Ventas, Inc. VTR recently accomplished the initial closing of the previously-announced Ventas Life Science and Healthcare Real Estate Fund, L.P. The fund is primarily focused on investments in core and core plus life science, medical office and senior housing real estate in North America.
This new growth platform builds on Ventas brand, team and industry expertise and relationships. The company, a behemoth in the healthcare REIT space, seems well poised to capitalize on the market opportunity.
At the onset, the fund has a corpus of 700 million in assets under management and equity commitments from third parties comprising well-reputed institutional investors to the tune of approximately $650 million.
Particularly, five premium and stabilized life-science and medical office assets, spanning an area of 1.2 million square feet, have been contributed by Ventas as part of the fund seeing. The fund has also secured a $300-million line of credit to undertake new investment opportunities. After taking into account the line of credit, the company possesses an additional $600-million acquisition capacity, which is likely to increase over time.
Ventas, being the Fund Sponsor and General Partner, is expected to enjoy 20% ownership interest in the Fund. The move is a strategic fit as it will allow the company to partake in the cash flows generated by the fund. The company received a sum of approximately $600 million, as net proceeds for its contribution to the fund’s initial assets and its 20% stake, which the company hopes to utilize for reducing debt burden.
Moreover, increasing longevity of the aging U.S. population, along with biopharma drug development growth opportunities, has promoted the institutional life-science and medical-market fundamentals. Long-lease terms and top-rated, institutional quality tenants assure steady growth in cash flows. Furthermore, with an expectation of a rising senior citizens’ population in the years ahead, investments in senior housing real estate seems a strategic fit.
Ventas currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Ventas have declined 13.1% over the past year compared with the industry’s rise of 12.5%
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Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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