Ventas Inc. (VTR) has finally closed the acquisition of its competitor, American Realty Capital Healthcare Trust Inc. (“HCT”). Through the deal, the company gained a high quality portfolio of medical office buildings and private pay senior living communities.
We view this acquisition as a strategic fit for the healthcare real estate investment trust (“REIT”) – Ventas. The deal not only added 4 million square feet to the company’s portfolio, but also boosted its client base with over 20 new health systems. Moreover, it brought 10 new senior living operators to Ventas’ business, producing consistent growing cash flows.
As per the terms of this cash and stock deal, shareholders of HCT either received 0.1688 Ventas shares or $11.33 in cash for each HCT common share held. This led to Ventas making a common stock issuance of 28.4 million shares, 1.1 million units redeemable for shares of Ventas common stock (exclusive of cash in lieu of fractional shares) and shelling out around $11 million in cash.
Moreover, a mortgage debt of $167 million was assumed by Ventas, while $740 million of debt, net of HCT cash on hand, were paid back. Subsequent to the HCT closing and at-the-market equity program, its fully diluted share count approximates to 334.8 million.
Going forward, we believe that Ventas’ adequate size and scale would help it to capitalize on the opportunities being offered by the healthcare real estate market and, eventually, ride on the growth trajectory.
Ventas currently carries a Zacks Rank #3 (Hold).
Some better-ranked healthcare REITs include Omega Healthcare Investors Inc. (OHI), Healthcare Realty Trust Incorporated (HR) and Medical Properties Trust Inc. (MPW). All these stocks hold a Zacks Rank #2 (Buy).
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