Ventas Lends a Hand to Tenants
Healthcare real estate investment trusts (REITs) were once viewed as having a solid future because of demographic trends. The outlook for the sector drastically changed, however, when COVID-19 started to spread. Owning medical facilities -- specifically those that house the elderly -- is now a massive liability. Industry bellwether Ventas (NYSE: VTR) is getting through this rough patch by focusing on the important stuff.
Ventas generates around 55% of its net operating income from senior housing assets. Ventas leases some of these assets to others using a net lease structure that requires the tenant to pay for most of the operating expenses of the property. The rest Ventas considers a senior housing operating portfolio (called SHOP in the industry) that it owns and runs. In reality, it hires companies to operate the facilities. The important fact is that property level performance flows through to the real estate investment trust, for better or for worse. Ventas' SHOP portfolio thus makes up the lion's share of its senior housing business.
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Source Fool.com
