Ventas Portfolio, Profile to Swell with $3.1B Atria Purchase

A new deal is turning heads in the seniors housing market, a deal that will put Ventas Inc. at the very head of the table: namely, the healthcare REIT's definitive agreement to acquire 118 premier properties from Atria Senior Living Group, the nation's fourth-largest assisted living property operator, in a transaction valued at $3.1 billion.

A new deal is turning heads in the seniors housing market, a deal that will put Ventas Inc. at the very head of the table: namely, the healthcare REIT’s definitive agreement to acquire 118 premier properties from Atria Senior Living Group, the nation’s fourth-largest assisted living property operator, in a transaction valued at $3.1 billion.

The assets involved in the transaction consist of 110 existing facilities and eight redevelopment properties in affluent markets in metropolitan New York and Boston, as well as California and additional locations in New England. Ventas will not dig too deep into its pockets for the purchase of the portfolio, which would be the envy of any investor in the seniors housing industry. The REIT will fork over just a bit of cash–$150 million–and will finance the remainder of the transaction by trading nearly $1.4 billion in common stock and assuming $1.6 billion of existing debt. A multibillion-dollar commitment is nothing to sneeze at, but Ventas will be getting a lot of bang for its billions of bucks.

“The Atria transaction–our sixth major acquisition during the last six years–advances our strategic vision of building an excellent, high-performing enterprise comprised of a portfolio of diverse and productive healthcare and senior living assets,” Debra Cafaro, president & CEO of Ventas, noted in a prepared statement. “The addition of 118 exceptional seniors housing assets in highly desirable locations will increase the portion of our net operating income received from private-pay assets to over two-thirds of our total NOI and will establish Ventas as the largest owner of seniors housing communities in the United States.”

For Atria, the deal will provide relief from massive debt that was hanging over its head and allow it to take a positive step forward by partnering with what will be the top seniors housing concern in the country. An Atria spokesperson told CPE that, essentially, the transaction merges the company’s strengths as an operator and manager with the trusted strength of an S&P 500 company known  for making high-quality, long-term real estate investments. The spokesperson added that the transition will be seamless for the residents the company serves and its employees. Despite the big news that has the seniors housing industry abuzz, she noted that it will be business as usual for Atria, meaning that it will continue to provide the same quality healthcare it has been providing for residents.

While Atria–owned by a group of private equity funds managed by Lazard Real Estate Partners–will be giving up nearly its entire portfolio, it will still have a dominant presence in the market through its management division, Atria Management Co.

It has been a busy month for Ventas. During the first week of October, the company announced that it had signed an agreement to purchase Sunrise Senior Living Inc.’s interests in 58 senior living properties in a cash and debt transaction valued at $186 million. Days later, Ventas revealed a significant accomplishment; it had completed the first step of its Lillibridge Healthcare Services Inc. integration process, three months after having acquired the company. Lillibridge became a Ventas subsidiary in the July 2010 deal, which evolved the REIT into a top provider of management, marketing, development and advisory services to premier U.S. hospitals and health systems, while adding real estate interests in 95 medical office properties and ambulatory facilities to its portfolio.

Of course, given the customary stipulations, the Atria transaction is not written in stone. However, if all goes as planned, the deal will close during the first half of 2011.