Ventas, Inc (VTR), a real estate investment trust (:REIT), has recently announced its decision to sell 5.2 million shares to Citigroup, Inc (C) in an underwritten offering. The company has also decided to grant Citigroup a 30-day option to purchase up to an additional 780,000 shares to cover the over-allotment options.
Ventas intends to use the net proceeds generated from the transaction to repay a portion of the debt currently outstanding under its revolving credit facility. The remainder of the proceeds would be used for working capital and general corporate purposes including future acquisitions and investment opportunities.
Ventas reported first quarter 2012 funds from operations (:FFO) of $214.8 million or 74 cents per share compared with $101.0 million or 62 cents per share in the year-earlier quarter. 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
As of March 31, 2012, the company had $73.0 million in borrowings outstanding under its unsecured revolving credit facility, $500 million in borrowings outstanding under its unsecured term loan facility, and $53 million in cash and cash equivalents.
At the end of the quarter, the company’s debt to total capitalization stood at 28% and net-debt-to-adjusted-pro-forma-EBITDA (earnings before interest, tax, depreciation and amortization) was 4.7x.
Ventas is one of the top performing healthcare REITs in the U.S., with one of the largest and most diversified portfolios in the healthcare sector with exposure to 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 competitive advantage over its peers. Presently, it has a portfolio of 1,400 healthcare-related facilities, which are strategically located in 47 states (including the District of Columbia) and two Canadian provinces.
Ventas currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, HCP Inc (HCP) also holds a Zacks #3 Rank.
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