Ventas CEO Says Rate Spike Makes It A Better Buyer — An Analyst Asks If Deal Prices Will Keep Rising
Ventas has closed $5.2 billion of senior housing deals this year, and its CEO says higher rates help it win more.
Ventas CEO Debra Cafaro said on the company's third-quarter earnings call that the recent global jump in interest rates makes the company "an even more desirable counterparty" to senior housing sellers, who need not wait for another buyer to line up financing. Ventas, which has closed $5.2 billion of senior housing investments so far this year, faced a skeptic on the line: an Evercore ISI analyst asked whether so much money chasing deals would keep squeezing returns.
Rates as a competitive edge
Ventas owns healthcare real estate, including senior housing communities, medical office and lab buildings, and triple-net leased properties. Senior housing run by third-party managers made up 49.4% of its net operating income in 2025, according to its annual report.
Cafaro, who is chairman and CEO, told a Barclays analyst that Ventas has financial strength and a reputation for closing. "People know we know what we're doing. We can close," she said. She tied that to the "$5 billion so far this year" and said it makes Ventas "incrementally more popular, if that were possible."
Justin Hutchens, executive vice president for senior housing operations, said higher borrowing costs could slow private buyers, which would put Ventas in an advantaged position. He added that recent moves in debt pricing should reinforce its position and create more investment opportunities.
The skeptic's question on cap rates
The Evercore ISI analyst, describing himself as "a skeptic," asked whether cap rates (the yield a buyer earns on a property's income) would keep compressing given "so much money out there chasing this." He also asked what supports management's expectation of low-to-mid-teens returns.
Hutchens said Ventas has spent three years buying luxury senior housing at unlevered returns of low double digits to the mid-teens, and has hit its underwriting. Higher debt costs, he said, could help "normalize cap rates." He conceded: "There has been a lot of competition. We'll see how that plays out in the upcoming months."
Seller price talks tend to lag rate moves, Hutchens said in answer to a Citi analyst, and Ventas is not yet seeing much of that activity. "It's still pretty early," he said.
Deals, returns and guidance
Chief Financial Officer Bob Probst said the $5.2 billion of year-to-date investments is above the $4.5 billion in prior full-year guidance. Ventas funded it with $4.7 billion of equity capital, plus dispositions and assumed debt, and has $4.5 billion of liquidity.
Hutchens said the deals span 37 transactions, with expected first-year yields of 6.6% and an average basis of about $346,000 per unit, acquired at significant discounts to estimated replacement cost.
Probst said full-year normalized funds from operations, a standard real estate earnings measure, is now guided to $3.87 to $3.90 per share, growth of 9% to 10%. Third-quarter normalized FFO was 99 cents per share, up 10%, and net debt to EBITDA was 4.4 times. Guidance includes only closed investments.
Ventas also expects most of its $700 million of dispositions and loan repayments, at a 7% yield, to close in the fourth quarter.
Sources
- Ventas Q3 earnings, revenue beat on senior housing organic growth (VTR:NYSE) | Seeking Alpha — seekingalpha.com
- Document — sec.gov
- Ventas (VTR) Q3 FFO and Revenues Top Estimates — Yahoo Finance
- Ventas Reports 2026 Third Quarter Results – Company Announcement - FT.com — Financial Times
- Ventas (VTR) Reports Q3 Earnings: What Key Metrics Have to Say — Yahoo Finance
