Ventas Inc. recently revealed a development pipeline in its university-based Research & Innovation business exceeding $1.5 billion in new investments. The R&I Pipeline will be developed through the company’s extended, exclusive partnership with Wexford Science & Technology LLC, the leading developer of university-focused real estate solutions.
According to a prepared release, Ventas, in partnership with Wexford, has reached an agreement to develop a class-A research and innovation center anchored by Arizona State University as the first committed development in the R&I Pipeline. In total, the R&I Pipeline is expected to be comprised of approximately 10 projects with existing and new university relationships, and will significantly enhance the Ventas/Wexford market position as the leading developer of research and innovation-focused Knowledge Communities with top-tier research universities.
“Our significant Research & Innovation pipeline exceeding $1.5 billion with top-tier research universities demonstrates the potential and value of this attractive business segment and positions us for meaningful, sustainable growth,” said John Cobb, Ventas Executive Vice President and Chief Investment Officer. “With our partner Wexford, we are the leading owner and developer of high-quality research and innovation properties that enable major institutions to advance life-changing research, innovation, technology and medicine globally. We are pleased to welcome another respected institution, Arizona State University, to our roster of university partners.”
“We are delighted to extend our collaborative partnership with Wexford to harness the power of both firms to expand our development pipeline and build out our unique and differentiated business to meet the growing needs of existing and new university partners,” Cobb added.
Wexford will develop and manage the R&I Pipeline projects under its exclusive relationship with Ventas. The Company currently owns 33 university-based R&I properties managed by Wexford, including one property under development, with a total investment of $2.1 billion, including remaining funding commitments on active developments. These properties are principally anchored by highly ranked research universities including Brown, Duke, University of Pennsylvania, Wake Forest, Washington University and Yale.
“The opportunity to strengthen our partnership with Ventas and accelerate our sizeable pipeline of new opportunities reinforces Wexford’s position as a preeminent partner of top-tier research universities in the development and management of our Knowledge Community platform, which integrates university research, entrepreneurial activity, corporate engagement and community inclusion to benefit and amplify economic opportunity and activity in proximity to our university partners,” said James Berens, Founder and Chief Executive Officer of Wexford Science and Technology.
First Committed Project with ASU
Arizona State University Development: Ventas, in partnership with Wexford, has committed to develop a $77 million class-A research & innovation center anchored by Arizona State University, a highly rated (Moody’s: Aa2) public research university and a new university relationship for Ventas. The property will be fully lab-enabled and principally be used for academic and commercial research, focused on biomedical discovery and innovation in health outcomes. It is attractively located within the Phoenix Biomedical Campus (the “PBC”), a 30-acre urban innovation district, established by the City of Phoenix in the heart of downtown, a premier environment for the growth of the Phoenix biomedical and healthcare industries. The PBC currently houses 1.5 million square feet of academic, research and clinical space and is ultimately expected to support up to 6 million total square feet of similar uses when fully developed. The project is expected to break ground in the first quarter of 2019 and open in late 2020.
Strategic Benefits and Highlights
Executes on Ventas’s Commitment to Significantly Accelerate its University-Based Research & Innovation Growth and Solidifies Leading Market Position with Top-Tier Research Universities: Including the greater than $1.5 billion R&I Pipeline, Ventas’s university-based R&I investments will more than double from its initial investment in 2016 to a pro forma investment exceeding $3.5 billion.
Generates Strong Risk-Adjusted Returns with Highly-Rated Institutions: Expected stabilized yields on the R&I Pipeline range from 6.5 to 8 percent with new properties, long-term leases and creditworthy tenants. Projects in the R&I Pipeline are expected to have significant pre-leasing activity prior to commencing construction.
Expands Partnerships with Existing Universities and Adds New University Relationships: Including the Company’s newly-formed relationship with ASU, the 14 universities in Ventas’s buildings account for 10 percent of all university research and development spending in the United States. Ventas expects the R&I Pipeline to add affiliations with similar-caliber institutions to the Company’s existing portfolio in the near term. In addition, Ventas expects to expand its footprint on the campuses of existing university relationships.
Extends Ventas’s Exclusive Relationship with Wexford: Ventas and Wexford’s extended, exclusive pipeline agreement through 2029 positions Ventas to further accelerate its forward pipeline of projects and maintain its leading market position with R&I centers at top-tier universities.