Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Ventas, Inc. | c07255e8vk.htm |
| EX-2.1 - EXHIBIT 2.1 - Ventas, Inc. | c07255exv2w1.htm |
Exhibit 99.1
| Ventas, Inc. | 111 South Wacker Drive, Suite 4800 | Chicago, Illinois 60606 | (877) 4-VENTAS | www.ventasreit.com | ||||
| Contact: | ||||||||
| David J. Smith (877) 4-VENTAS |
VENTAS TO ACQUIRE REAL ESTATE ASSETS OF ATRIA SENIOR LIVING
FOR $3.1 BILLION
FOR $3.1 BILLION
Ventas to Become Largest U.S. Owner of Seniors Housing Communities
with Acquisition of 118 High-Quality, Private Pay Assets
with Acquisition of 118 High-Quality, Private Pay Assets
Current Atria Management to Continue to Manage Assets Post-Closing
CHICAGO, IL — (October 22, 2010) — Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) announced
today that it has signed a definitive agreement to acquire substantially all of the real estate
assets of privately-owned Atria Senior Living Group (“Atria”) for a total purchase price of $3.1
billion, comprised of $1.35 billion in Ventas common stock (a fixed 24.96 million shares), $150
million in cash and the assumption or repayment of $1.6 billion of net debt.
Atria, based in Louisville, Kentucky, is the 4th largest operator of assisted
living properties in the U.S. Atria is owned by private equity funds managed by Lazard Real Estate
Partners (“LREP”). Prior to closing, Atria will spin off its management company (“Atria Management
Co.”), which will continue to operate the assets under a management contract with Ventas.
Ventas will acquire from Atria 118 high-quality, private pay seniors housing assets located in
markets with strong wealth demographics, including in the New York metropolitan area, New England,
Boston and California. The portfolio to be acquired, which consists of 110 stable assets and eight
redevelopment assets, contains approximately 13,500 units, with a median community size of 110
units, a median community age of 12 years and a current average occupancy rate exceeding 87
percent.
“The addition of 118 exceptional seniors housing assets in highly desirable locations will
increase the portion of our net operating income (“NOI”) received from private pay assets to over
two-thirds of our total NOI and will establish Ventas as the largest owner of seniors housing
communities in the United States. Moreover, given the inherent growth in the portfolio, we expect
that this transaction will improve Ventas’s growth rate,” Ventas Chairman, President and Chief
Executive Officer Debra A. Cafaro said. “We are excited about this transaction with Atria, which
is a highly respected operator known for its vibrant communities and its premier care to seniors.”
- MORE -
Ventas to Acquire Real Estate Assets of Atria Senior Living
October 22, 2010
Page 2
October 22, 2010
Page 2
Ventas expects the portfolio to generate approximately $640 million in revenues in 2011 and
NOI (after management fees and operating expenses) to range between $186 million and $196 million.
The assets have exceptional growth prospects both from current operating dynamics and redevelopment
opportunities, and Ventas expects total facility NOI to increase in the high single digits percent
annually.
Ventas expects a 2011 unleveraged NOI yield of approximately 6.5 percent on the
110 stabilized assets. The purchase price implies a cost of $230,000 per unit. The
transaction is expected to be breakeven to Ventas’s normalized funds from operations (“FFO”) per
share in 2011 and accretive in 2012 and thereafter, after transaction related costs.
“The Atria transaction – our sixth major acquisition during the last six years – advances our
strategic vision of building an excellent, high performing enterprise comprised of a portfolio of
diverse and productive healthcare and senior living assets,” Cafaro continued. “We are confident
that with the successful execution of this strategy, Ventas will continue to create value for our
stakeholders by generating reliable, growing cash flows while prudently managing the firm.”
Transaction Benefits
| • | High-Quality Portfolio in Major Metro Markets with Coastal Concentrations: The
portfolio to be acquired consists of 118 high-quality assets concentrated in strong wealth
demographic areas. Specifically, the assets derive 68 percent of their community-level NOI
from four high income, densely populated coastal markets: 29 percent from residents in the
New York metropolitan area, 21 percent from residents in New England, and 18 percent from
residents in Northern and Southern California. |
| • | High Growth Profile at the Assets: The assets to be acquired have superior
growth prospects and Ventas expects total NOI to increase in the high single digits percent
annually. The Atria assets demonstrated durable cash flows during the recession, with
limited variability, and have significant upside, with occupancies trending positively
above 87 percent. Ventas anticipates additional NOI growth through redevelopment
opportunities for certain assets located in affluent infill locations primarily in the
greater Los Angeles, San Francisco and New York metropolitan areas. |
| • | Excellent Industry Fundamentals: Seniors housing is an attractive,
highly-fragmented market with positive industry fundamentals. While new supply of seniors
housing assets in the United States is limited, the over-85 demographic is growing at three
times the rate of the overall population. Upon closing, Ventas will become the largest
owner of seniors housing nationally, with over 35,000 seniors housing units across 350
properties in its portfolio and will conduct business with four of the top five assisted
living operators in the U.S. |
- MORE -
Ventas to Acquire Real Estate Assets of Atria Senior Living
October 22, 2010
Page 3
October 22, 2010
Page 3
| • | Increased Diversification and Private Pay Component to Ventas NOI: The
transaction will increase Ventas’s tenant/operator diversification. Upon closing, no
single tenant or operator will account for more than 29 percent of Ventas’s NOI. In
addition, Ventas’s NOI from private pay assets is expected to increase to 67 percent from
58 percent. |
| • | Enhanced Ventas Scale: Pro forma for the transaction, Ventas would be a $14
billion enterprise, and one of the 10 largest U.S. REITs by equity capitalization, with a
portfolio of more than 700 seniors housing and healthcare assets in 44 states (including
the District of Columbia) and two Canadian provinces. |
| • | Increased FFO Growth Rate: Ventas expects the transaction to result in a higher
long-term FFO per share growth rate from both internal and external opportunities. Ventas
will benefit from this growth because the transaction utilizes Ventas’s taxable REIT
subsidiary and a management structure compliant with the REIT Investment Diversification
and Empowerment Act of 2007 (RIDEA). |
| • | Strong Financial Profile: Ventas intends to maintain its three investment grade
ratings and strong balance sheet, with a 33 percent debt to enterprise value and net debt
to EBITDA approximating 5.6 times expected at closing. With a larger balance sheet,
greater portfolio and increased earnings diversification, Ventas expects its long-term cost
of capital to improve. Ventas plans to repay a significant portion of Atria’s mortgage
debt with unsecured borrowings. |
| • | Outstanding Aligned Manager: Atria Management Co. has an outstanding platform
with an experienced management team, a robust reporting and regulatory infrastructure, and
a long record of providing excellent care to over 13,000 senior residents. Existing Atria
management will continue to lead Atria Management Co., which will be an independent
privately-owned company post closing. The manager is aligned with Ventas through: |
| • | ownership of Ventas common stock; |
||
| • | a potential performance-based payment by Ventas in 2015 or 2016; and |
||
| • | a minority ownership stake in Atria Management Co. |
“The Atria properties are attractive because they are newer seniors housing communities
located in large metropolitan areas with positive fundamentals and significant growth prospects,”
said Ventas Executive Vice President and Chief Investment Officer Raymond J. Lewis. “The Atria
Management Co. has a superb management team and reputation, and is committed to providing
high-quality care for seniors. The Atria management team is thoroughly invested in the long-term
success of the communities and, ultimately, Ventas.”
- MORE -
Ventas to Acquire Real Estate Assets of Atria Senior Living
October 22, 2010
Page 4
October 22, 2010
Page 4
John A. Moore, Chief Executive Officer of Atria, said, “Creating this important business
relationship with Ventas, which is respected for its outstanding performance, long track record of
reliability and financial strength, and support for its operating partners, will benefit Atria as
we grow our management business and continue to provide seniors with the highest quality care. Our
employees have built an outstanding senior living company that has tremendous potential to expand.
The transaction represents an excellent opportunity for Atria employees as well as the residents of
our communities.”
Transaction Terms
The consideration to be paid by Ventas in the transaction consists of:
| • | A fixed 24.96 million shares of Ventas common stock (with a value of $1.35
billion based on Ventas’s 10-day volume weighted average price as of October
20, 2010 of $54.09); |
||
| • | $150 million in cash; and |
||
| • | $1.6 billion of net debt. |
In connection with the transaction, Ventas expects to appoint Matthew J. Lustig to its Board
of Directors at closing. Lustig is Chief Executive Officer and Managing Principal of LREP and a
Managing Director of both Lazard Frères & Co. LLC and Lazard Alternative Investments LLC.
The transaction is structured as a tax-free merger. Completion of the transaction is subject
to satisfaction of conditions regarding regulatory approvals and third party consents, and to other
customary closing conditions. Ventas expects the acquisition to be completed in the first half of
2011, although there can be no assurance that the transaction will close or, if it does, when the
closing will occur.
Ventas’s lead financial advisors are Jefferies & Company, Inc. and Centerview Partners LLC.
BofA Merrill Lynch is also acting as a financial advisor to Ventas. Ventas’s legal advisors are
Wachtell, Lipton, Rosen & Katz and Barack Ferrazzano Kirschbaum & Nagelberg. LREP’s financial
advisor is Lazard Frères & Co. LLC, and its legal advisors are Sullivan & Cromwell LLP and Roberts
and Holland LLP.
Conference Call Today at 10:30 A.M. ET
Ventas will hold a conference call to discuss this transaction on Friday, October 22, 2010, at
10:30 a.m. Eastern Time (9:30 a.m. Central Time). The conference call is being webcast by Thomson
Reuters and can be accessed at the Ventas website at www.ventasreit.com or by dialing 617-614-3452
and providing the participant passcode “Ventas”. A replay of the webcast will be available on
Ventas’s website or by calling 617-801-6888, passcode 85604526, at approximately 1:30 p.m. Eastern
Time today. The webcast will be archived for 30 days.
- MORE -
Ventas to Acquire Real Estate Assets of Atria Senior Living
October 22, 2010
Page 5
October 22, 2010
Page 5
An investor presentation discussing the Atria transaction will be available on Ventas’s
website at www.ventasreit.com/.
ABOUT VENTAS
Ventas, Inc., an S&P 500 company, is a leading healthcare real estate investment trust. Its
diverse portfolio of nearly 600 assets in 44 states (including the District of Columbia) and two
Canadian provinces consists of seniors housing communities, skilled nursing facilities, hospitals,
medical office buildings and other properties. Through its Lillibridge subsidiary, Ventas provides
management, leasing, marketing, facility development and advisory services to highly rated
hospitals and health systems throughout the United States. More information about Ventas and
Lillibridge can be found at www.ventasreit.com and www.lillibridge.com.
ABOUT ATRIA
Atria is the fourth largest assisted living provider in the U.S. with approximately 14,200
units in 124 communities across 27 states. More information about Atria can be found on its
website at www.atriaseniorliving.com.
This press release includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements regarding the Company’s or its tenants’, operators’, managers’ or
borrowers’ expected future financial position, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing plans, business strategy, budgets, projected
costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment
opportunities, merger integration, growth opportunities, dispositions, expected lease income,
continued qualification as a real estate investment trust (“REIT”), plans and objectives of
management for future operations and statements that include words such as “anticipate,” “if,”
“believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other
similar expressions are forward-looking statements. Such forward-looking statements are inherently
uncertain, and security holders must recognize that actual results may differ from the Company’s
expectations. The Company does not undertake a duty to update such forward-looking statements,
which speak only as of the date on which they are made.
The Company’s actual future results and trends may differ materially depending on a
variety of factors discussed in the Company’s filings with the Securities and Exchange Commission.
These factors include without limitation: (a) the ability and willingness of the Company’s tenants,
operators, borrowers, managers and other third parties to meet and/or perform their obligations
under their respective contractual arrangements with the Company, including, in some cases, their
obligations to indemnify, defend and hold harmless the Company from and against various claims,
litigation and liabilities; (b) the ability of the Company’s tenants, operators, borrowers and
managers to maintain the financial strength and liquidity necessary to satisfy their respective
obligations and liabilities to third parties, including without limitation obligations under their
existing credit facilities and other indebtedness; (c) the Company’s success in implementing its
business strategy and the Company’s ability to identify, underwrite, finance, consummate and
integrate diversifying acquisitions or investments, including those in different asset types and
outside the United States; (d) the nature and extent of future competition; (e) the extent of
future or pending healthcare reform and regulation, including cost containment measures and changes
in reimbursement policies, procedures and rates; (f) increases in the Company’s cost of borrowing
as a result of changes in interest rates and other factors; (g) the ability of the Company’s
operators and managers, as applicable, to deliver high quality services, to attract and retain
qualified personnel and to attract residents and patients; (h) the results of litigation affecting
the Company; (i) changes in general economic conditions and/or economic conditions in the markets
in which the Company may, from time to time, compete, and the effect of those changes on the
Company’s revenues and its ability to access the capital markets or other sources of funds; (j) the
Company’s ability to pay down, refinance, restructure and/or extend its indebtedness as it becomes
due; (k) the Company’s ability and willingness to maintain its qualification as a REIT due to
economic, market, legal, tax or other considerations; (l) final determination of the Company’s
taxable net income for the year ending December 31, 2010; (m) the ability and willingness of the
Company’s tenants to renew their leases with the Company upon expiration
- MORE -
Ventas to Acquire Real Estate Assets of Atria Senior Living
October 22, 2010
Page 6
October 22, 2010
Page 6
of the leases and the
Company’s ability to reposition its properties on the same or better terms in the event such leases
expire and are not renewed by the Company’s tenants or in the event the Company exercises its right
to replace an existing tenant upon default; (n) risks associated with the Company’s senior living
operating portfolio, such as factors causing volatility in the Company’s operating income and
earnings generated by its properties, including without limitation national and regional economic
conditions, costs of materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability
claims, and the timely delivery of accurate property-level financial results for those properties;
(o) the movement of U.S. and Canadian exchange rates; (p) year-over-year changes in the Consumer
Price Index and the effect of those changes on the rent escalators, including the rent escalator
for Master Lease 2 with Kindred, and the Company’s earnings; (q) the Company’s ability and the
ability of its tenants, operators, borrowers and managers to obtain and maintain adequate liability
and other insurance from reputable and financially stable providers; (r) the impact of increased
operating costs and uninsured professional liability claims on the liquidity, financial condition
and results of operations of the Company’s tenants, operators, borrowers and managers, and the
ability of the Company’s tenants, operators, borrowers and managers to accurately estimate the
magnitude of those claims; (s) the ability and willingness of the lenders under the Company’s
unsecured revolving credit facilities to fund, in whole or in part, borrowing requests made by the
Company from time to time; (t) risks associated with the Company’s recent acquisition of businesses
owned and operated by Lillibridge, including its ability to successfully design, develop and manage
MOBs and to retain key personnel; (u) the ability of the hospitals on or near whose campuses the
Company’s MOBs are located and their affiliated health systems to remain competitive and
financially viable and to attract physicians and physician groups; (v) the Company’s ability to
maintain or expand its relationships with its existing and future hospital and health system
clients; (w) risks associated with the Company’s investments in joint ventures, including its lack
of sole decision-making authority and its reliance on its joint venture partners’ financial
condition;(x) the impact of market or issuer events on the liquidity or value of the Company’s
investments in marketable securities; and (y) the impact of any financial, accounting, legal or
regulatory issues that may affect the Company or its major tenants, operators or managers. Many of
these factors are beyond the control of the Company and its management.
- END -