CHICAGO, IL - Ventas, Inc. 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.
Source: Ventas, Inc.
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."
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."
"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."
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."
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.