Ventas remains 'bullish' on seniors housing

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Debra Cafaro, Ventas
Debra Cafaro, Ventas

Ventas remains confident about seniors housing as an investment for several reasons, the real estate investment trust's executives told analysts Friday during a second-quarter earnings call.

“We are bullish on senior housing, short, medium and long-term, because when you look at the services that seniors get in senior housing communities, economically, to replicate that at home, is twice as expensive,” said Robert F. Probst, executive vice president and chief financial officer. “Not to mention the social benefits of being part of a community, which are proven to be enhancing and extending life. So that, together with, of course, the aging population and the megatrend of longevity, has a huge tailwind to this business and give me and us confidence in that business.”

Ventas' seniors housing operating portfolio same-store cash net operating income grew 2.1% in the second quarter, which the REIT said was in line with its expectations. Although some markets continue to face occupancy challenges, Probst said he expects rate to be stable, helping to cover costs.

The REIT's diversified portfolio includes hospital, post-acute and medical office properties, but, Ventas Chairwoman and CEO Debra A. Cafaro said, “In the financial crisis and recession, senior housing was the only real estate asset class that continued to show positive net operating income growth.”

In the wake of the June decision by British voters to exit the European Union, or Brexit, Cafaro said, Ventas remains positive about its “very small investment” in seniors housing in the United Kingdom. She added, however, that the regulatory and operational environment can be “challenging” due to increased costs related to new staffing-related rules.

“The assets are performing as we expected,” Cafaro said. “We like our partner there. We continue to look at opportunities in the U.K.”

Across the company's investments, Ventas reported, profit fell less than expected in the second quarter, and revenue growth was better than anticipated.


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