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Ventas to Acquire Lillibridge Healthcare Services

^{Published on 2010-06-24 04:11:44 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Ventas, Inc. (NYSE: VTR) (aVentasa or the aCompanya) said today that it has entered into a definitive agreement to acquire 100 percent of Lillibridge Healthcare Services, Inc. (with its related entities, aLillibridgea) and real estate interests in 95 medical office buildings and ambulatory facilities (aMOBsa). Lillibridge, a premier Chicago-based, fully-integrated healthcare real estate company, owns, develops and manages MOBs, and offers strategic, financial and operational real estate advisory services, principally for highly rated, not-for-profit healthcare systems nationally. The purchase price is between $300 million and $400 million.

"We believe Ventas is the right fit for our clients, employees and our business as we move into our third decade of healthcare real estate. We are excited about growing our business by delivering comprehensive capital and real estate solutions to our hospital partners."

aThis strategic acquisition of Lillibridge represents an important breakthrough for Ventas in our goal to be a national leader in the growing area of MOBs and ambulatory facilities a" a market estimated at $173 billion and expected to grow over 30 percent in the coming years,a Ventas Chairman, President and Chief Executive Officer Debra A. Cafaro said. aThe powerful combination of our strong balance sheet and access to capital, with Lillibridgea™s leading operating platform that provides a full complement of development, construction, management and advisory services to highly rated healthcare systems, offers a compelling solution for hospitals as they expand, consolidate and evolve to meet increasing demand for medical care.a

With the completion of the acquisition, Ventas will manage or own 154 MOBs with 8.4 million square feet in 20 states including the District of Columbia. It will operate the MOB business under the Lillibridge name with its existing Chicago-based leadership, including Chief Executive Officer Todd Lillibridge, the companya™s founder. Lillibridge will be named Ventasa™s Executive Vice President, Medical Properties, reporting to the CEO.

aTodd Lillibridge and his team have built a remarkable firm characterized by high integrity, strong relationships with clients, a nationally recognized brand in healthcare real estate services and an excellent track record. We look forward to welcoming Todd and his team to Ventas,a Cafaro added.

TRANSACTION TERMS

In the transaction, Ventas will acquire:

A. a 100 percent interest in 37 MOBs comprising 1.9 million square feet of space; and

B. a 20 percent joint venture interest in 24 MOBs comprising 1.5 million square feet and a 5 percent joint venture interest in 34 MOBs comprising 2.3 million square feet. Ventas will be the managing member of these joint ventures and the property manager for the properties. An institutional third party holds the remaining property interests, and Ventas will have a right of first offer on those interests.

aWith Ventasa™s strong balance sheet and access to capital, we will be able to meet all the real estate needs of our clients a" leading not-for-profit, highly rated healthcare and hospital systems a" and also expand our franchise,a Lillibridge said. aWe believe Ventas is the right fit for our clients, employees and our business as we move into our third decade of healthcare real estate. We are excited about growing our business by delivering comprehensive capital and real estate solutions to our hospital partners.a

TRANSACTION BENEFITS

1. Instant scale in the MOB space, with a combined portfolio of 154 MOBs and 8.4 million square feet.
2. Increased net operating income (NOI) from MOBs, expected to be 8 percent versus 5 percent of Ventasa™s annualized run-rate NOI. Ventasa™s NOI derived from private pay sources will increase to 58 percent from 56 percent.
3. Occupancy of 86 percent at Lillibridgea™s owned MOB portfolio as of March 31, 2010. Lillibridge also property manages for third parties an additional 33 MOBs with 1 million square feet, located in 7 markets in 6 states.
4. Access to higher yielding development opportunities, and full property management and advisory capabilities for hospital systems.
5. Existing relationships with health and hospital systems rated aAa to aAA,a including Ascension Health, Catholic Health Initiatives and Ohio Health.
6. Highly desirable aon campusa locations with the sponsoring hospital or health system for 92 percent of the acquired MOBs.
7. Extensive knowledge and experience from Lillibridgea™s senior management team, which has a 25+ year track record in acquiring, developing and managing MOBs, and advising highly rated hospital systems. Lillibridge has served over 250 hospitals and health systems nationwide.

The transaction is expected to be modestly accretive to Ventasa™s 2010 normalized Funds From Operations (aFFOa) per share after costs and expenses of the transaction and transition and integration expenses. The Company said it expects to fund the transaction with a combination of cash on hand, borrowings under its revolving credit facilities and assumed secured mortgage financing. Currently, the assets to be acquired are primarily financed with prepayable secured debt, most of which is expected to be repaid at or following closing. Ventas has agreed to the sellera™s request that specific financial terms of the transaction remain confidential.

Completion of the transaction is subject to satisfaction of certain closing conditions. Ventas expects the acquisition to be completed in the third quarter of 2010, although there can be no assurance that the transaction will close or, if it does, when the closing will occur.

More information on the Lillibridge acquisition can be found on Ventasa™s website at [ www.ventasreit.com/lillibridge ].

Goldman, Sachs & Co. is acting as Ventasa™s lead financial advisor and Barclays Capital Inc. is also advising Ventas. Barack Ferrazzano Kirschbaum & Nagelberg LLP is serving as its legal counsel.

2010 NORMALIZED FFO AND FAD GUIDANCE

Ventas expects to update its expectations for 2010 normalized FFO and Funds Available for Distribution (aFADa) per diluted common share during the third quarter of 2010, but is under no obligation to do so. The Company's normalized FFO and FAD guidance (and related GAAP earnings projections) for all periods is subject to certain assumptions and qualifications, including those referenced above, and others that have been previously disclosed. Many of these assumptions and qualifications are subject to change and outside the control of the Company. There can be no assurance that the Company will achieve its expectations.

ABOUT VENTAS

Ventas, Inc., an S&P 500 company, is a leading healthcare real estate investment trust. Its diverse portfolio of properties includes seniors housing communities, skilled nursing facilities, hospitals, medical office buildings and other properties. More information about Ventas can be found on its website at [ www.ventasreit.com ].

ABOUT LILLIBRIDGE

Lillibridge is the largest fully-integrated private owner, manager and developer of MOBs in the country with over 6.7 million square feet under management, principally affiliated with highly rated hospitals and health systems. Lillibridge currently owns and manages 128 properties in 43 markets located in 17 states including the District of Columbia. Lillibridge provides management, leasing, marketing, facility development and advisory services for substantially all of its properties.

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. All statements regarding the Companya™s or its tenantsa™, operatorsa™, managersa™ or borrowersa™ expected future financial position, results of operations, cash flows, funds from operations, dividends and dividend plans, financing plans, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, merger integration, growth opportunities, dispositions, expected lease income, continued qualification as a real estate investment trust (aREITa), plans and objectives of management for future operations and statements that include words such as aanticipate,a aif,a abelieve,a aplan,a aestimate,a aexpect,a aintend,a amay,a acould,a ashould,a awilla and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and security holders must recognize that actual results may differ from the Companya™s expectations. The Company does not undertake a duty to update such forward-looking statements, which speak only as of the date on which they are made.

The Companya™s actual future results and trends may differ materially depending on a variety of factors discussed in the Companya™s filings with the Securities and Exchange Commission. These factors include without limitation: (a) the ability and willingness of the Companya™s tenants, operators, borrowers, managers and other third parties to meet and/or perform 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; (b) the ability of the Companya™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; (c) the Companya™s success in implementing its business strategy and the Companya™s ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions or investments, including those in different asset types and outside the United States; (d) the nature and extent of future competition; (e) the extent of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (f) increases in the Companya™s cost of borrowing as a result of changes in interest rates and other factors; (g) the ability of the Companya™s operators and managers, as applicable, to deliver high quality services, to attract and retain qualified personnel and to attract residents and patients; (h) the results of litigation affecting the Company; (i) changes in general economic conditions and/or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Companya™s revenues and its ability to access the capital markets or other sources of funds; (j) the Companya™s ability to pay down, refinance, restructure and/or extend its indebtedness as it becomes due; (k) the Companya™s ability and willingness to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations; (l) final determination of the Companya™s taxable net income for the year ended December 31, 2009 and for the year ending December 31, 2010; (m) the ability and willingness of the Companya™s tenants to renew their leases with the Company upon expiration of the leases and the Companya™s ability to reposition its properties on the same or better terms in the event such leases expire and are not renewed by the Companya™s tenants or in the event the Company exercises its right to replace an existing tenant upon default; (n) risks associated with the Companya™s senior living operating portfolio, such as factors causing volatility in the Companya™s operating income and earnings generated by its properties, including without limitation national and regional economic conditions, costs of 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; (o) the movement of U.S. and Canadian exchange rates; (p) year-over-year changes in the Consumer Price Index and the effect of those changes on the rent escalators, including the rent escalator for Master Lease 2 with Kindred, and the Companya™s earnings; (q) the Companya™s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate liability and other insurance from reputable and financially stable providers; (r) the impact of increased operating costs and uninsured professional liability claims on the liquidity, financial condition and results of operations of the Companya™s tenants, operators, borrowers and managers, and the ability of the Companya™s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (s) the ability and willingness of the lenders under the Companya™s unsecured revolving credit facilities to fund, in whole or in part, borrowing requests made by the Company from time to time; (t) the impact of market or issuer events on the liquidity or value of the Companya™s investments in marketable securities; and (u) the impact of any financial, accounting, legal or regulatory issues that may affect the Company or its major tenants, operators or managers.Many of these factors are beyond the control of the Company and its management.