Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today
announced that it has entered into agreements (collectively, the
“2024 Kindred Agreements”) with Kindred Healthcare, LLC (with its
subsidiaries, “Kindred”) and its parent companies (“ScionHealth”),
including regarding the 23 long term acute care hospitals whose
lease term is scheduled to mature on April 30, 2025 (the “LTACs”)
under the existing Master Lease between Ventas and Kindred (the
“Kindred Master Lease”).
The transactions under the 2024 Kindred Agreements are intended
to enhance the facility environment for patient care, strengthen
the Kindred Master Lease, provide upside to Ventas and enable
Kindred to improve its credit profile.
Key terms of the 2024 Kindred Agreements are as follows:
1. The initial annualized cash contractual base rent for the
LTACs will be $80 million starting May 1, 2025, consistent with the
Company’s previously announced expectations, and rent will escalate
annually by 2.75% through the extended lease maturity date of April
30, 2030. Ventas also has the right to receive additional
revenue-sharing rent annually if revenue at these assets exceeds
certain thresholds, and ScionHealth has granted Ventas warrants for
9.9% of its common equity exercisable at the pre-transaction value
of the common equity. Kindred has agreed to pay full contractual
cash rent through April 2025 on the LTACs.
Ventas estimates, on a preliminary basis, the following rental
impacts for the LTACs, consistent with its previously announced
expectations:
($ in millions)
23 LTACs
Q2 2024 Annualized
Rent
Annualized Rent Under the
Agreements
Cash
GAAP
Cash*
GAAP
Rent
$109
$100
$80
$87
* Represents a $29 million (27%)
annualized cash rent reduction commencing May 1, 2025.
2. Ventas has also acquired the real estate and related property
of five performing LTAC assets for a gross purchase price of $189
million. The assets will continue to be operated by Kindred and
were added to the existing Kindred Master Lease for an initial
10-year term. Annual cash rent of $16 million commenced immediately
and will escalate annually by 2.75%. ScionHealth has agreed to use
the proceeds to further improve its credit profile and for other
bona fide corporate purposes.
The transactions should strengthen EBITDARM to rent coverage
under the Master Lease to at least 1.3x. Kindred’s obligations
under the Master Lease will continue to be guaranteed by
ScionHealth.
Ventas expects the per share aggregate non-cash impact to its
2024 Normalized FFO relating to the LTAC lease extension to be in
line with its previously provided 2024 guidance, commencing in the
third quarter of 2024. The annualized Normalized FFO impact of the
investment in performing LTACs, funded wholly with equity, is
expected to be approximately $0.01 per share. Any additional cash
and GAAP impacts to the Company’s 2024 Normalized FFO per share
from other aspects of the transactions contemplated by the 2024
Kindred Agreements are not expected to be material.
About Ventas
Ventas, Inc. (NYSE: VTR) is a leading S&P 500 real estate
investment trust enabling exceptional environments that benefit a
large and growing aging population. With approximately 1,350
properties in North America and the United Kingdom, Ventas occupies
an essential role in the longevity economy. The Company’s growth is
fueled by its approximately 800 senior housing communities, which
provide valuable services to residents and enable them to thrive in
supported environments. The Ventas portfolio also includes
outpatient medical buildings, research centers and healthcare
facilities. The Company aims to deliver outsized performance by
leveraging its unmatched operational expertise, data-driven
insights from its Ventas OITM platform, extensive relationships and
strong financial position. Ventas’s seasoned team of talented
professionals shares a commitment to excellence, integrity and a
common purpose of helping people live longer, healthier, happier
lives.
Cautionary Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements include, among others,
statements of expectations, beliefs, future plans and strategies,
anticipated results from operations and developments and other
matters that are not historical facts. Forward-looking statements
include, among other things, statements regarding our and our
officers’ intent, belief or expectation as identified by the use of
words such as “assume,” “may,” “will,” “project,” “expect,”
“believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,”
“plan,” “potential,” “opportunity,” “estimate,” “could,” “would,”
“should” and other comparable and derivative terms or the negatives
thereof.
Forward-looking statements are based on management’s beliefs as
well as on a number of assumptions concerning future events. You
should not put undue reliance on these forward-looking statements,
which are not a guarantee of performance and are subject to a
number of uncertainties and other factors that could cause actual
events or results to differ materially from those expressed or
implied by the forward-looking statements. We do not undertake a
duty to update these forward-looking statements, which speak only
as of the date on which they are made. We urge you to carefully
review the disclosures we make concerning risks and uncertainties
that may affect our business and future financial performance,
including those made below and in our filings with the Securities
and Exchange Commission, such as in the sections titled “Cautionary
Statements — Summary Risk Factors,” “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K for the
year ended December 31, 2023 and our subsequent Quarterly Reports
on Form 10-Q.
Certain factors that could affect our future results and our
ability to achieve our stated goals include, but are not limited
to: (a) our ability to achieve the anticipated benefits and
synergies from, and effectively integrate, our completed or
anticipated acquisitions and investments; (b) our exposure and the
exposure of our tenants, managers and borrowers to complex
healthcare and other regulation, including evolving laws and
regulations regarding data privacy and cybersecurity and
environmental matters, and the challenges and expense associated
with complying with such regulation; (c) the potential for
significant general and commercial claims, legal actions,
investigations, regulatory proceedings and enforcement actions that
could subject us or our tenants, managers or borrowers to increased
operating costs, uninsured liabilities, including fines and other
penalties, reputational harm or significant operational
limitations, including the loss or suspension of or moratoriums on
accreditations, licenses or certificates of need, suspension of or
nonpayment for new admissions, denial of reimbursement, suspension,
decertification or exclusion from federal, state or foreign
healthcare programs or the closure of facilities or communities;
(d) the impact of market and general economic conditions on us, our
tenants, managers and borrowers and in areas in which our
properties are geographically concentrated, including macroeconomic
trends and financial market events, such as bank failures and other
events affecting financial institutions, market volatility,
increases in inflation, changes in or elevated interest and
exchange rates, tightening of lending standards and reduced
availability of credit or capital, geopolitical conditions, supply
chain pressures, rising labor costs and historically low
unemployment, events that affect consumer confidence, our occupancy
rates and resident fee revenues, and the actual and perceived state
of the real estate markets, labor markets and public and private
capital markets; (e) our reliance and the reliance of our tenants,
managers and borrowers on the financial, credit and capital markets
and the risk that those markets may be disrupted or become
constrained; (f) the implementation and impact of regulations
related to the Coronavirus Aid, Relief and Economic Security Act
(the “CARES Act”) and other stimulus legislation, including the
risk that some or all of the CARES Act or other COVID-19 relief
payments we or our tenants, managers or borrowers received could be
recouped; (g) our ability, and the ability of our tenants, managers
and borrowers, to navigate the trends impacting our or their
businesses and the industries in which we or they operate, and the
financial condition or business prospect of our tenants, managers
and borrowers; (h) the risk of bankruptcy, inability to obtain
benefits from governmental programs, insolvency or financial
deterioration of our tenants, managers, borrowers and other
obligors which may, among other things, have an adverse impact on
the ability of such parties to make payments or meet their other
obligations to us, which could have an adverse impact on our
results of operations and financial condition; (i) the risk that
the borrowers under our loans or other investments default or that,
to the extent we are able to foreclose or otherwise acquire the
collateral securing our loans or other investments, we will be
required to incur additional expense or indebtedness in connection
therewith, that the assets will underperform expectations or that
we may not be able to subsequently dispose of all or part of such
assets on favorable terms; (j) our current and future amount of
outstanding indebtedness, and our ability to access capital and to
incur additional debt which is subject to our compliance with
covenants in instruments governing our and our subsidiaries’
existing indebtedness; (k) risks related to the recognition of
reserves, allowances, credit losses or impairment charges which are
inherently uncertain and may increase or decrease in the future and
may not represent or reflect the ultimate value of, or loss that we
ultimately realize with respect to, the relevant assets, which
could have an adverse impact on our results of operations and
financial condition; (l) the risk that our leases or management
agreement are not renewed or are renewed on less favorable terms,
that our tenants or managers default under those agreements or that
we are unable to replace tenants or managers on a timely basis or
on favorable terms, if at all; (m) our ability to identify and
consummate future investments in, or dispositions of, healthcare
assets and effectively manage our portfolio opportunities and our
investments in co-investment vehicles, joint ventures and minority
interests, including our ability to dispose of such assets on
favorable terms as a result of rights of first offer or rights of
first refusal in favor of third parties; (n) risks related to
development, redevelopment and construction projects, including
costs associated with inflation, rising or elevated interest rates,
labor conditions and supply chain pressures, and risks related to
increased construction and development in markets in which our
properties are located, including adverse effect on our future
occupancy rates; (o) our ability to attract and retain talented
employees; (p) the limitations and significant requirements imposed
upon our business as a result of our status as a REIT and the
adverse consequences (including the possible loss of our status as
a REIT) that would result if we are not able to comply with such
requirements; (q) the ownership limits contained in our certificate
of incorporation with respect to our capital stock in order to
preserve our qualification as a REIT, which may delay, defer or
prevent a change of control of our company; (r) the risk of changes
in healthcare law or regulation or in tax laws, guidance and
interpretations, particularly as applied to REITs, that could
adversely affect us or our tenants, managers or borrowers; (s)
increases in our borrowing costs as a result of becoming more
leveraged, including in connection with acquisitions or other
investment activity and rising or elevated interest rates; (t) our
reliance on third-party managers and tenants to operate or exert
substantial control over properties they manage for, or rent from,
us, which limits our control and influence over such operations and
results; (u) our exposure to various operational risks, liabilities
and claims from our operating assets; (v) our dependency on a
limited number of tenants and managers for a significant portion of
our revenues and operating income; (w) our exposure to particular
risks due to our specific asset classes and operating markets, such
as adverse changes affecting our specific asset classes and the
real estate industry, the competitiveness or financial viability of
hospitals on or near the campuses where our outpatient medical
buildings are located, our relationships with universities, the
level of expense and uncertainty of our research tenants, and the
limitation of our uses of some properties we own that are subject
to ground lease, air rights or other restrictive agreements; (x)
the risk of damage to our reputation; (y) the availability,
adequacy and pricing of insurance coverage provided by our policies
and policies maintained by our tenants, managers or other
counterparties; (z) the risk of exposure to unknown liabilities
from our investments in properties or businesses; (aa) the
occurrence of cybersecurity threats and incidents that could
disrupt our or our tenants’, managers’ or borrower’s operations,
result in the loss of confidential or personal information or
damage our business relationships and reputation; (bb) the failure
to maintain effective internal controls, which could harm our
business, results of operations and financial condition; (cc) the
impact of merger, acquisition and investment activity in the
healthcare industry or otherwise affecting our tenants, managers or
borrowers; (dd) disruptions to the management and operations of our
business and the uncertainties caused by activist investors; (ee)
the risk of catastrophic or extreme weather and other natural
events and the physical effects of climate change; (ff) the risk of
potential dilution resulting from future sales or issuances of our
equity securities; and (gg) the other factors set forth in our
periodic filings with the Securities and Exchange Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20240916679178/en/
BJ Grant (877) 4-VENTAS
Ventas (NYSE:VTR)
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