After its previously announced $1.75 billion acquisition of Ardent Health Services, Inc., Ventas, Inc. (NYSE: VTR) has agreed to a deal with Equity Group Investments, which will take a majority ownership of the company’s hospital operations.
The transaction is the latest development as Ventas reconfigures its portfolio. At the same time that the Chicago-based real estate investment trust announced its initial acquisition of Ardent, it spun off most of its skilled nursing assets into a separate entity, named Care Capital Properties, Inc. (CCP).
The REIT is making moves to grow its hospital exposure, but will continue to invest in private-pay senior housing assets, Chairman and CEO Debra Cafaro said previously when announcing the Ardent purchase and SNF spin-off in April.
In the latest deal, signed Tuesday, Ventas will retain Ardent’s real estate and own a 9.9% interest in the hospital operations, while current AHS management will hold a significant ownership stake.
The EGI-Ventas transaction values Ardent at $475 million. At closing, which is expected to occur in the third quarter, Ventas and Ardent will enter into triple-net leases with an initial annual base rent of $105 million.
Ventas expects the cash rental yield on its real estate investment to be approximately 7.5%, and expects to receive a $900 million five-year unsecured bank loan to finance a portion of its investment.
Ardent’s management team will continue to lead the company.
“We are delighted to partner with EGI and Ardent’s management in this transaction,” said Cafaro in a prepared statement. “With Ardent, we are well-positioned to grow in the large, fragmented and rapidly consolidating $1 trillion domestic hospital segment. We believe that hospitals will continue to be at the core of the health care delivery system, supported by attractive demographics, policy and an improving economy, which we expect will expand the ranks of insured individuals and improve provider revenues.”
Written by Emily Study