Sunrise Senior Living (NYSE:SRZ)
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Ventas Inc. (VTR) has an eye out for acquisitions and said more opportunities are arising.

"The pipeline is building," said Raymond Lewis, chief investment officer, on the company's third-quarter conference call. Lewis said the company is seeing opportunities in a variety of areas including senior housing, medical office and skilled nursing.

Chief Executive Debra Cafaro said the company's "tremendous" liquidity gives it a "tremendous amount of flexibility" on how to structure a deal if a right-priced acquisition was to present itself.

Health-care REITs have seen their shares run up in recent months, as their generally strong balance sheets and potential for acquisitions have caught the attention of many investors.

Not to mention, the nature of their cash flows, compared to their peers in the multi-family or office space, for example, has helped health-care REITs be more resilient in the down economy, said David Aubuchon, analyst at Robert W. Baird & Co.

Ventas, like its peers, has actively boosted its capital and liquidity position by selling stock and notes and using some of the proceeds to pay off debt.

Before the market opened on Thursday, the REIT reported third-quarter funds from operations fell about 13%, yet topped analysts' expectations, helped in part by rent increases and strength in its medical-office-building portfolio.

"It was a nice beat," said Aubuchon. He added that better-than-expected results in the company's Sunrise Senior Living Inc. (SRZ) portfolio, which is top-of-mind for many investors, is good news.

The health-care real estate investment trust whose properties include senior housing communities, skilled nursing facilities and hospitals also raised its 2009 adjusted funds from operations, or FFO, forecast.

The Chicago company said third-quarter FFO fell to $98.3 million, from $113 million, a year earlier. On a per-share basis, FFO fell to 63 cents a share, from 80 cents a share. Adjusted FFO decreased to 66 cents from 68 cents a year ago.

Analysts, on average, expected FFO, which is a key industry measure of performance, of 63 cents a share, according to Thomson Reuters.

For the year, the Chicago company said it now expects adjusted FFO per share of $2.62 to $2.65 a share, improving upon its previous view of $2.55 to $2.62 a share.

Even so, senior housing occupancy has been challenged as the recession has held back some seniors from selling homes and moving into REIT-owned facilities.

Lower net operating income after management fees, or NOI, at some of the company's senior-living properties speaks to this challenge. Ventas said for its 76 Sunrise communities that were stabilized in the third quarters of 2009 and 2008, total community NOI fell to $32.6 million in the 2009 quarter from $34.9 million for the comparable 2008 period.

Still, Ventas said for the 78 communities that were stabilized in the second and third quarters of 2009, average occupancy increased to 88.1% in the third quarter from 87.2% in the second quarter, which is welcomed news to many investors. Looking at stabilized figures gives investors a clearer look at an asset's organic growth.

In addition, Ventas said NOI for its Sunrise properties is trending toward the high end of its $122 million to $129 million forecast range.

Investors have carefully eyed property owners' exposure to Sunrise, a key senior-housing operator that is battling back from balance-sheet issues after a period of over-expansion. Sunrise's news this week of a pact to settle claims with some of its lenders is likely to be seen as a positive for Ventas as well, analysts say.

Sunrise manages 79 senior housing communities in North America for Ventas. Ventas owns 100% of 19 of these communities and has a partnership share of between 75% to 85% in the remaining 60 communities, in which Sunrise has a noncontrolling stake.

Ventas shares recently traded up 2.6% to $40.04.

-By Veronica Dagher, Dow Jones Newswires; 212-416-2261; veronica.dagher@dowjones.com