Ventas Inc. (NYSE:VTR) has acquired a 26-property portfolio of independent living communities from Holiday Retirement for around $790 million, the REIT disclosed in its third quarter earnings report.
Holiday Retirement, owned by Fortress Investment Group, is the largest independent living provider in the U.S. with around 300 locations, according to its website.
“This is a very good portfolio [that is] 94% occupied, good EBITDAR margins over 50%,” said Debra Cafaro, chairman and CEO of Ventas during the third quarter earnings call. “We’re very happy with the acquisition.”
Cafaro alluded to the possibility of expanding Ventas’ Holiday holdings.
“Most of [our tenants] own significant amounts of additional real estate,” she said. “Hopefully, if we do a good job and we think that they’re a good operator there will be follow-in opportunities and we’ll evaluate all of those in the context of our business strategy. We’re hopeful there will be sort of quasi-proprietary pipeline with many of our tenant operators over time.”
Ventas will own the 26 properties and triple-net lease them to Holiday under a 15-year term.
The cap rate on the portfolio was about 7.85% looking at annualized net operating income of $62 million in Ventas’ supplemental information filing. While annual lease escalators were not disclosed, Green Street Advisors estimates they will be around 3.25%, says analyst Jeff Theiler.
Editor’s note: A previous version of this article incorrectly attributed a 6.25% portfolio cap rate to Cafaro.
Written by Alyssa Gerace