Real estate investment trust giant Ventas took a huge step in bolstering its private-pay assets on Monday, when it announced it would acquire American Realty Capital (ARC) Healthcare Trust for $2.6 billion in cash and stock. The transaction is expected to be finalized by the end of this year.
When combined with its planned $900 million acquisition of Holiday Retirement’s 29 senior living communities in Canada later this year, Ventas will reportedly become the nation’s largest REIT and a global leader in senior living and medical office buildings. The ARC Healthcare deal will add eight new seniors 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,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said in announcing the deal. The Canadian communities are clustered mainly in Toronto and Alberta.
Private pay revenue sources account for 82% of ARC Healthcare’s assets and 100% of the Canadian assets, according to the joint statement. ARC Healthcare also expects to complete potential investments exceeding $250 million by the end of 2014. Ventas reported that the Canadian properties, whose 3,354 independent living units are about 90% occupied, boast margins of approximately 50% in markets “with above average income and senior population growth rates.” Once the Canadian acquisition is sealed, operations there will be handled by Atria, which will manage a total of 173 communities for Ventas.
Ventas previously was known as the dominant landlord for Kindred Healthcare long-term care properties.