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Ventas Announces R&I Development Commitments Worth $0.8B

Zacks Equity Research

Ventas, Inc. VTR recently announced four new developments, totaling approximately $0.8 billion in its university-based Research & Innovation (R&I) segment. These investments are part of the $1.5-billion R&I investment pipeline announced by the company this February.

All the projects were announced in partnership with Wexford Science & Technology, LLC — a well-known developer of university-focused real estate solutions. The developments consist of two projects in the Philadelphia University City (uCity) submarket — a new development in association with the University of Pennsylvania and The College of Nursing and Health Professions, Drexel University — totaling $400 million.

It also includes the Pitt immune transplant and therapy center with the University of Pittsburgh as well as expansion of the dynamic Cortex Innovation Community, along with Washington University in St. Louis. The projects are expected to open in 2021-2022.

With the previously-announced development at Arizona State University, Ventas has commitment to its R&I pipeline amounts to $0.9 billion. These projects expand the company’s R&I portfolio by 1.5 million square feet and are 40% pre-leased. Further, it is anticipated to drive value accretion at stabilization, with unlevered cash yield of more than 7% and GAAP yield of more than 8%.

Notably, such investments offer Ventas the opportunity to capitalize on the growing healthcare-driven research and development, supported by top-tier research universities. In fact, pro forma for announced developments, the company’s R&I portfolio will span approximately eight million square feet and likely generate around $230 million in annual net operating income, when the projects stabilize.

Furthermore, with relationships with more than 15 leading research universities in its R&I portfolio, the company is well poised to cater the rapidly aging population.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 11.3% compared with the industry’s growth of 9.3%.

Key Picks

Investors can also consider some better-ranked stocks from the same space like Host Hotels & Resorts, Inc. HST, Lamar Advertising Company LAMR and Duke Realty Corporation DRE, carrying a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Host Hotels & Resorts’ funds from operations (FFO) per share estimates for 2019 moved marginally north to $1.82 over the past month.

Lamar Advertising’s FFO per share estimates for the ongoing year have been revised slightly upward to $5.83 in 30 days’ time.

Duke Realty’s FFO per share estimates for the current year moved up to $1.41 in the past month.

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