The Real Deal Chicago

Ventas investing $1.5B into university research facilities, starting in Arizona

The Chicago-based REIT is partnering with Wexford to develop about 10 university projects
By Joe Ward | February 08, 2019 03:00PM

Debra Cafaro and the Campus of Arizona State University in Phoenix (Credit: iStock)

Ventas will invest $1.5 billion in research and innovation facilities at colleges throughout the country, starting with a $77 million project at Arizona State University.

The Chicago-based REIT is extending its partnership with college research facility developers Wexford Science & Technology with plans for about 10 new projects, Ventas executives announced during an earnings call Friday.

The partnership and sizable investment will ensure Ventas and Wexford remain leaders in the university research development market, said John Cobb, chief investment officer at Ventas. The plan “demonstrates the potential and value of this attractive business segment and positions us for meaningful, sustainable growth,” he said in a statement.

Ventas’ first project under the new investment is the development of a new research lab at Arizona State University’s Phoenix Biomedical Campus, a research district in downtown Phoenix. The project will break ground this quarter and will be delivered in late 2020, according to Ventas.

Ventas has a 1,100-property portfolio that is heavily concentrated with senior housing centers (727) and medical offices (358), according to its website. The REIT began investing in research facilities in 2016 and now owns 33 such properties.

Investing in research facilities will give Ventas a base of strong risk-adjusted returns as it seeks to get back to year-over-year growth, the company said.

For the fourth quarter of 2018, the REIT posted a funds from operations per share of 96 cents, down from $1.03 a year earlier. For the full year, FFO was $3.64, compared to $4.22 in 2017. Same-store net operating income for the fourth quarter grew by 0.2 percent, with the full year coming in at 1.2 percent growth.

Ventas Chairman and CEO Debra A. Cafaro told investors Friday that demographics will be favorable to the company’s senior housing portfolio moving forward, and slowing construction starts in the market will further help its holdings.

“We enter 2019 on a strong foundation,” Cafaro said. “We are very encouraged by the recent recorded improvements in senior living starts. Demand for our product ramped up to its highest level ever in 2018.”