Ventas' $2.6 billion bid will create healthcare REIT titan

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Ventas Chairman and CEO Debbie Cafaro
Ventas Chairman and CEO Debbie Cafaro

Real estate investment trust giant Ventas took a huge step in bolstering its private-pay assets when it announced it would acquire American Realty Capital Healthcare Trust for $2.6 billion in cash and stock. The transaction is expected to close later this year.

When combined with its planned $900 million acquisition of Holiday Retirement's 29 senior living communities in Canada later this year, Ventas reportedly will become the nation's largest REIT and a global leader in senior living. The ARC Healthcare deal will add eight new senior housing operators, one new specialty hospital operator and five new skilled nursing operators, the joint statement said.

“With the addition of ARC Healthcare and the Canadian senior housing communities, we are continuing our focus on private-pay assets,” said Debra A. Cafaro, chairman and chief executive officer of Ventas.

Under the deal, ARC Healthcare shareholders will have the option to receive 0.1688 Ventas shares, based on a negotiated price of $67.13 per share, or $11.33 cash for each of their own shares in the company. Both firms have extensive healthcare holdings.

In recent years, Ventas has taken advantage of depressed real-estate prices and low interest rates to scoop up thousands of properties across North America. In all, the firm has spent more than $16 billion bulking up its portfolio, according to Cafaro.

Private pay accounts for 82% of ARC Healthcare's assets and 100% of the Canadian assets, according to the joint statement. ARC Healthcare expects to complete potential investments exceeding $250 million by the end of 2014. Ventas reported that the Canadian properties boast margins of approximately 50% in markets “with above average income and senior population growth rates.” Operations in Canada will be handled by Atria, which will manage a total of 173 communities for Ventas. 

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