Retirement News : Seniors : Ventas to acquire assisted-living company

Ventas to acquire assisted-living company

Date Added: 13-04-2005

Ventas Inc., a Louisville health-care real-estate company, is buying a New Jersey owner of assisted-living and independent-living properties for $760 million in cash and stock.

The deal will grow Ventas by about one-third and substantially reduce its dependence on rent from Louisville's Kindred Healthcare, its largest tenant. It also makes Ventas less dependent on businesses tied to Medicare and Medicaid.

Shareholders of Provident Senior Living Trust, based in Princeton, N.J., will receive nearly one-half a share of Ventas and $7.81 in cash for each Provident share. The deal requires approval by Provident's shareholders. Ventas will acquire 68 independent- and assisted-living properties in 19 states, which are run by two of that industry's largest operators, Brookdale and Alterra.

Just as important as the number of properties is their type. Ventas' current portfolio is dominated by Kindred-owned nursing homes and long-term-care hospitals, which depend on the government's Medicare and Medicaid programs for revenue.

Residents in Provident's communities pay with their own money or private insurance.

The deal is "a huge step toward our strategic diversification goal," said Debra Cafaro, chairman, president and CEO of Ventas.

The company now gets 76 percent of its revenue from Kindred. That will fall to 56 percent once this deal closes, Cafaro said.

And private-pay facilities will generate 38 percent of Ventas' revenue, compared with 16 percent before the deal. Proceeds from nursing homes will fall to 41 percent of Ventas' revenue.

Ventas will put up $382 million worth of company shares and $378 million in cash, drawn from its revolving credit line and other borrowings. Ventas also will assume $460 million of Provident's debt.

Ventas said it will reduce its new indebtedness over time through payments made from cash flows and any future sale of properties.

There will be no changes to Ventas' board of directors as a result of the purchase, and Provident's senior managers have agreed to stay on with Ventas through Dec. 31.

Ventas said it expects the deal to add to its 2005 earnings. The company will release an updated earnings forecast for 2005 when the deal closes.

Ventas currently owns 292 health-care-related facilities. Most are nursing homes or long-term care hospitals, but the company has increased its holdings of other types of properties through deals such as its $115 million purchase of 14 independent- and assisted-living communities early last year.

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