Real Estate Forum

Wittman, SVP in charge of capital markets
and investor relations, says that for more
than 10 years, the firm has had a very set
strategy to grow, diversify its operators and
increase its private-pay percentage. “We
had one tenant in the government-reim-
bursement area, and we really set out to
change that, to diversify our business. Now,
over 80% of our revenues are all private
pay. This gives us consistent returns no mat-
ter what the economic environment would
be and, at the same time, mitigates risk.”
Wittman admits that most firms don’t talk
about mitigating risk while talking about
growth and acquisitions, “but we really think
we continue to do both. We’ve strengthened
our balance sheet over time such that today
we’re over 30% levered. We have been able
to achieve superior consistent returns and
we’ve gotten several upgrades.” She adds
that being well balanced in a sector with
favorable demographics, and favorable pol-
icy thanks to healthcare reform, has been a
boon to Ventas’ growth.

Growth With a Plan

Perhaps what gives these firms longevity is
that in the same breath that the principals
are talking about growth, they’re also talking
about careful, controlled growth that makes
sense. “We’re careful with costs,” says Cooper.
“We’re making significant investments, but
they’re smart investments. We’re constantly
measuring our performance, and we are
constantly talking to our clients and think-
ing of the old kaizen: continuous improve-
ment. We don’t have our blinders on.”
Schorsch maintains that his firm has
simply stayed the course and didn’t get dis-
tracted, which has led to successful growth.
“We didn’t do anything amazing,” he states.
“We delivered 6% to 7% annual earned
dividend and had high-teens returns. You
do that for four years and give the investors
back their money, and they get back 175
cents for every dollar invested, so that’s the
proof. We have the largest net-lease REIT
and the largest REIT on NASDAQ—a year
ago, it was $400 million of assets, and this
has grown to $4 billion.”
In 2009, ARC raised $275 million. In
2010, that figure rose to $1.1 billion. In
2012, it grew to $3 billion. “So far this year,
we’ve raised $3 billion, and we’re only 96
days into the year,” says Schorsch. “We
raised more in the first 3. 5 months in 2013
than we raised last year, and that was double
the previous year. We expect to raise $7 bil-
lion to $8 billion this year. We’ve also added
employees at a strong growth rate.”

Scaling Back?

When asked if they could imagine a sce-
nario in which they might consider scaling
back rather than expanding, the principals
expound on prudent philosophies. “If we
believe our markets or clients don’t support
a certain geography or service line or strat-
egy, we are a very nimble organization, and
we would scale back,” says Cooper. “But we
don’t have to push the panic button like
others do. We have patient money.”
Despite its remarkable growth pattern,
Schorsch says ARC is “very cautious about
growth. We are not planning growth. We
need to be in a position where we can let
the growth come organically. That’s very
important to our business philosophy. We
try not to force growth because in our busi-
ness it’s not about growth of volume, it’s
about growth of process. We’re focused on
making our investors money—not about
being the biggest company.”
Frater says his firm might pull back in a
scenario where there is a sharp decrease in
the amount of capital available for real
estate activity, “but I don’t really anticipate

Challenging the Conventional
Discover the value of industry veterans, supported by an innovative platform,
delivering new solutions to your most challenging real estate needs.