Ventas (VTR) Concludes New Senior Investment Group Acquisition
Ventas VTR has announced the completion of its acquisition of New Senior Investment Group Inc. in an all-stock transaction valued at $2.3 billion. It also includes the New Senior debt assumed or repaid by Ventas. The move is a strategic fit for Ventas, given the scope to capitalize on the senior housing industry’s recovery.
Per the terms of the merger agreement, shareholders of New Senior will get 0.1561 shares of the newly-issued Ventas stock for each share of New Senior’s common stock which they owned just before the effective time of the merger.
According to Debra A. Cafaro, Ventas chairman and CEO, “The acquisition of the New Senior portfolio positions Ventas to capture the powerful senior housing upside at a cyclical inflection point.”
With a diversified portfolio of senior housing properties located across the United States, New Senior has emerged as one of the largest owners of senior housing properties, with 103 properties across 36 states.
Its acquisition adds a high quality independent living portfolio in markets witnessing favourable demand-supply dynamics. This will help Ventas cater to a large and growing middle-income senior population. Also, it will fortify Ventas’ relationships with the leading operators as well as add new operators.
With widespread vaccine roll-outs and strong demand from a fast increasing population of seniors, the independent living senior housing industry is poised for solid growth in the upcoming years and hence, this transaction is a strategic fit for Ventas.
Per the June press release, the transaction valuation is estimated to represent roughly a 6% capitalization rate on the estimated New Senior 2022 net operating income, and nearly 9-11 cents accretive to Ventas’ normalized funds from operations (FFO) per share on a full-year basis.
However, Ventas’s third-quarter 2021 guidance, which was issued on Aug 6, excluded any contribution or impact from the transaction.
Shares of this Zacks Rank #3 (Hold) company have gained 3.9% over the past month, against its industry's decline of 1.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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