Equity Group Investments Entity to be
Majority Owner of Ardent’s Hospital Operating Company
Ventas to Retain Ardent’s Real Estate and
Acquire 9.9% Interest in Ardent Hospital Operating Company
Current Ardent Management to Continue to
Lead Company in Nashville
Ventas, Inc. (NYSE: VTR) (“Ventas”) and an entity controlled by
Equity Group Investments (“EGI”), today announced the signing of a
definitive agreement whereby the hospital operations of Ardent
Health Services (“AHS”), will be majority owned by EGI, with Ventas
owning a 9.9 percent interest, and current AHS management holding a
significant ownership stake. Ventas previously announced plans to
acquire AHS, a premier provider of healthcare services and one of
the ten largest investor-owned hospital companies in the U.S.,
while retaining the owned real estate and selling the hospital
operations of AHS to a newly formed and capitalized operating
company (“Ardent”).
The EGI-Ventas transaction values Ardent at approximately $475
million, subject to working capital and other adjustments. At
closing, which is expected to occur in the third quarter of 2015,
Ventas and Ardent will enter into pre-agreed, long-term, triple-net
leases with initial annual base rent of $105 million. Based upon
Ventas’s continued expectation of an approximate $1.4 billion
investment in the AHS-owned real estate (inclusive of Ventas’s
previously announced purchase of a minority ownership stake of the
real estate of a partner in one of AHS’s hospital service areas),
Ventas now expects the unlevered cash rental yield on its real
estate investment to be approximately 7.5 percent. Ventas expects
to receive a $900 million five-year unsecured bank loan to finance
a portion of its investment.
“We are delighted to partner with EGI and Ardent’s management in
this transaction,” said Ventas Chairman and Chief Executive Officer
Debra A. Cafaro. “With Ardent, we are well positioned to grow
in the large, fragmented and rapidly consolidating $1 trillion
domestic hospital segment. We believe that hospitals will continue
to be at the core of the healthcare delivery system, supported by
attractive demographics, policy and an improving economy, which we
expect will expand the ranks of insured individuals and improve
provider revenues.”
David T. Vandewater, President and Chief Executive Officer of
Ardent, said, “With these strong partners of EGI and Ventas, we
believe we can build upon our success and provide additional
capital to our facilities and expand into new service areas. This
new partnership will be a significant benefit to hospitals, health
systems and communities across the country.”
Both the acquisition by Ventas of AHS and the acquisition by EGI
of Ardent are subject to the satisfaction of certain specified
closing conditions, including receipt of regulatory approvals and
are expected to close concurrently in the third quarter of
2015.
Ardent’s best-in-class management team, under President and
Chief Executive Officer David Vandewater, will continue to lead the
company, which provides high quality healthcare services in three
key service areas: Amarillo, Texas; Tulsa, Oklahoma; and
Albuquerque, New Mexico. The portfolio includes 14 hospitals and
three multi-specialty physician groups. Ardent will remain
headquartered in Nashville with no expected changes to its current
operations. Ardent currently generates approximately $2 billion in
annual net revenues.
Advisors
UBS Investment Bank is serving as exclusive financial advisor to
Ventas, and Kirkland & Ellis LLP and Waller Lansden Dortch
& Davis, LLP are serving as legal advisors in connection with
the transaction. McDermott, Will & Emery LLP is serving as
legal advisor to EGI. Katten Muchin Rosenman LLP is serving as
legal advisor to Ardent management. Bank of America Merrill Lynch,
which is the current lender to Ardent Health Services, is providing
financing to Ardent in the transaction and is serving as EGI’s
exclusive financial advisor.
About Ventas
Ventas, Inc., an S&P 500 company, is a leading real estate
investment trust. Its diverse portfolio of more than 1,600 assets
in the United States, Canada and the United Kingdom consists of
seniors housing communities, medical office buildings, skilled
nursing facilities, hospitals and other properties. Through its
Lillibridge subsidiary, Ventas provides management, leasing,
marketing, facility development and advisory services to highly
rated hospitals and health systems throughout the United States.
More information about Ventas and Lillibridge can be found at
www.ventasreit.com and www.lillibridge.com.
About Equity Group Investments
Equity Group Investments, the private firm founded by Sam Zell
over 45 years ago, specializes in opportunistic investments across
the debt and equity markets. EGI has extensive experience in
energy, industrial, manufacturing, logistics and transportation,
business services, communications, healthcare and real estate.
About Ardent Health Services
Ardent Health Services invests in quality health care. In
people, technology, facilities and communities, Ardent makes
considerable investments, producing high-quality care and
extraordinary results. Based in Nashville, Tenn., Ardent’s
subsidiaries own and operate acute care health systems in three
service areas – Amarillo, Texas; Tulsa, Okla. and Albuquerque, N.M.
– that include 14 hospitals and three multi-specialty physician
groups. For more information, go to www.ardenthealth.com.
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 statements include, but are not limited to,
statements regarding the expected timing of the completion of the
proposed transaction, the benefits of the proposed transaction,
including future financial and operating results, statements
regarding plans, objectives, expectations relating to the proposed
transaction and other statements that are not historical facts. All
statements regarding Ventas, Inc. (the "Company") or its tenants’,
operators’, borrowers’ or managers’ expected future financial
condition, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing opportunities
and plans, capital markets transactions, business strategy,
budgets, projected costs, operating metrics, capital expenditures,
competitive positions, acquisitions, investment opportunities,
dispositions, acquisition integration, growth opportunities,
expected lease income, continued qualification as a real estate
investment trust (“REIT”), plans and objectives of management for
future operations and statements that include words such as
“anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,”
“intend,” “may,” “could,” “should,” “will” and other similar
expressions are forward-looking statements. These forward-looking
statements are inherently uncertain, and actual results may differ
from the Company’s expectations. The Company does not undertake a
duty to update these forward-looking statements, which speak only
as of the date on which they are made.
The Company’s actual future results and trends may differ
materially from expectations depending on a variety of factors
discussed in the Company’s filings with the Commission. These
factors include without limitation:
(a) the inability to complete the acquisition of AHS and the
separation and sale of AHS’s hospital operations on terms
acceptable to the Company or at all; (b) the failure to satisfy any
conditions to completion of the transaction on terms acceptable to
the Company or at all; (c) the occurrence of any event, change or
other circumstances that could give rise to the termination of the
purchase agreement or any other agreement relating to the
transaction; (d) the risk that the expected benefits of the
transaction, including financial results, may not be fully realized
or may take longer to realize than expected; (e) risks related to
disruption of management’s attention from ongoing business
operations due to the proposed transaction; (f) the effect of the
announcement of the proposed transaction on the Company’s or AHS’s
relationships with their respective customers, tenants, lenders,
operating results and businesses generally; (g) the ability and
willingness of the Company’s tenants, operators, borrowers,
managers and other third parties to satisfy their obligations under
their respective contractual arrangements with the Company,
including, in some cases, their obligations to indemnify, defend
and hold harmless the Company from and against various claims,
litigation and liabilities; (h) the ability of the Company’s
tenants, operators, borrowers and managers to maintain the
financial strength and liquidity necessary to satisfy their
respective obligations and liabilities to third parties, including
without limitation obligations under their existing credit
facilities and other indebtedness; (i) the Company’s success in
implementing its business strategy and the Company’s ability to
identify, underwrite, finance, consummate and integrate
diversifying acquisitions and investments, including investments in
different asset types and outside the United States; (j)
macroeconomic conditions such as a disruption of or lack of access
to the capital markets, changes in the debt rating on U.S.
government securities, default or delay in payment by the United
States of its obligations, and changes in the federal or state
budgets resulting in the reduction or nonpayment of Medicare or
Medicaid reimbursement rates; (k) the nature and extent of future
competition, including new construction in the markets in which the
Company’s seniors housing communities and medical office buildings
(“MOBs”) are located; (l) the extent of future or pending
healthcare reform and regulation, including cost containment
measures and changes in reimbursement policies, procedures and
rates; (m) increases in the Company’s borrowing costs as a result
of changes in interest rates and other factors; (n) the ability of
the Company’s operators and managers, as applicable, to comply with
laws, rules and regulations in the operation of the Company’s
properties, to deliver high-quality services, to attract and retain
qualified personnel and to attract residents and patients; (o)
changes in general economic conditions or economic conditions in
the markets in which the Company may, from time to time, compete,
and the effect of those changes on the Company’s revenues, earnings
and capital sources; (p) the Company’s ability to pay down,
refinance, restructure or extend its indebtedness as it becomes
due; (q) the Company’s ability and willingness to maintain its
qualification as a REIT in light of economic, market, legal, tax
and other considerations; (r) final determination of the Company’s
taxable net income for the year ended December 31, 2014 and for the
year ending December 31, 2015; (s) the ability and willingness of
the Company’s tenants to renew their leases with the Company upon
expiration of the leases, the Company’s ability to reposition its
properties on the same or better terms in the event of nonrenewal
or in the event the Company exercises its right to replace an
existing tenant, and obligations, including indemnification
obligations, the Company may incur in connection with the
replacement of an existing tenant; (t) risks associated with the
Company’s senior living operating portfolio, such as factors that
can cause volatility in the Company’s operating income and earnings
generated by those properties, including without limitation
national and regional economic conditions, costs of food,
materials, energy, labor and services, employee benefit costs,
insurance costs and professional and general liability claims, and
the timely delivery of accurate property-level financial results
for those properties; (u) changes in exchange rates for any foreign
currency in which the Company may, from time to time, conduct
business; (v) year-over-year changes in the Consumer Price Index or
the UK Retail Price Index and the effect of those changes on the
rent escalators contained in the Company’s leases and the Company’s
earnings; (w) the Company’s ability and the ability of its tenants,
operators, borrowers and managers to obtain and maintain adequate
property, liability and other insurance from reputable, financially
stable providers; (x) the impact of increased operating costs and
uninsured professional liability claims on the Company’s liquidity,
financial condition and results of operations or that of the
Company’s tenants, operators, borrowers and managers, and the
ability of the Company and the Company’s tenants, operators,
borrowers and managers to accurately estimate the magnitude of
those claims; (y) risks associated with the Company’s MOB portfolio
and operations, including the Company’s ability to successfully
design, develop and manage MOBs, to accurately estimate its costs
in fixed fee-for-service projects and to retain key personnel; (z)
the ability of the hospitals on or near whose campuses the
Company’s MOBs are located and their affiliated health systems to
remain competitive and financially viable and to attract physicians
and physician groups; (aa) the Company’s ability to build, maintain
and expand its relationships with existing and prospective hospital
and health system clients; (ab) risks associated with the Company’s
investments in joint ventures and unconsolidated entities,
including its lack of sole decision-making authority and its
reliance on its joint venture partners’ financial condition; (ac)
the impact of market or issuer events on the liquidity or value of
the Company’s investments in marketable securities; (ad) merger and
acquisition activity in the seniors housing and healthcare
industries resulting in a change of control of, or a competitor’s
investment in, one or more of the Company’s tenants, operators,
borrowers or managers or significant changes in the senior
management of the Company’s tenants, operators, borrowers or
managers; (ae) the impact of litigation or any financial,
accounting, legal or regulatory issues that may affect the Company
or its tenants, operators, borrowers or managers; (af) changes in
accounting principles, or their application or interpretation, and
the Company’s ability to make estimates and the assumptions
underlying the estimates, which could have an effect on the
Company’s earnings; and (ag) uncertainties as to the completion and
timing of the Company’s proposed spin-off transaction, and the
impact of the spin-off transaction on the Company’s business. Many
of these factors are beyond the control of the Company and its
management.
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Ventas, Inc.Lori B. Wittman(877) 4-VENTAS
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