Ventas to spin off SNF portfolio after hospital chain purchase

Just a month after spending $2.9 billion to acquire medical office buildings and senior housing assets, Ventas announced Monday it will spin off its skilled nursing facility portfolio following the new acquisition of a 14-hospital chain in the Southwest.

One of the nation's largest healthcare real estate investment trusts, Ventas said it will acquire privately held Ardent Medical Services for $1.75 billion. All but four of Ardent's hospitals are in Texas, Oklahoma or New Mexico, which have seen swelling Medicaid enrollment. U.S. hospitals are benefiting from higher admissions of low-income Medicaid patients and a 3.25% Medicare rate increase set for 2016.

The Ventas SNF spin-off, which is slated for completion later this year, will create another healthcare REIT focused on running skilled nursing facilities. It will be composed of 355 skilled nursing facilities and other healthcare-related assets. There will be “significant consolidation opportunities,” said Ventas President Ray Lewis, who will be CEO of the new publicly traded REIT, according to published reports.

In announcing the deal, Ventas stated that the $1 trillion U.S. hospital market is benefiting from increasing emergency room visits and an aging population. The company's share price rose 6% after the announcement.