Creates an Independent, Publicly Traded Skilled Nursing REIT
Positioned for Growth
CHICAGO--(BUSINESS WIRE)--Apr. 6, 2015--
Ventas, Inc. (NYSE: VTR) ("Ventas" or the "Company") announced today
that the Company’s Board of Directors has unanimously approved a plan to
spin off most of its post-acute/skilled nursing facility ("SNF")
portfolio into an independent, publicly traded REIT ("SpinCo"). The
transaction is expected to be completed in the second half of 2015 and
is intended to qualify as a tax-free distribution to Ventas shareholders.
SpinCo will own 355 high-quality triple-net leased SNFs and other
healthcare assets operated by 44 private regional and local care
providers. SpinCo will have an independent, experienced management team
and strategy focused on its "pure-play" post-acute/skilled nursing
business. With a strong balance sheet, equity currency and independent
access to capital markets, SpinCo will drive growth and create value
through acquisitions and active asset management including redevelopment.
The spin-off transaction will enhance Ventas’s growth profile and
increase the contribution of net operating income ("NOI") from private
pay assets and assets operated by leading operators and care providers
globally. The Company will maintain its scale and diversification across
a wide spectrum of high-quality seniors housing, medical office
buildings and other select healthcare segments, as well as its strong
SpinCo’s portfolio will be diversified by geography, spanning 37 states,
and by operator, with no single tenant expected to constitute more than
10 percent of SpinCo’s NOI (other than Senior Care Centers at 12
percent). SpinCo’s leases contain annual escalations and have a weighted
average remaining term of approximately 10 years. In its first full year
of operations, SpinCo is expected to generate estimated NOI of $315
million to $320 million and estimated funds from operations ("FFO") of
$240 million to $245 million. Upon completion of the spin-off, Raymond
J. Lewis, currently President of Ventas, will serve as Chief Executive
Officer and as a director of SpinCo, and Douglas Crocker II, currently
Ventas’s Presiding Director, will serve as SpinCo’s independent
Non-Executive Chairman of the Board.
"Over the past 15 years, Ventas has delivered 29 percent compound annual
return to shareholders. This transaction demonstrates our continued
commitment to enhancing shareholder value by creating two focused
companies with distinct strategies," said Ventas Chairman and Chief
Executive Officer Debra A. Cafaro. "SpinCo will thrive as an
independent, pure-play SNF REIT with a seasoned management team and a
strong Ventas heritage. For Ventas, the spin-off enhances our growth
profile, increases our NOI contribution from top-tier operators, and
improves our industry-leading private pay NOI composition. As one of the
top REITs globally, Ventas will maintain our diversification, scale,
strong balance sheet, and superior dividend and cash flow growth."
Mr. Lewis commented, "With a focus on the highly fragmented
post-acute/SNF market, SpinCo will have the necessary size, balance
sheet strength and access to capital to pursue significant consolidation
opportunities. I am excited to join my colleagues to launch a new
company poised for success, delivering strong cash flows and growth to
drive value for shareholders."
Creates a Competitive Pure-Play Post-Acute/SNF REIT, Poised for
Growth. The SNF industry benefits from attractive dynamics,
including a growing 85 and over population and significant growth in
SNF expenditures. As one of only two pure-play publicly-traded SNF
REITs with a large and diverse triple-net leased portfolio, SpinCo
will be positioned for success. SpinCo will have the necessary
relationships, expertise, size and balance sheet strength to pursue
growth and consolidation opportunities within a large, fragmented
Enhances Ventas’s Growth Profile and Further Aligns Portfolio with
Core Strategy. Ventas believes that its same-store NOI growth rate
will increase as a result of the spin-off. On a pro forma basis,
Ventas’s same-store NOI growth rate for the full year 2014 would have
been approximately 10 percent higher than reported. Following
completion of the spin-off, approximately 83 percent of Ventas’s NOI
will come from top 20 operators in seniors housing, post-acute
facilities and hospitals; approximately 83 percent of NOI will be
derived from private pay assets; more than 50 percent of NOI will come
from medical office buildings and seniors housing operating assets
that have greater upside to a growing economy; and, NOI from SNFs will
be approximately five percent.
Ventas and SpinCo Will Maintain Strong Financial Positions.
Each company will have a strong balance sheet that will provide the
financial flexibility necessary to pursue future growth opportunities.
It is anticipated that Ventas will use proceeds from the new debt
raised by SpinCo to pay down Ventas debt. There is no change expected
to Ventas’s credit ratings or related outlook.
Combined Dividend Expected to Increase by at Least 10 Percent.
Following completion of the spin-off, Ventas and SpinCo expect to have
a combined annualized dividend that represents an increase of at least
10 percent on an aggregate basis. On a standalone basis, Ventas
expects to maintain its best-in-class dividend payout ratio.
SpinCo will be led by an experienced, independent management team and
Board of Directors:
Raymond J. Lewis, currently President of Ventas, will serve as Chief
Executive Officer and a director of SpinCo;
Douglas Crocker II, Presiding Director of Ventas’s Board, will serve
as Non-Executive Chairman of the Board of SpinCo;
Lori B. Wittman, currently Senior Vice President, Capital Markets and
Investor Relations of Ventas, will serve as Executive Vice President
and Chief Financial Officer of SpinCo;
Kristen M. Benson, currently Senior Vice President, Associate General
Counsel and Corporate Secretary of Ventas, will serve as Executive
Vice President and General Counsel of SpinCo; and
Timothy A. Doman, currently Senior Vice President and Chief Portfolio
Officer of Ventas, will serve as Executive Vice President and Chief
Operating Officer of SpinCo.
Additional members of the SpinCo Board will be announced as Ventas works
towards completion of the transaction.
Ventas will continue to be headed by Debra A. Cafaro, its current
Chairman and Chief Executive Officer. Upon completion of the
transaction, Ventas does not intend to replace the position of
President, and the remainder of Ventas’s executive team will remain
Under the terms of the spin-off, Ventas shareholders are expected to
receive one common share of SpinCo via a special distribution for every
four shares of Ventas they own. Following the distribution, Ventas’s
shareholders will own shares in both Ventas and SpinCo. Importantly, the
number of Ventas shares owned by each shareholder will not change as a
result of the distribution.
SpinCo expects to file its initial Form 10 registration statement
relating to the spin-off with the Securities and Exchange Commission
("SEC") in April 2015, and the spin-off is expected to be completed in
the second half of 2015.
The transaction is subject to certain conditions, including the
effectiveness of SpinCo’s Form 10 registration statement, receipt of an
opinion from tax counsel regarding the tax-free nature of the
distribution, and final approval and declaration of the distribution by
Ventas’s Board of Directors. There can be no assurance regarding the
ultimate timing of the spin-off or that it will be completed. SpinCo
intends to apply to have its common stock authorized for listing on the
New York Stock Exchange.
Centerview Partners and Bank of America Merrill Lynch are serving as
financial advisors to Ventas, and Wachtell, Lipton, Rosen & Katz is
serving as legal advisor in connection with the spin-off.
Conference Call Details
Ventas will hold a conference call to discuss the transaction today at
8:30 a.m. Eastern Time. The dial-in number for the conference call is
(866) 953-6858 (or (617) 399-3482 for international callers). The
participant passcode is "Ventas." The call will also be webcast live and
can be accessed at the Company’s website at www.ventasreit.com.
A replay of the call will be available at the Company’s website, or by
calling (888) 286-8010 (or (617) 801-6888 for international callers),
passcode 65539086, beginning at approximately 12:30 p.m. Eastern Time
and will remain for 29 days.
Additional information regarding the spin-off can be found on the
Company’s website under the "Investor Relations" section.
Raymond J. Lewis, who will serve as Chief Executive Officer of SpinCo,
has been President of Ventas since 2010. He previously served as
Ventas’s Executive Vice President and Chief Investment Officer from 2006
to 2010 and as Senior Vice President and Chief Investment Officer from
2002 to 2006. Prior to joining Ventas in 2002, he was managing director
of business development for GE Capital Healthcare Financial Services, a
division of General Electric Capital Corporation ("GECC"), which is a
subsidiary of General Electric Corporation, where he led a team focused
on mergers and portfolio acquisitions of healthcare assets. Before that,
Mr. Lewis was Executive Vice President of Healthcare Finance for Heller
Financial, Inc. (which was acquired by GECC in 2001), where he had
primary responsibility for healthcare lending. He is Chairman Emeritus
of the National Investment Center for the Seniors Housing & Care
Industry (NIC). Mr. Lewis is also a member of the Executive Board of the
American Seniors Housing Association where he serves as Vice Chair on
the Executive Committee. He is a graduate of the University of Wisconsin.
Douglas Crocker II, who will serve as Non-Executive Chairman of the
Board of SpinCo, has more than 40 years of real estate experience and
has been a director of Ventas since 1998. He is currently Managing
Partner of DC Partners LLC, a firm that invests in and develops
apartment properties, where he previously served as principal from 2003
to 2006. From 2006 to 2014, Mr. Crocker was the Chairman and Chief
Investment Officer of Pearlmark Multifamily Partners, L.L.C., a
commercial real estate firm. From 1993 to 2003, he was the President,
Chief Executive Officer and a trustee of Equity Residential, a prominent
multifamily REIT, most recently serving as Vice Chairman of the Board.
Mr. Crocker is currently a trustee of Acadia Realty Trust, a shopping
center REIT, and a director of Associated Estates Realty Corporation, an
apartment REIT, and CYS Investments, Inc., a specialty finance company
that primarily invests in agency residential mortgage-backed securities.
He serves on the Advisory Board of the DePaul University Real Estate
School and is a member of the Board of Trustees of Milton Academy and
the National Multi Housing Counsel. He is also a former member of the
Board of Governors of the National Association of Real Estate Investment
Lori B. Wittman, who will serve as Executive Vice President and Chief
Financial Officer of SpinCo, currently serves as Ventas’s Senior Vice
President, Capital Markets and Investor Relations, and has been with
Ventas since 2011. Prior to that, she was the Chief Financial Officer
and Managing Principal of Big Rock Partners, a real estate private
equity firm with over $500 million of assets under management at its
peak. She previously served as Senior Vice President and Treasurer for
General Growth Properties, Inc. and held various capital markets and
finance positions with Heitman, Homart Development Company, Citibank and
Mellon Bank. Ms. Wittman received a B.A. in Geography and Sociology from
Clark University, a Masters in City Planning from the University of
Pennsylvania and an M.B.A. from the University of Chicago. She serves on
the Board of Directors of IMH Financial Inc. and is a member of the
audit committee and chairs the compensation committee.
Kristen M. Benson, who will serve as Executive Vice President and
General Counsel of SpinCo, currently serves as Ventas’s Senior Vice
President, Associate General Counsel and Corporate Secretary. She has
been with Ventas since 2004, previously serving as Vice President,
Associate General Counsel and Corporate Secretary from 2012 to 2014, as
Vice President and Senior Securities Counsel from 2007 to 2012 and as
Senior Securities Counsel from 2004 to 2007. From 1997 to 2004, Ms.
Benson was an associate at the law firm of Sidley Austin LLP in Chicago,
Illinois, where her principal practice areas were securities, mergers
and acquisitions, and corporate finance. She received her J.D. from the
University of Virginia School of Law and her B.B.A. summa cum laude in
Finance and Computer Applications from the University of Notre Dame. Ms.
Benson is admitted to the Bar in Illinois and currently serves on the
Legal Advisory Board of World Business Chicago and as a member of the
Association of Corporate Counsel, the Society of Corporate Secretaries
and Governance Professionals and NAREIT.
Timothy A. Doman, who will serve as Executive Vice President and Chief
Operating Officer of SpinCo, currently serves as Ventas’s Senior Vice
President and Chief Portfolio Officer. Mr. Doman has been with Ventas
since 2002, previously serving as Senior Vice President, Asset
Management from 2007 to 2012 and as Vice President, Asset Management
from 2002 to 2007. Before joining Ventas, Mr. Doman was a senior asset
manager for GE Capital Real Estate, where he managed a commercial real
estate equity and loan portfolio. Before that, he was Vice President of
Asset Management at Kemper Corporation and a senior appraiser for Arthur
Andersen & Co. Mr. Doman received his B.B.A. in Real Estate and Finance
from the University of Wisconsin and an M.B.A. in Finance from Indiana
About Ventas, Inc.
Ventas, Inc., an S&P 500 company, is a leading real estate investment
trust. Its diverse portfolio of more than 1,600 assets in the United
States, Canada and the United Kingdom consists of seniors housing
communities, medical office buildings, skilled nursing facilities,
hospitals and other properties. 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
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. Although
Ventas believes that the expectations reflected in any forward-looking
statements are based on reasonable assumptions, it can give no assurance
that these expectations will be attained, and it is possible that actual
results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and uncertainties.
Such factors include, but are not limited to: uncertainties as to the
completion and timing of the spin-off, the failure to satisfy any
conditions to complete the spin-off, the expected tax treatment of the
spin-off, the inability to obtain certain third party consents required
to transfer certain properties, and the impact of the spin-off on the
businesses of Ventas and SpinCo. Other important factors that
could cause actual results or events to differ materially from those
expressed in forward-looking statements made in this press release are
described in Ventas’s most recent Annual Report on Form 10-K filed with
the SEC. Ventas assumes no obligation to update these statements except
as is required by law.
Non-GAAP Financial Measures
This press release includes forward-looking statements regarding
estimated non-GAAP financial measures of initial year NOI and FFO for
SpinCo, and certain NOI metrics for Ventas following the anticipated
spin-off, based upon the assets currently expected to be included in
NOI is a supplemental non-GAAP financial measure that aids in the
assessment of unlevered property-level operating results. The
most directly comparable GAAP measure is net income. NOI is
defined as total revenues, less interest and other income, and, with
respect to Ventas, property-level operating expenses and medical office
building services costs (in each case including amounts in discontinued
operations). Cash receipts may differ due to straight line
recognition of certain rental income and the application of other GAAP
Ventas uses the National Association of Real Estate Investment Trusts
("NAREIT") definition of FFO. The most directly
comparable GAAP measure is net income. NAREIT defines FFO as net
income (computed in accordance with GAAP), excluding gains (or losses)
from sales of real estate property, including gain on re-measurement of
equity method investments, and impairment write-downs of depreciable
real estate, plus real estate depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments
for unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis.
Ventas believes that NOI and FFO are helpful to investors, analysts
and management because they are widely recognized measures of the
performance of equity REITs and provide a relevant basis for comparison
of Ventas’s operating results with the operating results of other real
estate companies and between periods on a consistent basis.
The non-GAAP financial measures we present in this press release may
not be comparable to those reported by other real estate companies due
to the fact that all real estate companies do not use the same
definitions. These non-GAAP financial measures should not be considered
as alternatives to net income as indicators of operating performance or
as alternatives to cash flows from operating activities as indicators of
liquidity, nor are they necessarily indicative of sufficient cash flow
to fund capital needs. Because certain terms of the spin-off have not
yet been determined, including as to the balance sheet of SpinCo, it is
not reasonably possible at this time to provide a comparable
forward-looking estimation of initial year net income for SpinCo or a
reconciliation to the estimated NOI and FFO figures included in this
press release. Historical GAAP financial information for Ventas is
included in its most recent Annual Report on Form 10-K filed with SEC,
and historical GAAP financial information for SpinCo will be included in
the Form 10 registration statement relating to the spin-off.
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Source: Ventas, Inc.
Lori B. Wittman