Acquisitions Have Been Key Growth Drivers for Ventas
Solid track record
Ventas has been rising continuously due to its strong performance, consistent growth, and reliable cash flow through cycles for two decades. Its annual FFO per share has grown by 11% since 2011. The dividend has grown 8% since 2001, and the total shareholder return CAGR (compound annual growth rate) has been 25% since 1999. Its diversified portfolio has more than 1,200 assets.
The company is pursuing attractive expansion strategies. In 2016, VTR acquired a $1.5 billion institutional quality life science and innovation center portfolio, which is leased by research universities. It also sold its skilled nursing portfolio at a premium valuation to fund an acquisition loan for an acute care provider. In 2015, the company completed the spin-off of Care Capital properties, amounting to over $4 billion. It also acquired $1.3 billion worth of Ardent’s hospital real estate network and entered the US acute care hospital market.
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Acquisition plans for 2018
The company plans to increase its university footprint of 262,000 square feet of class A life science buildings and expand its $62 million in life science and innovation centers. It also intends to partner with an institutional investor to form a joint venture for one of its existing senior living portfolios.
Ventas offers investors downside protection with its reliable business model and revenues that are uncorrelated with the business cycle. The company has a diversified portfolio divided into nine segments, the largest of which is senior housing centers and medical offices.
Ventas has 243 properties in the US and 41 in Canada. It generates about 86.5% of its revenue from the US markets. New York contributes ~21% to the overall revenues. It also has strong relationships with various tenants and operators. It collaborates with 12 operators with Atria contributing 19% of the annualized NOI.
Expected revenue for VTR for 2018 is $3.6 billion. In comparison, Welltower (HCN), HCP (HCP), and Healthcare Trust of America (HTA) have expected revenues of $4.4 billion, $1.8 billion, and $723 million, respectively. VTR forms 2.4% of the iShares Core U.S. REIT ETF (USRT).