On Monday, Chicago-based Ventas Inc., the largest U.S. healthcare real estate investment trust by market value, approved a pair of deals that total $3.5 billion.
The Board of Directors of both Ventas and American Reality Capital Healthcare Trust, Inc. (ARC Healthcare) unanimously approved a definitive agreement in which Ventas will acquire all of the outstanding shares of ARC Healthcare for $2.6 billion in stocks and cash.
Ventas also said in a press release that it will buy 29 independent senior-housing communities located in Canada from Lake Oswego, Ore.-based Holiday Retirement for approximately $900 million in cash. The transaction is expected to close in the third quarter of 2014.
According to the press release, the deal with ARC Healthcare would add 143 properties, comprising medical office buildings and senior housing communities, to Ventas’ portfolio.
Ventas said ARC Healthcare shareholders will have the option to receive either 0.1688 Ventas shares or $11.33 in cash for each ARC Healthcare share. The cash offer represents a premium of about 14 percent to ARC Healthcare's Friday closing.
Meanwhile, the Holiday portfolio is currently 90 percent occupied, with margins of approximately 50 percent in markets with above average income and senior population growth rates, according to the press release. Upon closing, the operations for the acquired seniors housing communities will be transitioned to Atria, which will manage a total of 173 communities for Ventas, inclusive of two unrelated communities that Ventas acquired after the first quarter.
[See also: Ventas to acquire Nationwide Health Properties]
Ventas said the deals would add at least 10 cents per share to its 2015 funds from operations (FFO), a measure of cash flow for real estate management companies.
“These acquisitions are consistent with our stated strategy to be the leading owner of healthcare and senior living properties globally, and position Ventas to continue to deliver growth and consistent superior returns to our shareholders,” said Ventas Chairman and CEO Debra A. Cafaro, in a written statement.
“Our Board and management team continuously review options to drive value for our shareholders and we believe this transaction with Ventas provides compelling value,” said Thomas P. D'Arcy, CEO of ARC Healthcare, in the press release.