Ventas, Inc. (NYSE: VTR), an S&P 500 company, announced that it has sponsored and formed the Ventas Life Science and Healthcare Real Estate Fund, L.P. (the “Fund”), a perpetual life vehicle that will focus on investments in core and core plus life science, medical office and senior housing real estate.
The Fund is expected to launch during the first quarter of 2020 with more than $700 million in assets under management and third-party equity commitments of approximately $650 million.
The Fund will utilize Ventas’s brand, industry expertise and team, providing a vehicle for core and core plus life science, medical office and senior housing real estate asset classes in North America and simultaneously benefitting Ventas’s public equity shareholders.
“This Ventas-sponsored Fund is a natural opportunity to capitalize on our position as a trusted industry expert and innovator, and extend our track record of delivering outstanding returns to our public shareholders – including a compound total annual return of 22 percent over the last two decades,” said Debra A. Cafaro, Ventas Chairman and Chief Executive Officer. “Accessing private institutional capital through a Ventas-sponsored Fund will further diversify our capital sources, enable us to invest across market cycles with a stable cost of capital, provide a vehicle for growth as we expand assets under management, and leverage our strong brand, excellent team and industry knowledge.”
Fund Enhances Long Term Shareholder Returns
The targeted institutional Fund will provide numerous strategic benefits to Ventas and its shareholders including: (i) creating a new, permanent growth platform and augmenting Ventas’s significant investment capacity; (ii) expanding Ventas’s strategic reach; (iii) maximizing the impact of Ventas’s excellent team, industry knowledge and brand; (iv) enabling global institutional investors to invest with Ventas in a public or private investment structure; and (v) establishing Ventas as a first-mover in private capital formation among public REITs in the life science, medical office and senior housing real estate space.
The Ventas investment team, led by Executive Vice President and Chief Investment Officer John D. Cobb, will source, underwrite and close investments for the Fund. Fran Federman, Brian Newman and Nevin Boparai, current leaders at Ventas, will serve as Managing Directors of the Fund.
In establishing the Fund, Ventas will contribute five high-quality, stabilized life science and medical office assets comprising 1.2 million square feet of space valued at a 4.9 percent going-in cash capitalization rate, validating the Company’s value creation. Ventas, as the Fund Sponsor and General Partner, is expected to hold a 20 percent ownership stake in the Fund to participate in the robust cash flows expected to be generated by the Fund’s portfolio and ensure alignment of interests with Fund investors. The Fund will have a conservative capital structure, in line with the Company’s targets.
The Fund will be perpetual life and is expected to grow gross assets under management over time. As the sponsor and General Partner of the Fund, Ventas will also earn asset management fees and a promote if the Fund investors receive expected returns.
There can be no assurance as to whether, when or on what terms the Fund will close.
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