She did, with a backdrop of Atria residents and staff. Cafaro urged conference participants to watch the video.
“Some of the Atria staff, honestly, had not slept for three days,” she said. “It's a really good story of what value our operators and what the senior living industry can bring to the lives and safety for seniors.”
Cafaro said she's pleased that Atria and Kindred “are in the right side of the screen with the success stories and not on the other side of the screen, where you've seen some of the other sort of more negative stories that have come out of the hurricanes.”
One of those negative stories involved the death of eight residents of the Rehabilitation Center at Hollywood Hills after a power outage due to Hurricane Irma left the facility without electricity or air conditioning. Gov. Rick Scott on Thursday directed the state's Agency for Health Care Administration to terminate the facility as a Medicaid provider.
Many Florida affordable housing and senior living communities on Thursday continued to report power outages that left their buildings without air conditioning, elevators or other amenities. Some of the buildings had been evacuated. The state is “aggressively working” to restore power to those assisted living and nursing facilities, Scott said.
Florida officials continues to hold daily calls with assisted living facilities and nursing homes to ensure that they have everything they need to serve their residents, he said. The governor also has directed Florida AHCA and the Department of Children and Families to work with local law enforcement to “check in with the healthcare facilities in their area to ensure nursing homes and assisted living facilities have the ability to keep their residents safe.”
Cafaro said that it was too early to know the exact impact the hurricanes will have on the REIT, but about 1% of the net operating income in the portfolio was affected. “Maybe 18 assets or so,” she said.
Communities incurred costs related to extra staff, overtime, moving, hotels, food and supplies, Cafaro said.
“There will be deductibles, she said. “Most of them will get some recovery of at least a part of those expenses from business interruption insurance.” The buildings also are covered by property and casualty insurance, Cafaro added.
Triple-net lease operators are responsible for paying their rent and any costs related to effects incurred by the storm, she said.