Senior Housing: Atria selling its assisted-living properties to Ventas
By Patrick Howington for the Courier-Journal.com
Louisville-based Atria Senior Living Group, a major operator of assisted-living communities, is selling most of its real estate to Ventas Inc. for $1.5 billion in stock and cash.
Ventas also will assume or repay $1.6 billion in debt of Atria, which is owned by private equity funds managed by New York-based Lazard Real Estate Partners.
Atria, which operates more than 120 assisted-living communities in 27 states, will continue to manage them under a contract with Ventas. The deal won’t affect Atria’s day-to-day operations, the company said in a statement.
Its new partnership with Ventas, one of the nation’s largest health-care real-estate companies, positions Atria to grow, CEO John A. Moore said in an interview.
He said the company could manage assisted-living properties that Ventas buys in the future or look on its own for new communities to manage,
“The plan is for Atria to be a growing Louisville business,” Moore said.
Atria has about 200 employees at its headquarters on Fourth Street in downtown Louisville. It also operates three assisted-living communities in Louisville.
Moore said there won’t immediately be any new Louisville jobs as a result of the deal, “but there won’t be any fewer” either.
The deal, expected to close in the first half of next year, is largely a stock transaction. It calls for Ventas to pay $150 million in cash and $1.35 billion in Ventas stock, plus take on $1.6 billion in Atria debt.
Chicago-based Ventas, which formerly had its corporate headquarters in Louisville, owns hospitals, nursing homes and medical office buildings as well as assisted-living facilities.
Acquiring the 118 Atria properties included in the deal will make Ventas the largest owner of senior housing communities in the nation, Ventas CEO Debra Cafaro said in a statement.
J.P. Morgan analyst Mark Streeter said in a research note that the deal reduces Ventas’ reliance on its largest tenant, Louisville-based Kindred Healthcare, and on nursing homes in general.
Nursing homes rely heavily on Medicare and Medicaid reimbursements, which are vulnerable to government cutbacks, while assisted-living facilities are paid by residents’ cash or private insurance.
Once the Atria purchase closes, Ventas will get more than two-thirds of its net operating income from private-pay facilities.
Rent from Kindred will fall to 29 percent of Ventas income, from 37 percent, Streeter said. Atria will contribute the next-largest amount among other Ventas tenants, about 21 percent, he said.
Ventas and Kindred have their origins in the 1998 split of former Louisville long-term care operator Vencor into two companies.
In trading after the deal was announced, Ventas shares fell $2.40 to close at $52.35, down 4 percent.