Ventas Inc. (VTR), a leading healthcare real estate investment trust (“REIT”), has recently announced that its wholly owned subsidiary Lillibridge Healthcare Services Inc. would develop a 250,000 square foot medical office building (“MOB”) in Baton Rouge, Louisiana. The facility would be built on the campus of the new $350 million Woman’s Hospital and is expected to cost approximately $40 million.
The new MOB would be physically connected to Woman’s Hospital and would provide infrastructure for an ambulatory surgery center, retail space and other potential outpatient services. The facility would consist of two towers, which would share an atrium lobby, and is expected to be completed by 2012.
Ventas had earlier acquired Lillibridge Healthcare in July 2010 to extend its footprint in MOB and ambulatory facilities segment. Besides improving the economies of scale, the acquisition enabled Ventas to gain access to higher yielding development opportunities, property management and advisory capabilities for hospital systems. In addition, the transaction helped Ventas to leverage on the extensive market knowledge and experience of Lillibridge Healthcare’s senior management team to strengthen its leadership position in the market.
Ventas is one of the top performing healthcare REITs in the U.S., having one of the largest and most diversified portfolios in the healthcare sector with exposure to nearly all types of facilities. The product diversity of the company allows it to capitalize on opportunities in different markets based on individual market dynamics, and provides a hard-to-replicate competitive advantage over its peers.
Ventas is primarily engaged in the business of financing, owning and leasing healthcare related and senior housing facilities. The company leases some of its owned healthcare related and senior housing facilities to third-party operators under “triple net” leases, under which the tenant pays all taxes, insurance, and maintenance for the properties, in addition to rent. Ventas also owns healthcare related and senior housing facilities that are managed by third-party operators.
We maintain our Neutral rating on Ventas, which currently has a Zacks #2 Rank that translates to a short-term ‘Buy’ recommendation.
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