To facilitate the expansion of its international footprint and leverage on the growing senior citizen population, Ventas Inc. (VTR) completed the acquisition of 29 Canadian senior living communities from Holiday Retirement.
Positioned in seven Canadian provinces and predominantly in Ontario and Alberta, these private-pay properties enjoy 90% occupancy. The markets have a high concentration of senior population with elevated median household income, thus deeming the properties suitably positioned for their demand.
The all-cash deal was previously announced in Jun 2014. During the second-quarter earnings release, the company confirmed the value of the transaction at $957 million Canadian dollars (approximately $897 million). Management of these communities has been assumed by Atria Senior Living, Inc.
The acquisition was financed with Canadian-dollar denominated term loan and assumed debt. However, the company has plans to replace the term loan with a long-term debt financing.
As a matter of fact, demand for healthcare facilities and senior housing have been on the rise with an increase in the elderly population and consequently proliferating healthcare expenses. Amid this, strong players in the market have announced acquisitions so as to capitalize on this trend.
In addition to the latest acquisition, Ventas is also in a deal to acquire its competitor, American Realty Capital Healthcare Trust Inc. (HCT) in a stock and cash deal worth $2.9 billion.
Most recently, Health Care REIT, Inc. (HCN) unveiled a plan to acquire HealthLease Properties REIT in order to expand its presence in the seniors housing and post-acute care segments. The cash deal was valued at around $950 million, including debt.
Further, Health Care REIT has entered into a partnership agreement with Mainstreet Property Group. It plans to shell out as much as $1.4 billion for acquiring development projects under the Next Generation brand, bringing the total potential investment amount to $2.3 billion. Moreover, NorthStar Realty Finance Corp. (NRF) announced a deal to acquire Griffin-American Healthcare REIT II in a $4.0 billion transaction.
For Ventas, this acquisition would strengthen its already sturdy presence in the healthcare REIT sector, being in tune with its strategy of focusing on its private-pay properties. We expect such acquisitions and the resultant cash flows to add momentum to Ventas’ growth going forward.
Ventas currently sports a Zacks Rank #3 (Hold).