- Sale Price Represents Approximately
Seven Percent Yield on Current Cash Rent
- Ventas Skilled Nursing Portfolio
Will Represent Only One Percent of Net Operating Income Upon
Sale
- Proceeds of Sale Will Further
Strengthen Ventas’s Excellent Financial Condition
Ventas, Inc. (NYSE: VTR) announced today that it continues to
expect to sell 36 owned skilled nursing facilities (the “Ventas
SNFs”) that are currently operated by Kindred Healthcare, Inc.
(NYSE: KND) (“Kindred”) to facilitate Kindred’s previously
announced exit from its skilled nursing facility (“SNF”) business.
The transactions further enhance the companies’ longstanding
relationship and improve both businesses.
Kindred announced today that it has signed definitive agreements
to sell its entire SNF business to an affiliate of Blue Mountain
Capital Management, LLC and that, as Kindred closes on the sale of
its SNFs, Kindred will pay to Ventas its allocable portion of the
sale proceeds for a total $700 million aggregate purchase price for
the Ventas SNFs and Ventas will convey the applicable Ventas SNFs
to the ultimate buyer. Ventas expects to use proceeds from the sale
to repay debt, further strengthening Ventas’s excellent financial
condition and liquidity.
“We are delighted to work with Kindred to position both
companies for continued success,” said Debra A. Cafaro, Ventas
Chairman and Chief Executive Officer. “With the sale of 36 skilled
nursing assets, we are improving our portfolio and enhancing our
ability to deliver reliable growth and income for our shareholders.
Upon the expected sale, our skilled nursing rent will be only one
percent of our total business. These actions differentiate our
high-quality portfolio of leading properties and continue our long
track record of working cooperatively with our customers to provide
innovative capital solutions.”
The sale price of $700 million represents a seven percent cash
yield on current annual cash rent of $50 million and an eight
percent GAAP yield. The difference in yield represents the annual
portion of the amortization of $23 million in cash fees Ventas
previously received from Kindred. Upon the sale of the SNFs, Ventas
is expected to record a gain exceeding $600 million.
Kindred also stated today that it expects the closings of the
sale of the Ventas SNFs to occur in phases, beginning in the third
quarter of 2017 and completed by year end 2017. While there can be
no assurance that the closings will occur or the timing of any such
closings, Kindred has previously agreed that any Ventas SNFs not
purchased by Kindred by April 30, 2018 will be automatically
renewed until 2025 at the current rent level plus annual
escalations.
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 and innovation centers, inpatient rehabilitation and
long-term acute care facilities, general acute care hospitals and
skilled nursing facilities. 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. References to “Ventas”
or the “Company” mean Ventas, Inc. and its consolidated
subsidiaries unless otherwise expressly noted. More information
about Ventas and Lillibridge can be found at www.ventasreit.com and www.lillibridge.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’, 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 and effect 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, 2016 and for the year ending December 31, 2017;
(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 Company’s ability to obtain
the financial results expected from its development and
redevelopment projects; (w) the impact of market or issuer events
on the liquidity or value of the Company’s investments in
marketable securities; (x) 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; (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; and
(z) 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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