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Life Sciences: Ventas earmarked about $700 million for LSRE in 2022

Its development partner, Wexford, recently started on a $425M project in Charlotte, N.C.

By Murray W. Wolf

Charlotte, N.C.-based Atrium Health and Ventas’ development partner, Wexford Science + Technology, broke ground on 20 acres in Midtown Charlotte Jan. 17 for one of those projects: the $425 million, 643,000 square foot first phase of a planned $1.5 billion, 40-acre, mixed-use innovation district known as “The Pearl.” (Rendering courtesy of Atrium Health)

CHICAGO – Ventas Inc. (NYSE: VTR), a Chicago-based real estate investment trust (REIT) perhaps better known for its senior living and medical office investments, continues to prioritize life sciences real estate (LSRE) as it adds to its portfolio.

In its fourth quarter (Q4) and full-year earnings report, released last Thursday (Feb. 9), Ventas noted that of the $1.2 billion in investments that it closed on or committed to in 2022, $700 million was devoted to the continued expansion of its life sciences footprint.

Charlotte, N.C.-based Atrium Health and Ventas’ development partner, Wexford Science + Technology, broke ground on 20 acres in Midtown Charlotte Jan. 17 for one of those projects: the $425 million, 643,000 square foot first phase of a planned $1.5 billion, 40-acre, mixed-use innovation district known as “The Pearl.” The initial project includes the roughly 300,000 square foot Howard R. Levine Center for Education and a 331,000 square foot research building.

The education building will be anchored by the Wake Forest University School of Medicine Charlotte, which is scheduled to welcome its first students in 2024. Other announced tenants include Wake Forest University School of Business, Wake Forest School for Professional Studies and Carolinas College of Health Sciences.

Announced in 2022, the medical school project “exemplifies Ventas’s ability to leverage strong relationships with leaders in research, medicine and higher education to execute on high-quality, large-scale transactions,” according to the Feb. 9 earnings news release from the REIT.

As for the research building, it was announced in March 2022 that IRCAD, a French-based research and training institute for surgeons, plans to establish its exclusive North American headquarters there. IRCAD, which specializes in minimally invasive surgery techniques, reportedly plans to occupy about 100,000 square feet. Based in Strasbourg, France, IRCAD was founded in 1994.

All told, The Pearl is slated to include four research towers, the education building, two parking lots with a combined 2,000 spaces, a residential tower with 350 units, a hotel and mixed-use lots. It is anticipated that total build-out of the multi-phase development will take about 15 years.

The Pearl is public-private partnership between Atrium Health, Wexford, the city of Charlotte and Mecklenburg County, N.C.

Atrium Health is an integrated, nonprofit health system with more than 70,000 employees, 40 hospitals and more than 1,400 care locations. Formerly known as Carolinas HealthCare System, Atrium Health is part of Advocate Health, the fifth-largest nonprofit integrated health system in the United States, created from the $27 billion merger of Advocate Aurora Health and Atrium Health in late 2022.

Wexford became Ventas’ exclusive LSRE development partner in 2016 when the REIT acquired “substantially all” of Wexford’s life science and medical real estate assets from affiliates of Blackstone Real Estate Partners VIII LP for $1.5 billion in cash.

In November 2020, Ventas announced that it had formed a joint venture (JV) with GIC Private Limited, a sovereign wealth fund established by the government of Singapore in 1981 as the Government of Singapore Investment Corp. to manage the nation’s foreign reserves. The JV initially owned four then-in-progress, university-based development projects with total costs estimated at $930 million.

Flanking three corners of the intersection of Baxter and South McDowell streets in Midtown Charlotte, The Pearl is the latest of Wexford’s 17 completed or under-development “Knowledge Communities” across the United States. The new innovation district “will help reshape and diversify the economy of the Charlotte region, integrating research, clinical expertise, entrepreneurial activity, corporate engagement and community inclusion,” according to a joint news release from Wexford and Atrium Health.

The name “The Pearl” is a nod to the area’s Black history, including Pearl Street Park and the Brooklyn neighborhood, an African American community largely displaced by urban renewal in the 1950s.

The architect and master planner for The Pearl is Baltimore-based Ayers Saint Gross. The master planning team also included civil engineering firm Kimley-Horn of Raleigh, N.C., and architectural firm Neighboring Concepts of Charlotte. Baltimore-based Whiting-Turner Contracting Co. and R.J. Leeper Construction LLC of Charlotte have formed a JV to serve as the construction manager at risk for The Pearl.

As for Ventas, company officials say they remain on the prowl for acquisitions as well as development opportunities. During the REIT’s Q4 earnings conference call with securities analysts last Friday (Feb. 10), Justin Hutchens, executive VP, Senior Housing and chief investment officer, noted, “So, first of all, we’re fortunate to have a wide variety of capital sources to further acquisitions. We’ll prioritize our key asset classes – senior housing, obviously, is one of those, life science, medical office as well.

“The market itself is not normal,” Mr. Hutchens continued. “There are exceptions to this, but there tend to be fewer market participants right now. The deals that we’re seeing are getting repriced…

“But we remain very interested in expanding the portfolio and growing in our preferred asset classes.”

News Release: Ventas Reports 2022 Fourth Quarter and Full Year Results and Provides 2023 Outlook

News Release: Atrium Health, Wexford Science & Technology Break Ground on Transformative Development to Advance Medicine and Innovation

 

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