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Ventas CEO Courts Generalist Investors Ahead Of GICS Change

Ventas Inc.'s top executive made an overt pitch to generalist investors in the company's April 29 earnings call, in anticipation of an industry classification change that is expected to draw a wave of new money to the REIT sector.

At the end of August, S&P Dow Jones Indices plans to transition real estate into a stand-alone sector under its Global Industry Classification Standard, known as GICS. The change will move real estate out of the financials sector and is expected to draw new investors, and new scrutiny, to REITs.

In recent months, CEOs at some of the largest and most prominent public REITs — including Simon Property Group Inc. and Equity Residential — have publicly and privately courted new non-REIT-dedicated investors.

In her opening remarks on the company's first-quarter earnings conference call, Chairman and CEO Debra Cafaro said the GICS change should attract more capital to real estate over time, and added, "We believe our size, leading position in health care and senior housing, track record of disciplined capital allocation and excellent team make us attractive to generalist investors."

Cafaro also cited the company's dividend growth, liquidity, investment-grade balance sheet, diversification, high-quality portfolio and growth opportunities.

"Honestly, if I were a generalist investor looking at GDP growth of half a percent in the first quarter, corporate profits declining for three consecutive quarters and global weakness, Ventas looks incredibly attractive," she said. "To my mind, that's a compelling value proposition. So whether there's a new GIC or not, why wouldn't you want to own Ventas?"

Despite the overture, Cafaro said the company "obviously" remains focused on its core REIT-dedicated investors, who are "crucial" to its continued success.

S&P Dow Jones Indices and S&P Global Market Intelligence are owned by S&P Global Inc.

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