Ardent-LHP Transaction Creates Second Largest
Private, For-Profit Hospital Operator in the U.S.
Reinforces Ventas’s Position as the Premier
Capital Partner for Leading Senior Living and Healthcare
Providers
Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) announced
today that it has issued a commitment to provide secured debt
financing in the amount of $700 million to a subsidiary of Ardent
Health Services (“Ardent”) in connection with Ardent’s agreement to
acquire LHP Hospital Group, Inc. (“LHP”), also announced earlier
today. Terms of the purchase were not disclosed. The transaction is
expected to close in the first quarter of 2017, pending customary
regulatory reviews and approvals.
To complete the purchase of LHP, Ventas is providing a
commitment to make a five-year LIBOR-based loan (“the Loan”),
guaranteed by Ardent’s parent company, and bearing an initial
interest rate of approximately 8%. Ardent will also receive a
significant equity contribution from its majority owner, an
affiliate of Equity Group Investments (“EGI”). The transaction is
structured to enable Ardent to maintain its strong balance sheet
and potential for future growth and investment.
“This commitment is aligned with our position as the premier
capital partner to leading senior living and healthcare providers
and our strategy of building a formidable, high quality hospital
business,” said Ventas Chairman and Chief Executive Officer Debra
A. Cafaro. “The LHP acquisition validates our investment last year
in Ardent’s experienced management team and scalable
infrastructure, and its ability to consolidate the large,
fragmented hospital sector.”
“We are excited by Ardent’s acquisition of LHP, which expands
Ardent’s business by 50% and creates the second largest private,
for-profit hospital operator in the United States with over $3
billion in revenues. This transaction enhances Ardent’s scale and
diversification by adding a high-quality portfolio with significant
market share in attractive markets. Ardent will also benefit from
LHP’s strong margins, excellent payor mix, significant synergy
opportunities and outstanding joint venture partner relationships
with leading not-for-profit and academic medical centers. This
accretive, well-structured loan will enhance Ventas’s ability to
drive reliable growth and income from our diversified portfolio for
the benefit of shareholders.”
Ventas expects the Loan to be accretive to 2017 normalized funds
from operations on a leverage neutral basis. Ventas expects to fund
the transaction using proceeds of asset sales and loan repayments,
cash on hand and other capital sources. The acquisition agreement
between Ardent and LHP and Ventas’s Loan commitment are subject to
customary conditions to closing and approvals. There can be no
assurance that the acquisition of LHP will occur or that Ventas
will fund the Loan.
Following the completion of Ardent’s acquisition of LHP, Ardent
will benefit from significant scale and diversification, operating
19 high-quality hospitals with more than 3,200 beds across six
states and employing approximately 18,000 employees, including more
than 475 physicians. With LHP, Ardent will also gain significant
relationships with outstanding joint venture partners, including
leading not-for-profit and academic medical centers such as
Ascension, Hackensack Meridian Health and Portneuf Health Care.
Existing Ardent management will lead the combined company with the
assistance of key LHP executives, and expects to realize meaningful
synergies in the transaction. Headquartered in Plano, Texas, LHP is
owned by affiliates of the private equity firm CCMP Capital
Advisors, LLC and the CPP Investment Board as well as certain
members of management and its board of directors.
Ventas owns substantially all of Ardent’s current real estate,
including 10 of its 14 hospitals and related medical facilities.
Ardent is owned by an entity consisting of an affiliate of EGI,
Ardent management, and Ventas, which owns a 9.9% equity stake.
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, life
science 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.
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.
Click here to subscribe to Mobile Alerts for Ventas, Inc.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161005006406/en/
Ventas, Inc.Ryan K. Shannon(877) 4-VENTAS
Ventas (NYSE:VTR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ventas (NYSE:VTR)
Historical Stock Chart
From Sep 2023 to Sep 2024