Ventas to Acquire New Senior Investment Group In $2.3 Billion Deal

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Ventas will acquire New Senior Investment Group in an all-stock transaction, valued at approximately $2.3 billion, including $1.5 billion of new senior debt.

With the acquisition of New Senior’s 12,404 units, Ventas is getting a geographically diversified portfolio of 103 private-pay senior living communities, including 102 independent living communities. It spans 36 states in the United States.

New Senior shareholders will receive 0.1561 shares of newly issued Ventas stock per share of New Senior common stock. That comes out to approximately $9.10 per New Senior share, a 31% equity premium based on its 30-day trading average and a 10% premium on its total enterprise value.

Ventas anticipates that the transaction will be approximately $0.09 to $0.11 accretive to its normalized funds from operations per share on a full-year basis. It is also expected to represent roughly a 6% capitalization rate on expected New Senior 2022 Net Operating Income.

“The transaction provides Ventas shareholders with an attractive valuation and accretion, and further positions us to win the recovery,” said Debra A. Cafaro, Ventas Chairman and CEO, in a prepared statement. “It continues Ventas’s longstanding track record of capital allocation excellence, builds on our deep experience with the independent living product and leading operators Atria and Holiday, and is a testament to the continued dedication and expertise of our outstanding team.”

The Ventas-New Senior deal is the second significant seniors transaction in the past week. Last week, Welltower announced that it was acquiring a portfolio of 86 seniors housing properties owned by Holiday Retirement for $1.58 billion, or $152,000 per unit.

The portfolio includes 80 nearly identical independent living and six combinations of independent living and assisted living properties. Upon the closing date of this transaction, expected to be in the third quarter of 2021, Atria Senior Living will assume operations of the properties and retain Holiday’s in-place senior management and staff.

The price tag of $1.58 billion represents a 30% discount to the estimated replacement cost, according to Welltower. The REIT says the transaction is expected to be approximately $0.10 per diluted share accretive to its normalized funds from operations during the first twelve months post-closing.

These transactions are occurring as seniors housing is primed for recovery. The JLL Valuation Advisory says demand in the sector will soon be at its highest point ever. Helping magnify that demand will be supply shortages as construction delays from the pandemic hindered starts. As a percentage of existing supply, units under construction dropped from peak levels of 7.0% in Q4 2019 to 4.7% in Q1 2021. JLL says the need to serve the middle-income population will increase, resulting from the global impact of COVID-19.

“Investors remain bullish on seniors housing and care investments,” said JLL Managing Director Zach Bowyer, MAI, head of Alternatives Asset Sectors, Valuation Advisory. “We anticipate market fundamentals to steadily improve and the market to re-stabilize between two and four years, depending on the location.”

 

Source: GlobeSt

Dallas-Based Caddis Hires Sector Veteran To Grow The Company’s MOB Portfolio

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W. Todd Jensen has plenty of experience in the healthcare real estate (HRE) sector, and in his 25-year career with both public and private companies has been involved in more than 300 transactions topping $5 billion.

W. Todd Jensen

Dallas-based Caddis, which has been focused on healthcare facilities since its founding as the successor to a previous HRE firm in 2008, is looking to tap into Mr. Jensen’s experience to help grow its medical office building (MOB) portfolio, which currently comprises 42 assets with about 2 million square feet of space and $600 million in value The company recently hired him for a newly created position: executive VP, investments.

“We created this new position because we wanted to add more senior talent to help us grow our portfolio and expand our capital relationships,” says Lance M. Hardenburg, managing partner and CEO of the HRE firm with a national platform. “The company looks to grow the portfolio by making MOB acquisitions through our various medical office investment funds. However, we will continue to consider MOB development opportunities outside our investment funds, and where strategic or other considerations dictate our doing so, we also may pursue acquisitions opportunities on a separately syndicated basis. Mr. Jensen will lead Caddis’ acquisitions team while also providing strategic leadership to business development, capital relationships and development operations.”

As noted, Mr. Jensen’s experience is quite extensive, as prior to joining Caddis he was principal of Jensen Property Group, a real estate development and investment firm focused on healthcare, mixed-use and multifamily properties. Prior to that, Mr. Jensen was with New York-based Healthcare Trust Inc., a non-traded real estate investment trust (REIT), where he helped raise and invest nearly $5 billion in healthcare-related properties. He also spent more than 15 years with several HRE firms, including DASCO Companies, Lauth Property Group and Hammes Company.

Upon learning of Mr. Jensen’s new position, HREI reached out and he agreed to answer questions tossed his way.

HREI: Can you tell us why you decided to join Caddis? What excites you about the company and this opportunity?

W. Todd Jensen: I decided to join Caddis because they are a well-regarded firm with proven capabilities in the acquisition, capitalization, development and management of both medical office buildings and senior housing properties. It’s a great fit with my background and 25-year experience in healthcare real estate, where I have acquired and developed both medical office buildings and senior housing properties on a nationwide basis. I’m excited about the opportunity to help grow the company and the portfolio. That’s what I’ve done a lot in my career — help healthcare real estate businesses grow — and I’ve always thoroughly enjoyed the challenge. There is already a great platform that is poised for growth, and both Caddis and I think I can help.

 

Source: HREI

Medical Properties Trust To Invest $950 Million In Behavioral Health Platform

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Medical Properties Trust, Inc. (the “Company” or “MPT”) recently announced that it has entered into definitive agreements to acquire 18 inpatient behavioral health hospital facilities and an interest in the operations of Springstone, LLC (“Springstone”) from Welsh, Carson, Anderson & Stowe (“WCAS”) for total consideration of $950 million.

Springstone, based in Louisville, Kentucky, is a leading provider of behavioral health services in the United States distinguished by its purpose-built, inpatient facilities in carefully selected markets and care delivery across the full behavioral care acuity spectrum.

The hospitals, along with additional facilities that Springstone expects to develop and acquire, are expected to be master leased pursuant to terms that are anticipated to provide a GAAP-basis yield exceeding 9.0% and lease payment coverage of approximately 1.75x in the near-term. The lease is expected to include an initial 20-year term with CPI-based annual rent escalators subject to a 2% floor.

The Company expects to initially fund the total cash consideration using cash on hand and borrowings under its revolving credit facility and additional financing arrangements, which may include issuances of debt and equity securities, placement of new secured loans on the acquired real estate, or a combination thereof. The sources of financing actually used will depend upon a variety of factors, including market conditions. The transactions are expected to close during the second half of 2021, subject to customary closing conditions, including certain regulatory approvals.

“The Springstone investments give MPT a major presence in the rapidly expanding United States behavioral health care market, which has been underserved in our society despite importance on the same level as acute and post-acute care hospitals,” said Edward K. Aldag, Jr., MPT’s Chairman, President, and CEO. “MPT’s acquisition of the 18 purpose-built inpatient facilities, much like our recent investment in the Priory portfolio in the United Kingdom, appropriately targets the highest level of acuity within the behavioral care continuum, and we believe that our investment in the operating company will result in additional attractive real estate opportunities.”

MPT anticipates that Springstone will continue to be operated by the same senior management team that has created this distinct portfolio of entirely de novo, purpose-built inpatient and outpatient behavioral health facilities in carefully selected markets. It is expected that these highly experienced individuals, led by Executive Chairman Bill Wilcox, CEO Phil Spencer and CFO Greg Miller, will co-invest alongside MPT in the operating company and be responsible for the day-to-day operations of Springstone, which will be essentially unchanged going forward.

“We’re so appreciative of the job the management team did to build this business. We started this company from scratch 10 years ago and are incredibly proud to have built over 50 facilities, created more than 4,000 jobs, and treated tens of thousands of patients with the highest quality care,” said Brian T. Regan, Head of Healthcare and Partner at WCAS. “It was important to us that the management team has the opportunity to be part of Springstone’s ownership and to continue leading the company and its employees to the next phases of growth.”

Philip Spencer, Springstone’s CEO, added, “Over the past decade, Springstone has helped tens of thousands who struggle with mental health and addiction challenges, thanks to the support of Welsh, Carson, Anderson & Stowe and the dedication of our team of compassionate professionals. We look forward to working with MPT to expand our behavioral healthcare model to serve even more communities.”

Benefits of Transaction

Expected to Achieve Immediate Accretion. The strong cash and GAAP returns related to the sale-leaseback transaction and an accretive cash return on MPT’s investments in the operating company, along with MPT’s attractive cost of capital, are expected to result at closing in immediate improvement in per share net income and funds from operations.

Projected to Create an Unmatched Competitive Advantage in Accelerating United States Behavioral Health Care Market. Springstone provides a full continuum of behavioral care including inpatient, partial hospitalization, and intensive outpatient programs and has targeted diversified geographies with positive demographic trends and a commercial-heavy payor mix. These factors, along with its scale and the purpose-built nature of its facilities, differentiate Springstone from competing operators.

The COVID-19 pandemic has accelerated growth in demand for mental health services in the U.S., evidenced by improving Springstone operations throughout 2020. Like in the U.K., the U.S. government and payors alike acknowledge the need for incremental funding for behavioral health care. Multiple Avenues for Growth Including Development and Expansion Projects. Increasing demand for behavioral health services is expected to continue to generate additional attractive development and expansion projects not underwritten in this transaction.

Improved Portfolio Diversification. MPT’s largest individual property investment now represents only 2.6% of pro forma total gross assets. The consummation of the Springstone transaction is subject to customary closing conditions, including applicable regulatory approvals and the finalization of agreements with current management. MPT cannot give assurances that the transactions will be successfully consummated as described above or at all. Barclays and Guggenheim Securities, LLC acted as financial advisors to MPT.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospitals with 442 facilities and roughly 45,000 licensed beds in nine countries and across four continents on a pro forma basis. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information (including additional details related to the Springstone investment as part of an updated investor presentation), visit the Company’s website at www.medicalpropertiestrust.com.

 

Source: HREI