Positions Ventas to capture powerful senior
housing upside at cyclical inflection point
Adds high quality independent living portfolio
in advantaged markets with positive supply demand fundamentals
Builds on existing relationships with leading
operators and deep experience in independent living
Attractive valuation and accretive
transaction
Ventas, Inc. (NYSE: VTR) (“Ventas”) and New Senior Investment
Group Inc. (NYSE: SNR) (“New Senior”) today announced that they
have entered into a definitive merger agreement pursuant to which
Ventas will acquire New Senior in an all-stock transaction (the
“Transaction”), valued at approximately $2.3 billion, including
$1.5 billion of New Senior debt.
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New Senior has a high-quality, geographically diversified
portfolio of 103 private pay senior living communities, including
102 independent living communities, totaling 12,404 units and
located across 36 states in the United States.
Under the terms of the agreement, New Senior shareholders will
receive 0.1561 shares of newly issued Ventas stock per share of New
Senior common stock. Based on the closing price of Ventas common
stock on June 25, 2021, this represents approximately $9.10 per New
Senior share, a 31% equity premium based on New Senior’s 30-day
trading average, and a 10% premium on New Senior’s total enterprise
value.
The Transaction valuation is expected to represent approximately
a 6% capitalization rate on expected New Senior 2022 Net Operating
Income (“NOI”) and is expected to be approximately $0.09 to $0.11
accretive to Ventas’s normalized funds from operations per share on
a full year basis.
“Building on the strong momentum we are experiencing in our
business, we are delighted to announce this strategic and accretive
acquisition with New Senior that expands Ventas’s position in
senior housing at an important inflection point in the cycle as the
senior housing industry rebounds,” said Debra A. Cafaro, Ventas
Chairman and CEO.
“The transaction provides Ventas shareholders with an attractive
valuation and accretion, and further positions us to win the
recovery. It continues Ventas’s longstanding track record of
capital allocation excellence, builds on our deep experience with
the independent living product and leading operators Atria and
Holiday, and is a testament to the continued dedication and
expertise of our outstanding team.”
J. Justin Hutchens, Ventas’s EVP, Senior Housing, added, “I am
excited to include the New Senior assets in our portfolio. These
independent living communities represent a strong fit with our
existing portfolio, as we enhance our senior housing business to
capture upside from the industry recovery.”
“New Senior’s independent living communities are located in
advantaged markets, enjoy positive supply demand fundamentals,
appeal to a large and growing middle market senior demographic,
have demonstrated superior financial performance and are rapidly
growing occupancy and leads.”
“We are pleased to have reached this agreement with Ventas,
which provides immediate, full and fair value to our shareholders,”
said Susan L. Givens, President and Chief Executive Officer of New
Senior. “It was a pleasure to work with the focused and
knowledgeable Ventas team. Our Board and management team have
concluded that combining with Ventas will provide all of our
stakeholders the opportunity to benefit from the upside potential
of a combined company that has enhanced size, scale, relationships
and financial strength.”
Strategic and Financial Benefits of the
Transaction
- Enhances Ventas’s senior housing position at a cyclical
inflection point in advance of the expected powerful senior housing
industry recovery
- The Transaction significantly expands Ventas’s participation in
the robust senior housing recovery through its Senior Housing
Operating (“SHOP”) portfolio. With resilient demand from a rapidly
growing population of seniors, new construction at cyclical lows,
and the trough of the COVID-19 pandemic behind us, independent
living senior housing is poised for exciting growth.
- The accelerating 80+ population is expected to grow by over 2
million individuals through 2025 and is expected to increase from
13 million in 2020 to nearly 20 million by 2030. Senior housing new
construction trends are favorable, with new construction starts at
the lowest level since 2011.
- Adds a superior quality, high performing portfolio to Ventas
that is well located in advantaged markets
- New Senior has driven strong historic performance. In the early
stages of the post-pandemic recovery, the portfolio has seen
positive trends with leads and move-ins in the second quarter
accelerating through June and expected to exceed the comparable
pre-pandemic period in 2019. New Senior “same-store” occupancy
gains have accelerated in June and the 2Q21 “spot to spot”
occupancy change is expected to be toward the high-end of the 2Q21
guidance range of +120bps to +150bps sequentially.
- New Senior’s communities are located in highly attractive
sub-markets with compelling metrics, including advantaged median
home values exceeding $300,000, median incomes exceeding $70,000,
proximity to premier retail locations and limited deliveries of new
supply expected in the next few years. The wealth metrics in these
submarkets makes the communities’ price point highly affordable and
accessible.
- The New Senior portfolio comprises well invested, purpose-built
properties with attractive physical characteristics, including
large, well-designed floorplans appealing to the independent living
demographic. It has limited near term capital expenditure needs but
provides opportunity for select investment in revenue enhancing
projects.
- The New Senior portfolio has highly favorable operating margins
approximating 40% pre-pandemic that benefit from the independent
living staffing model with minimal need for care and a resident
length of stay of approximately three years.
- Expands Ventas’s exposure to independent living in the
United States, catering to a large and growing middle market
- Demographic and new supply trends in independent living support
strong and accelerating positive net absorption over the
intermediate term.
- Complementary to Ventas’s high end major market senior housing
portfolio, independent living expands the addressable market by
appealing to the large and growing middle income senior population,
which is expected to grow by 82% to 14 million by 2029, at which
time the segment is expected to represent 43% of all seniors.
- Builds on Ventas’s Existing Relationships with Leading
Operators; Adds New Operators
- 65 independent living communities under terminable management
contracts with longstanding Ventas manager Holiday Retirement
(“Holiday”).
- 21 independent living communities under long term management
contracts with longstanding Ventas leading operator Atria Senior
Living (“Atria”).
- 16 independent living communities under management contracts
with other senior housing managers including Grace Management,
Merrill Gardens Senior Living, Hawthorn Senior Living and Watermark
Retirement Communities.
- Ventas holds a 34% ownership stake in Atria, and Atria and
Holiday recently agreed to combine as one entity. This Transaction
will enable Ventas to benefit from the scale, technology, team and
operating capabilities of both companies.
- Attractive Valuation & Financial Returns
- The Transaction valuation is expected to represent
approximately a 6% capitalization rate on expected New Senior 2022
NOI; and approximately an 8% capitalization rate on estimated New
Senior NOI over time, incorporating the attractive medium-term
supply demand fundamentals in independent living.
- The acquisition price implies a 20% to 30% discount to
estimated replacement cost on a per unit basis.
- Ventas expects to realize between $16 to $18 million in
annualized corporate G&A synergies commencing in 2022.
- The Transaction price represents a multiple of <12 times
estimated 2022 New Senior normalized FFO per share including full
synergies.
- Ventas expects to make revenue generating capital investments
for additional value add opportunities in select communities and
markets.
- Ventas expects to assume certain existing New Senior mortgage
debt and fund the repayment of any debt not assumed through other
capital sources.
Pro Forma Portfolio
Composition
The Transaction increases Ventas’s exposure to the powerful
recovery in Senior Housing. Pro forma for the Transaction:
- Ventas’s total Senior Housing portfolio concentration will
increase from 44% to 48% of first quarter 2021 annualized adjusted
NOI.
- Ventas’s SHOP portfolio mix will increase from 26% to 31%.
- Ventas’s SHOP portfolio independent living unit mix will
increase from 48% to 58%.
- SHOP portfolio NOI generated in the United States will increase
from 61% to 69%.
Approvals, Timing and
Dividends
The Transaction is expected to close during the second half of
2021, subject to customary closing conditions, including approval
by the common shareholders of New Senior. The Companies have agreed
to synchronize the record and payment dates for their dividends,
which are expected to remain at their current levels prior to the
closing of the Transaction, subject to approval of their respective
Boards of Directors, on the dates typically used by Ventas.
The Board of Directors of both companies have unanimously
approved the Transaction.
Advisors
Centerview Partners LLC is serving as financial advisor and
Wachtell, Lipton, Rosen & Katz is acting as legal advisor to
Ventas. Morgan Stanley & Co. LLC is serving as financial
advisor and Cravath, Swaine & Moore LLP is acting as legal
advisor to New Senior.
Investor Presentation
A presentation detailing the Transaction and providing a
business update is posted to the Events & Presentations section
of Ventas’s website at
ir.ventasreit.com/events-and-presentations.
About Ventas
Ventas, an S&P 500 company, operates at the intersection of
two powerful and dynamic industries – healthcare and real estate.
As one of the world’s foremost Real Estate Investment Trusts
(REIT), we use the power of capital to unlock the value of real
estate, partnering with leading care providers, developers,
research and medical institutions, innovators and healthcare
organizations whose success is buoyed by the demographic tailwind
of an aging population. For more than twenty years, Ventas has
followed a successful strategy that endures: combining a
high-quality diversified portfolio of properties and capital
sources to manage through cycles, working with industry leading
partners, and a collaborative and experienced team focused on
producing consistent growing cash flows and superior returns on a
strong balance sheet, ultimately rewarding Ventas stakeholders. As
of March 31, 2021, Ventas owned or had investments in approximately
1,200 properties.
About New Senior
New Senior Investment Group Inc. (NYSE: SNR) is a
publicly-traded real estate investment trust with a diversified
portfolio of senior housing properties located across the United
States. New Senior is one of the largest owners of senior housing
properties, with 103 properties across 36 states.
Non-GAAP Financial Measures
This communication includes certain financial performance
measures not defined by generally accepted accounting principles in
the Unites States (“GAAP”). We believe such measures provide
investors with additional information concerning our operating
performance and a basis to compare our performance with the
performance of other REITs. Our definitions and calculations of
these non-GAAP measures may not be the same as similar measures
reported by other REITs.
These non-GAAP financial measures should not be considered as
alternatives to net income attributable to common stockholders
(determined in accordance with GAAP) as indicators of our financial
performance or as alternatives to cash flow from operating
activities (determined in accordance with GAAP) as measures of our
liquidity, nor are these measures necessarily indicative of
sufficient cash flow to fund all of our needs.
Forward-Looking Statements
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
regarding New Senior and Ventas including, but not limited to,
statements related to the proposed acquisition of New Senior and
the anticipated timing, results and benefits thereof; statements
regarding the expectations and beliefs of the board of directors of
New Senior, New Senior management, the board of directors of Ventas
or Ventas management and other statements that are not historical
facts. You can generally identify forward-looking statements by the
use of forward-looking terminology such as “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,”
“intend,” “may,” “might,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” or “will,” or the negative thereof or
other variations thereon or comparable terminology. These
forward-looking statements are based on each of the New Senior’s
and Ventas’s current plans, objectives, estimates, expectations and
intentions and inherently involve significant risks and
uncertainties, many of which are beyond New Senior’s or Ventas’s
control. Actual results and the timing of events could differ
materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which
include, without limitation, risks and uncertainties associated
with New Senior’s and Ventas’s ability to complete the proposed
acquisition on the proposed terms or on the anticipated timeline,
or at all, including: risks and uncertainties related to securing
the necessary shareholder approval and satisfaction of other
closing conditions to consummate the proposed acquisition; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement relating to
the proposed acquisition; risks related to diverting the attention
of New Senior and Ventas management from ongoing business
operations; failure to realize the expected benefits of the
proposed acquisition; significant transaction costs and/or unknown
or inestimable liabilities; the risk of litigation in connection
with the proposed acquisition, including resulting expense or
delay; the risk that New Senior’s business will not be integrated
successfully or that such integration may be more difficult,
time-consuming or costly than expected; the ability to obtain
financing in connection with the proposed acquisition; risks
related to future opportunities and plans for the combined company,
including the uncertainty of financial performance and results of
the combined company following completion of the proposed
acquisition; the ability of the combined company to qualify and
maintain its qualification as a real estate investment trust for
U.S. federal income tax purposes and the potentially onerous
consequences that any such failure to maintain such qualification
would have on the combined company’s business; disruption from the
proposed acquisition, making it more difficult to conduct business
as usual or maintain relationships with property managers, tenants,
employees or other third parties; effects relating to the
announcement of the proposed acquisition or any further
announcements or the consummation of the proposed acquisition on
the market price of New Senior common stock or Ventas common stock;
the possibility that, if Ventas does not achieve the perceived
benefits of the proposed acquisition as rapidly or to the extent
anticipated by financial analysts or investors or at all, the
market price of Ventas common stock could decline; regulatory
initiatives and changes in tax laws; market volatility and changes
in economic conditions; and other risks and uncertainties affecting
New Senior and Ventas, including those described from time to time
under the caption “Risk Factors” and elsewhere in New Senior’s and
Ventas’s U.S. Securities and Exchange Commission (the “SEC”)
filings and reports, including New Senior’s Annual Report on Form
10-K for the fiscal year ended December 31, 2020, Ventas’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2020 and
future filings and reports by either company. In addition, the
trajectory and future impact of the COVID-19 pandemic remains
highly uncertain and can change rapidly, and the extent of the
pandemic’s continuing and ultimate impact on the combined company’s
ability to generate revenues from its operations and the operation
of its facilities will depend on future developments that are
highly uncertain and cannot be predicted with confidence at this
time. Moreover, other risks and uncertainties of which New Senior
or Ventas are not currently aware may also affect each company’s
forward-looking statements and may cause actual results and the
timing of events to differ materially from those anticipated.
Readers of this communication are cautioned that forward-looking
statements are not guarantees of future performance. The
forward-looking statements made in this communication are made only
as of the date hereof or as of the dates indicated in the
forward-looking statements and reflect the views stated therein
with respect to future events as at such dates, even if they are
subsequently made available by New Senior or Ventas on their
respective websites or otherwise. Except as otherwise required by
law, neither New Senior nor Ventas undertakes any obligation, and
each expressly disclaims any obligation, to update or supplement
any forward-looking statements to reflect actual results, new
information, future events, changes in its expectations or other
circumstances that exist after the date as of which the
forward-looking statements were made.
Participants in the Solicitation
New Senior, Ventas and their respective directors and certain of
their executive officers and other employees may be deemed to be
participants in the solicitation of proxies from New Senior’s
stockholders in connection with the proposed acquisition.
Information about New Senior’s directors and executive officers is
set forth in New Senior’s Annual Report on Form 10-K for the year
ended December 31, 2020, which was filed with the SEC on February
25, 2021, and in its proxy statement on Schedule 14A for the 2021
Annual Meeting of Stockholders, which was filed with the SEC on
April 12, 2021 and subsequent statements of beneficial ownership on
file with the SEC. Information about Ventas’s directors and
executive officers is set forth in Ventas’s Annual Report on Form
10-K for the year ended December 31, 2020, which was filed with the
SEC on February 23, 2021, and in its proxy statement on Schedule
14A for the 2021 Annual Meeting of Stockholders, which was filed
with the SEC on April 13, 2021 and subsequent statements of
beneficial ownership on file with the SEC. Additional information
regarding the persons who may, under the rules of the SEC, be
deemed participants in the solicitation of New Senior’s
stockholders in connection with the proposed acquisition, including
a description of their direct or indirect interests, by security
holdings or otherwise, will be set forth in the registration
statement on Form S-4 and proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become
available.
Additional Information and Where to Find It
In connection with the proposed acquisition, Ventas intends to
file with the SEC a registration statement on Form S-4 that will
include a prospectus for the Ventas common stock that will be
issued in the proposed acquisition and that will also constitute a
proxy statement for a special meeting of New Senior’s stockholders
to approve the proposed acquisition. Each of New Senior and Ventas
may also file other relevant documents with the SEC regarding the
proposed acquisition. This communication is not a substitute for
the registration statement, the proxy statement/prospectus or any
other document that New Senior or Ventas may file with the SEC with
respect to the proposed acquisition. The definitive proxy
statement/prospectus (if and when available) will be mailed to New
Senior’s stockholders. INVESTORS AND SECURITY HOLDERS ARE URGED TO
READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS,
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER
RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT NEW SENIOR,
VENTAS AND THE PROPOSED ACQUISITION.
Investors and security holders will be able to obtain copies of
these materials (if and when they are available), and other
documents containing important information about New Senior, Ventas
and the proposed acquisition, once such documents are filed with
the SEC free of charge through the website maintained by the SEC at
www.sec.gov. Copies of documents filed with the SEC by New Senior
will be made available free of charge on New Senior’s investor
relations website at ir.newseniorinv.com. Copies of documents filed
with the SEC by Ventas will be made available free of charge on
Ventas’s investor relations website at ir.ventasreit.com.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any offer, solicitation or sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made in the United States absent registration under the
U.S. Securities Act of 1933, as amended, or pursuant to an
exemption from, or in a transaction not subject to, such
registration requirements.
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version on businesswire.com: https://www.businesswire.com/news/home/20210628005482/en/
Ventas, Inc. Sarah Whitford (877)4-VENTAS
New Senior Investment Group Inc. Lori B. Marino (646)
885-1522
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