Ventas Inc. (NYSE: VTR) is pleased with the state of its medical office building business—and the sector’s compressing cap rates.

“I’m excited about where the valuation is,” Ventas Chairman and CEO Debra Cafaro said of medical office buildings during the company’s first-quarter 2017 earnings call on April 28.

Overall, Cafaro expressed confidence in how things are going at the Chicago-based real estate investment trust (REIT).

The company posted strong financial results for the first quarter of 2017, with its revenue of $883.4 million beating analysts’ expectations by $13.37 million and its earnings per share of $1.03 beating analysts’ expectations by 1 cent.

Same-store cash NOI in Ventas’ medical office business rose by 3.7% during the first quarter, CFO Bob Probst said during the earnings call. The first-quarter results were fueled by in-place lease escalations and the benefit of lease termination fees, Probst explained.

Additionally, Ventas’ medical office building tenant retention was higher than 80% in the first quarter.

“In summary, our full-year outlook continues to forecast cash NOI growth of 1% to 2% for our same-store medical office assets,” Probst said.

The company’s medical office building and life science segment currently generates approximately 25% of its NOI, Cafaro added.

Plan to cope with ‘policy whiplash’

Ventas has a plan to cope with the “volatility and uncertainty in the markets, public policy and in the geopolitical sphere,” Cafaro said during the earnings call.

“In this environment, we continue to believe its most important for Ventas to remain financially strong and liquid, maintain diversification and balance in our portfolio, drive cash flow and efficiency in our enterprise, allocate capital wisely, continue to elevate the already outstanding quality of our portfolio, make selective investments in our future growth and keep our team together and focused on creating value for customers and shareholders,” she said.

It remains unclear whether the Trump administration’s proposals on taxes, regulations, health care or trade will jumpstart the U.S. growth trajectory, or whether there is enough Congressional support to even pass the administration’s agenda, Cafaro added. The effects of this uncertainty have reverberated through several sectors.

“There is a little bit of policy whiplash going on across all businesses, certainly including ours,” Cafaro said.

Written by Mary Kate Nelson