- Diversifies Portfolio with 4.5
Million Square Feet
- Establishes Growth Platform with
Wexford Science & Technology, LLC, the Leading
University-Focused Developer
- Consistent with Ventas’s Strategy to
Drive Reliable Income and Growth from Institutional Quality
Tenants
- Transaction Expected to be Accretive
in 2017 by $0.07 to $0.09 Per Share to Normalized FFO
Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today
announced that it has signed a definitive agreement to acquire
substantially all of the life science and medical real estate
assets of Wexford Science & Technology, LLC (“Wexford”) from
affiliates of Blackstone Real Estate Partners VIII L.P. for $1.5
billion in cash. The acquisition will add a related business line
to Ventas’s diverse portfolio with 25 class-A assets that are
leased by leading universities, academic medical centers and
research companies, including Yale University, the University of
Pennsylvania Health System, Washington University in St. Louis,
Wake Forest University and Alexion Pharmaceuticals, Inc. The
transaction is subject to the satisfaction of customary closing
conditions and expected to close in the fourth quarter of 2016.
“This acquisition and alliance with Wexford are a natural fit
for Ventas, and reinforce our position as the premier provider of
capital at the intersection of healthcare and real estate. We are
excited to add these world class institutions and advantaged real
estate to our portfolio,” said Ventas Chairman and Chief Executive
Officer Debra A. Cafaro. “This transaction also provides Ventas a
unique opportunity to capitalize on increasing healthcare-driven
research and development spurred and supported by top tier research
universities. We believe the growth opportunity is significant, and
look forward to working with Wexford to help leading universities,
academic medical centers and research companies fulfill their core
missions.”
The portfolio includes 23 operating properties that contain 4.1
million square feet, are 97 percent leased and derive 73 percent of
revenue from excellent credit tenants, including 11 universities
with an average credit rating of Aa2, investment grade companies
and public companies with an equity market capitalization exceeding
$1 billion. It also includes two development assets encompassing
approximately 400,000 square feet, that are nearly 60 percent
pre-leased and affiliated with Duke University and Wake Forest
University. The Company is also acquiring nine development sites
principally contiguous to existing assets.
The total consideration for the transaction is $1.5 billion plus
the assumption of $33 million of liabilities. The total
consideration for the 23 operating properties is $1.4 billion
(representing a 2017 cash yield of 6.8 percent); $88 million for
the two development properties (representing an unlevered projected
stabilized yield of approximately 7.5 percent inclusive of
post-closing capital funding to complete and lease up the assets to
stabilization); and $50 million for the development sites.
Wexford is the leading real estate development company focused
exclusively on partnering with universities, academic medical
centers and research companies. As part of the acquisition, Ventas
will enter into a long-term management and pipeline agreement with
Wexford, whereby Ventas will own the existing real estate
portfolio, Ventas will have exclusive rights to jointly develop
future projects with Wexford, and Wexford will continue to manage
the portfolio. Wexford will be independently owned and operated by
its experienced, existing management team.
“Through the acquisition of Wexford’s assets, we are adding new
high-quality properties with long lease terms and highly rated,
institutional quality tenants, driving reliable, growing cash flows
for Ventas,” said Ventas Executive Vice President, Chief Investment
Officer John Cobb. “We are pleased to partner with the outstanding
Wexford team. With several projects in the near term pipeline, we
look forward to pursuing additional growth opportunities
together.”
“Universities are reliable, consistent drivers of economic
activity, resulting in high, sustainable portfolio occupancies,”
said Jim Berens, President of Wexford. “We are delighted to have
Ventas, the leader in healthcare real estate, as our strategic
capital partner to continue growing a portfolio where there is
cutting-edge, institutional-quality life science research to meet
the needs of a growing and aging population.”
Strategic and Financial
Benefits
- Consistent with Ventas’s Strategy of
Driving Reliable Income and Growth from a Diversified
Portfolio. The transaction marks Ventas’s entry into the
attractive university-affiliated life science real estate business.
These 100 percent private pay assets will provide Ventas with
additional diversification, reliable income and growth. Wexford’s
assets are affiliated with 11 leading universities that
collectively account for 10 percent of U.S. university research and
development spending. Pro forma for the Wexford transaction, the
acquired assets will generate approximately five percent of
Ventas’s total net operating income ("NOI"). Upon closing of the
transaction, the Wexford portfolio will increase Ventas’s NOI
contribution from private pay assets to 84 percent.
- Adds High-quality Properties
Generating Growing Cash Flows. The acquired portfolio of 25
properties includes highly rated tenants and favorable triple-net
lease structures with a weighted average lease term of 10 years and
two percent annual rent escalators. The two development properties
are expected to open in 2017, leading to additional near term
growth. 2017 cash NOI is expected to approximate $94.6
million.
- Establishes New Platform for
Growth. Similar to what Ventas has successfully achieved with
Lillibridge Healthcare Services and Atria Senior Living, this
transaction adds the leading real estate development company
focused exclusively on partnering with universities, academic
medical centers and research companies as a strategic partner for
growth. Ventas will have an exclusive pipeline agreement with
Wexford that will provide Ventas with the opportunity to capture
real estate demand for the institutional life science and medical
market, which is benefitting from the increasing longevity of the
aging U.S. population and biopharma drug development growth
opportunities. Wexford currently has a significant pipeline of near
term, attractive investment opportunities.
- Accretive Transaction on a Leverage
Neutral Basis. The transaction is expected to be accretive to
Ventas’s normalized funds from operations (“FFO”) in 2017 by $0.07
to $0.09 per share on a leverage-neutral basis.
- Enhanced Sustainability Profile with
15 LEED Properties. 13 of the operating properties are LEED
certified and both of the development properties are expected to be
LEED certified, enhancing Ventas’s sustainability profile.
Advisors
J.P. Morgan Securities LLC is acting as financial advisor to
Ventas, and Kirkland & Ellis LLP is acting as its legal counsel
in connection with the transaction. Eastdil Secured group of Wells
Fargo Securities LLC is acting as financial advisor to Blackstone,
and Simpson Thacher & Bartlett LLP is acting as its legal
counsel.
Additional Materials
A presentation regarding the acquisition of Wexford’s university
affiliated life science and medical real estate assets and a link
to a video property tour can be found on the Company’s website
under the “Investor Relations” section.
About Ventas
Ventas, Inc., an S&P 500 company, is a leading real estate
investment trust. Its diverse portfolio of approximately 1,300
assets in the United States, Canada and the United Kingdom consists
of seniors housing communities, medical office buildings, skilled
nursing facilities, specialty hospitals and general acute care
hospitals. 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 Wexford
Wexford Science & Technology, LLC is a real estate company
exclusively focused on partnering with universities, academic
medical centers and research companies. Wexford targets strategic
opportunities with top-tier research universities that are directly
on or contiguous to dense, urban campuses.
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’, borrowers’ or managers’ 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 or acquisition 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; (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 or state budgets resulting
in the reduction or nonpayment of Medicare or Medicaid
reimbursement rates; (e) the nature and extent of future
competition, including new construction in the markets in which the
Company’s seniors housing communities and medical office buildings
(“MOBs”) are located; (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 tenants, 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 in light of economic, market,
legal, tax and other considerations; (l) final determination of the
Company’s taxable net income for the year ended December 31, 2015
and for the year ending December 31, 2016; (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 exchange
rates for any foreign currency in which the Company may, from time
to time, conduct business; (p) year-over-year changes in the
Consumer Price Index or the UK Retail Price Index and the effect of
those changes on the rent escalators contained in the Company’s
leases 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 Company’s liquidity, financial condition
and results of operations or that of the Company’s tenants,
operators, borrowers and managers, and the ability of the Company
and the Company’s tenants, operators, borrowers and managers to
accurately estimate the magnitude of those claims; (s) risks
associated with the Company’s MOB portfolio and operations,
including the Company’s ability to successfully design, develop and
manage MOBs 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) 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; (v) the impact of market or issuer
events on the liquidity or value of the Company’s investments in
marketable securities; (w) consolidation activity in the seniors
housing and healthcare industries resulting in a change of control
of, or a competitor’s investment in, one or more of the Company’s
tenants, operators, borrowers or managers or significant changes in
the senior management of the Company’s tenants, operators,
borrowers or managers; (x) the impact of litigation or any
financial, accounting, legal or regulatory issues that may affect
the Company or its tenants, operators, borrowers or managers; and
(y) changes in accounting principles, or their application or
interpretation, and the Company’s ability to make estimates and the
assumptions underlying the estimates, which could have an effect on
the Company’s earnings.
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Ventas, Inc.Ryan K. Shannon(877) 4-VENTAS
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