Debra Cafaro, chairman and CEO of health care REIT Ventas, Inc. (NYSE: VTR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.
Ventas has made news this summer through a series of transactions. On June 2, Ventas announced two separate deals: the acquisition of American Reality Capital Healthcare Trust (NYSE: HCT) and a group of Canadian properties from Holiday Retirement. The American Reality Capital Healthcare Trust transaction solidified Ventas’ position as “the leading medical office building franchise and senior living franchise globally,” according to Cafaro. The Holiday deal will bring nearly 30 independent living properties into Ventas’ portfolio.
Cafaro was asked about Ventas’ ability to grow its funds from operations (FFO). Cafaro said the company emphasizes increasing cash flow, dividends and FFO.
“We really pride ourselves on being able to consistently grow through all kinds of environments,” she said.
Cafaro noted that Ventas’ FFO gains are coming from multiple aspects of the company’s business. First, Ventas is growing internally, which comes from having productive assets, according to Cafaro. Second, Cafaro said Ventas is refinancing at lower interest rates. Third, the firm is working on development and redevelopment, she noted. Finally, Cafaro said the company is using transactions as a source of external growth.
“When you put all that together, that’s how we’ve been able to grow FFO consistently and dividends consistently over a very long period of time,” Cafaro said.
Cafaro also discussed Ventas’s approach to growing internationally.
“I really believe that international expansion can be an important part of the evolution of our growth and diversification strategy,” she said.
Cafaro said the firm is looking at two specific types of markets. First, Ventas is interested in markets that have aging demographics with well-developed health care and rule of law. The firm is also exploring “developed democracies with a burgeoning middle class and underserved health care infrastructure.”
Cafaro noted that with the acquisition of the Holiday properties, international operations will account for approximately 5 percent of Ventas’ net operating income.