Ventas Inc. (VTR) – a leading healthcare real estate investment trust (REIT), has recently acquired the full ownership of 16 senior living communities from Sunrise Senior Living Inc. (SRZ) – the largest provider of senior living services in the U.S., and its joint venture partner, for $362 million. The transaction is expected to be completed by the second quarter of 2012.
The acquired portfolio has a median age of four years and contains 1,274 units in aggregate. The acquisition was funded through the borrowing capacity under its revolving credit facility.
With the deal, Ventas has strengthened its position in the senior living segment and augmented its revenue from private pay senior living communities. Ventas expects the transaction to be accretive to its recurring FFO (funds from operations) with an immediate effect. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to net income.
Ventas is one of the top performing healthcare REITs in the U.S., having one of the largest and most diversified portfolios in the healthcare sector exposed to nearly all types of facilities. The product diversity of the company allows it to capitalize on opportunities in different markets based on individual market dynamics, and provides a hard-to-replicate competitive advantage over its peers.
Ventas is primarily engaged in the business of financing, owning and leasing healthcare related and senior housing facilities. The company leases some of its owned healthcare related and senior housing facilities to third-party operators under "triple net" leases, under which the tenant pays all taxes, insurance, and maintenance for the properties, in addition to rent. Ventas also owns healthcare related and senior housing facilities that are managed by third-party operators.
We maintain our ‘Neutral’ rating on Ventas, which currently has a Zacks #3 Rank that translates into a short-term Hold recommendation.
SUNRISE SENIOR (SRZ): Free Stock Analysis Report
VENTAS INC (VTR): Free Stock Analysis Report
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