Cdn $2.1 Billion Acquisition Adds 74 New, High-Quality Private Pay Assets in U.S. and Canada Growth Profile of Ventas Enhanced Through Development Pipeline and Exclusive Right of First Offer on Sunrise Assets in Canada and Portions of U.S.LOUISVILLE, Ky., Jan 15, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Ventas, Inc.
(NYSE: VTR) ("Ventas" or the "Company") announced today that it has reached a
definitive agreement with Sunrise Senior Living REIT (TSE: SZR.UN) ("Sunrise
REIT") to acquire its interest in 74 high-quality private pay assisted living
communities in the U.S. and Canada and the exclusive right of first offer to
acquire other newly developed assets in Canada and portions of the U.S. for
Cdn $15.00 per unit, for a total value including debt of Cdn $2.1 billion (or
approximately USD $1.8 billion at current exchange rates). The 74 communities
are located in demographically desirable metropolitan areas of 17 states and
two Canadian provinces. Ventas also expects to acquire for a fixed price five
communities in the U.S. and Canada that are currently under development (the
"Five Development Properties").
The acquired assets are high-quality new communities, almost all of which
were developed by Sunrise Senior Living, Inc. (NYSE: SRZ) ("Sunrise") in its
recognizable and award-winning "Sunrise Mansion" style. Sunrise is the
manager of all of the properties under the existing long-term management
contracts, which will remain in place, and is a minority joint venture partner
in 56 of the communities.
"This transaction will add 74 exceptional private pay assets to our
diverse high-quality portfolio and is expected to increase our revenue from
private pay assets to approximately two-thirds of our total revenue. The
acquired assets are all new assisted living communities located in large
metropolitan areas, with high barriers to entry, and extraordinary growth
prospects. We welcome the opportunity to establish a new, important
relationship with Sunrise, the world's premier manager of senior living
residences," Ventas Chairman, CEO and President Debra A. Cafaro said. "This
transaction will broaden our footprint in North America with entry into the
Canadian seniors housing market. With the exclusive right of first offer on
additional Sunrise-developed assets in Canada and portions of the U.S., we
believe that this transaction will position Ventas for long-term growth and
add a new dimension to our diversification program."
"We are moving from one excellent capital partner in the Sunrise REIT to
another in Ventas," said Thomas Newell, Sunrise's President. "We are growing
rapidly because we see tremendous growth in demand for our resident-centered
senior living services. We believe the new Ventas relationship provides a
great new partner to help us meet the needs of more seniors."
Of the 74 acquired communities, 63 are located in the U.S., clustered in
metropolitan areas of California, Illinois, New Jersey, Pennsylvania, New York
and Colorado, and 11 are located in the Canadian provinces of Ontario and
British Columbia. Three of those assets are currently in lease-up.
Four of the Five Development Properties that Ventas expects to acquire are
in the U.S. and one is in Ontario. Two communities, located in Staten Island,
New York and Sandy, Utah, opened in late 2006; two communities are expected to
open in early to mid-2007; and the Ontario community, which is principally a
229-suite independent living community, is expected to open by 2008.
In 2007, total revenue from the 74 acquired communities should approximate
USD $387 million, and net operating income (NOI) should approximate
USD $132 million, using current exchange rates. Because Sunrise is a minority
joint venture partner in some of the assets, Ventas's share of the total
expected revenue and NOI is approximately 85 percent.
The transaction is expected to be initially five to seven cents dilutive
to the Company's normalized Funds from Operations (FFO) per share in 2007, and
is expected to be break even to the Company's normalized FFO per share in
2008, in each case excluding development properties. The Company expects the
transaction to increase Ventas's internal growth rate due to the
attractiveness of the assets coupled with the positive fundamentals in the
seniors housing market.
BENEFITS OF TRANSACTION
-- Significant diversification by tenant and by asset class. With the
close of this transaction, annualized REIT revenues from Kindred
Healthcare, Inc. (NYSE: KND) should represent approximately 30 percent
of Ventas's run rate total revenue and annualized revenue from private
pay assets in the Company's portfolio should represent approximately
67 percent of the Company's run rate total revenue.
-- Upon completion of the transaction, Ventas will own over 525 assets in
43 states and two Canadian provinces.
-- The 74 acquired communities include approximately 6,000 suites and
capacity for over 7,000 residents. Ventas will acquire a 100 percent
interest in 18 communities that are wholly owned by Sunrise REIT, and
between a 75 to 85 percent interest in 56 communities.
-- The average age of the portfolio is seven years, including the 74
acquired communities and Five Development Properties.
-- The transaction brings added geographic diversification to the Ventas
portfolio and international expansion into Canada.
-- The acquired communities enjoy (excluding lease-up properties) strong
occupancies of 94 percent and compelling margins, due to Sunrise's
brand and standardized operating model, the high quality of the assets
and the excellent location of the communities.
-- An initial NOI yield to Ventas of approximately 6.2 percent and
excellent prospects for growth in the existing portfolio.
-- An exclusive right of first offer to acquire additional assets
developed by Sunrise in Canada and limited right to acquire certain
Sunrise developed assets in the U.S.
-- Ventas will enjoy an important new relationship with Sunrise, one of
the world's premier providers of senior living services. Through
minority partnership interests in 56 of the acquired communities, and
an incentive management fee structure at all the assets, Sunrise is
invested in the long-term success of the communities.
-- Ventas will enjoy true economic benefits from the projected growth in
the portfolio, through use of its taxable REIT subsidiary.
"The Sunrise REIT communities are desired for their exceptional care and
resident-centered services, as well as outstanding architectural and interior
design. We believe these communities will continue to be highly successful,"
Cafaro added.
Completion of the transaction will be subject to satisfaction of customary
closing conditions, including approval by the unitholders of Sunrise REIT.
Ventas expects the acquisition to be completed early in the second quarter of
2007, although there can be no assurance that the transaction will close or,
if it does, when the closing will occur.
Merrill Lynch & Co. acted as the Company's exclusive financial advisor and
delivered a fairness opinion to its Board of Directors. Interim financing for
the acquisition will be provided by Merrill Lynch. Wachtell, Lipton, Rosen &
Katz and Osler, Hoskin & Harcourt acted as legal advisors to Ventas.
CONFERENCE CALL TUESDAY AT 9:00 A.M. (E.T.)
Ventas will hold a conference call to discuss this press release on
Tuesday, January 16, 2007, at 9:00 a.m. Eastern Time (8:00 a.m. Central Time).
The conference call is being web cast by CCBN and can be accessed at the
Ventas website at http://www.ventasreit.com . A replay of the web cast will
be available at approximately 11:00 a.m. Eastern Time on January 16 and will
be archived for thirty (30) days.
Ventas, Inc. is a leading healthcare real estate investment trust. Its
diverse portfolio of properties located in 43 states includes independent and
assisted living facilities, skilled nursing facilities, hospitals and medical
office buildings. More information about Ventas can be found on its website
at http://www.ventasreit.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
Ventas, Inc.'s ("Ventas" or the "Company") and its subsidiaries' expected
future financial position, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing plans, business strategy,
budgets, projected costs, capital expenditures, competitive positions, growth
opportunities, 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. Factors that may affect the Company's
plans or results include without limitation: (a) the ability and willingness
of the Company's operators, tenants, borrowers and other third parties to meet
and/or perform the obligations under their various contractual arrangements
with the Company; (b) the ability and willingness of Kindred Healthcare, Inc.
(together with its subsidiaries, "Kindred"), Brookdale Living Communities,
Inc. (together with its subsidiaries, "Brookdale") and Alterra Healthcare
Corporation (together with its subsidiaries, "Alterra") to meet and/or perform
their obligations to indemnify, defend and hold the Company harmless from and
against various claims, litigation and liabilities under the Company's
respective contractual arrangements with Kindred, Brookdale and Alterra; (c)
the ability of the Company's operators, tenants and borrowers 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; (d) 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; (e) the nature and extent of future competition; (f) the extent of
future or pending healthcare reform and regulation, including cost containment
measures and changes in reimbursement policies, procedures and rates; (g)
increases in the Company's cost of borrowing; (h) the ability of the Company's
operators to deliver high quality care and to attract patients; (i) the
results of litigation affecting the Company; (j) changes in general economic
conditions and/or economic conditions in the markets in which the Company may,
from time to time, compete; (k) the Company's ability to pay down, refinance,
restructure and/or extend its indebtedness as it becomes due; (l) the movement
of interest rates and the resulting impact on the value of and the accounting
for the Company's interest rate swap agreement; (m) the Company's ability and
willingness to maintain its qualification as a REIT due to economic, market,
legal, tax or other considerations; (n) final determination of the Company's
taxable net income for the year ending December 31, 2006; (o) the ability and
willingness of the Company's tenants to renew their leases with the Company
upon expiration of the leases, including without limitation Kindred's
willingness to renew any or all of its bundles of leased properties expiring
in 2008, and the Company's ability to relet its properties on the same or
better terms in the event such leases expire and are not renewed by the
existing tenants; (p) risks associated with the proposed acquisition of
Sunrise Senior Living REIT, including the Company's ability to successfully
complete the transaction on the contemplated terms and to timely and fully
realize the expected revenues and cost savings therefrom; (q) the movement of
U.S. and Canadian exchange rates; (r) year-over-year changes in the Consumer
Price Index and the effect of such changes on the rent escalator for Master
Lease 2 with Kindred and the Company's earnings; and (s) the impact on the
liquidity, financial condition and results of operations of the Company's
operators, tenants and borrowers resulting from increased operating costs and
uninsured liabilities for professional liability claims, and the ability of
the Company's operators, tenants and borrowers to accurately estimate the
magnitude of such liabilities. Many of such factors are beyond the control of
the Company and its management.
SOURCE Ventas, Inc.
Debra A. Cafaro, Chairman, President and CEO, or Richard A. Schweinhart, Executive
Vice President and CFO, both of Ventas, Inc., +1-502-357-9000
http://www.ventasreit.com