Strategic Transaction Creates Additional Growth Opportunities and
Enhances Alignment
Atria Leadership to Remain in Place
CHICAGO--(BUSINESS WIRE)--Dec. 24, 2012--
Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) announced today
that it executed a transaction whereby Ventas and the management team of
Atria Senior Living, Inc. (“Atria”) own 100 percent of Atria, effective
December 21. Atria’s Chairman and Chief Executive Officer John A. Moore
will continue to lead Atria, one of the nation’s premier providers of
senior living care services.
In the transaction, Ventas acquired 100 percent of various private
investment funds (the “Funds”) previously managed by Lazard Frères Real
Estate Investors LLC (“LFREI”) or its affiliates. The acquired Funds now
own (a) a 34 percent interest in Atria and (b) 3.7 million shares of
Ventas common stock. The total purchase price for these interests was
approximately $242 million. Atria’s executives and employees, including
Moore, now own 66 percent of Atria.
“We are excited to complete this strategic transaction, creating
additional alignment and capacity to grow our private pay senior housing
business with Atria,” Ventas Chairman and Chief Executive Officer Debra
A. Cafaro said. “Atria is one of the nation’s premier providers of care
to seniors, with a robust reporting and regulatory infrastructure. Its
experienced team has delivered outstanding results. We are proud to
expand our relationship with Atria, ensure its continued success and
create additional opportunities for growth,” she added.
“With our management team owning a majority stake in Atria, we are
thoroughly invested in the long-term success of the brand and all the
Atria communities,” Atria Chairman and Chief Executive Officer John A.
Moore said. “For who we are and what we do, we couldn’t imagine a better
partner than Ventas to build our business. We have a terrific team with
a longstanding record of serving seniors in environments that help them
thrive and flourish. Atria’s platform and its ability to deliver value
to all its constituents are strengthened by this transaction,” he added.
The transaction terms imply that the Company bought its shares of common
stock at a discount to the December 20 closing price of $64.69. In
addition, Ventas obtained certain rights and minority protections
regarding material transactions affecting Atria and is entitled to two
seats on the Atria Board of Directors. The base management fee under
Ventas’s management arrangements with Atria will remain at five percent
of revenues. At year end, Atria is expected to have approximately $30
million cash on hand.
In the transaction, Ventas also extinguished its obligation related to
the “Earnout,” a contingent performance-based payment arising out of
Ventas’s 2011 acquisition of 117 Atria-managed senior living
communities, for an additional $44 million. This amount represents the
discounted present value of the potential future payment, which was
reflected on Ventas’s financial statements as a liability.
Atria remains the same corporate and licensed entity and will continue
to manage for Ventas a portfolio of 118 high-quality, private pay senior
living communities containing approximately 13,600 units that are
located in major metropolitan markets with strong wealth demographics.
The transaction is expected to be minimally accretive to Ventas’s 2013
normalized funds from operations (FFO) per share. The 3.7 million shares
of Ventas common stock remain in the Funds, but will be considered
treasury shares and excluded from Ventas’s outstanding shares for
purposes of calculating its earnings per share under generally accepted
accounting principles (GAAP) and normalized FFO per share.
BACKGROUND
On May 12, 2011, Ventas acquired substantially all of the real estate
assets and working capital of privately-owned Atria Senior Living Group,
Inc. (ASLG). At that time, ASLG was owned by private equity funds
managed by LFREI or its affiliates. Prior to the closing of the
transaction, ASLG spun off its management company. The new, spun off
management company was named Atria Senior Living, Inc. (Atria), which
continued to be substantially owned and controlled by LFREI or its
affiliates.
ABOUT VENTAS
Ventas, Inc., an S&P 500 company, is a leading healthcare real estate
investment trust. Its diverse portfolio of more than 1,400 assets in 47
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 SENIOR LIVING, INC.
Atria Senior Living, Inc. is the fifth largest assisted living provider
in the U.S., operating more than 130 communities in 28 states. Home to
more than 14,000 older Americans, Atria communities provide respectful,
quality services designed to promote independence and help seniors enjoy
fulfilling lifestyles. Its goal is to provide environments where older
people flourish, where loneliness and isolation are forgotten, and where
families feel confident that their aging members are secure and
thriving. More information about Atria can be found 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 condition, results of
operations, cash flows, funds from operations, dividends and dividend
plans, financing opportunities and plans, capital markets transactions,
business strategy, budgets, projected costs, operating metrics, capital
expenditures, competitive positions, acquisitions, investment
opportunities, dispositions, merger integration, 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. These forward-looking statements are inherently
uncertain, and actual results may differ from the Company’s expectations.
The Company does not undertake a duty to update these 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
from expectations 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 satisfy 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 and investments,
including investments in different asset types and outside the United
States; (d) macroeconomic conditions such as a disruption of or lack of
access to the capital markets, changes in the debt rating on U.S.
government securities, default or delay in payment by the United States
of its obligations, and changes in the federal budget resulting in the
reduction or nonpayment of Medicare or Medicaid reimbursement rates; (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 borrowing costs as a result of changes in
interest rates and other factors; (h) the ability of the Company’s
operators and managers, as applicable, to comply with laws, rules and
regulations in the operation of the Company’s properties, to deliver
high quality services, to attract and retain qualified personnel and to
attract residents and patients; (i) changes in general economic
conditions 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, earnings and funding sources; (j) the Company’s
ability to pay down, refinance, restructure 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, 2012; (m) the ability and
willingness of the Company’s tenants to renew their leases with the
Company upon expiration of the leases, the Company’s ability to
reposition its properties on the same or better terms in the event of
nonrenewal or in the event the Company exercises its right to replace an
existing tenant, and obligations, including indemnification obligations,
the Company may incur in connection with the replacement of an existing
tenant; (n) risks associated with the Company’s senior living operating
portfolio, such as factors that can cause volatility in the Company’s
operating income and earnings generated by those properties, including
without limitation national and regional economic conditions, costs of
food, 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) changes in U.S. and Canadian currency exchange rates;
(p) year-over-year changes in the Consumer Price Index and the effect of
those changes on the rent escalators contained in the Company’s leases,
including the rent escalator for Master Lease 2 with Kindred Healthcare,
Inc., 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 property, liability and other insurance from
reputable, 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) risks associated with the
Company’s medical office building (“MOB”) portfolio and operations,
including the Company’s ability to successfully design, develop and
manage MOBs, to accurately estimate its costs in fixed fee-for-service
projects and to retain key personnel; (t) 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; (u) the Company’s
ability to build, maintain and expand its relationships with existing
and prospective hospital and health system clients; (v) risks associated
with the Company’s investments in joint ventures and unconsolidated
entities, including its lack of sole decision-making authority and its
reliance on its joint venture partners’ financial condition; (w) the
impact of market or issuer events on the liquidity or value of the
Company’s investments in marketable securities; (x) merger and
acquisition activity in the healthcare industry resulting in a change of
control of one or more of our tenants, operators, borrowers or managers
or significant changes in the senior management of our tenants,
operators, borrowers or managers; and (y) the impact of litigation or
any financial, accounting, legal or regulatory issues that may affect
the Company or its tenants, operators, borrowers or managers. Many of
these factors are beyond the control of the Company and its management.
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Source: Ventas, Inc.
Ventas, Inc.
Lori B. Wittman, 877-4-VENTAS