Ventas Exits SNF Business With $700M Sale

By Keith Loria, Contributing Editor

Ventas Inc. is selling its 36-owned skilled nursing facilities that are currently operated by Kindred Healthcare Inc. for $700 million to an affiliate of Blue Mountain Capital Management LLC, removing itself from the SNF business.

Kindred Healthcare skilled nursing facility

“We are delighted to work with Kindred to position both companies for continued success,” Debra Cafaro, Ventas’ chairman & CEO, said in a company release. “With the sale of 36 skilled nursing assets, we are improving our portfolio and enhancing our ability to deliver reliable growth and income for our shareholders. Upon the expected sale, our skilled nursing rent will be only one percent of our total business.”

These actions differentiate the company’s high-quality portfolio of leading properties and continues its long track record of working cooperatively with its customers to provide innovative capital solutions.

Acquisition yields

Ventas said it will use proceeds from the sale to repay debt, helping to strengthen its already strong financial condition and liquidity.

The acquisition price represents a 7 percent cash yield on current annual cash rent of $50 million and an 8 percent GAAP yield. Once the sale is final, Ventas will record a gain exceeding $600 million.

Kindred also announced its closing on the sale of the Ventas SNFs will occur in phases, starting in the third quarter of 2017 and completed by the end of the year. Kindred has already agreed that any Ventas SNFs not purchased by Kindred by April 30, 2018 will be automatically renewed until 2025 at the current rent level plus annual escalations.

Last year, Ventas announced its first move into the life science field with an agreement to acquire nearly all the real estate assets of Wexford Science & Technology LLC and its development pipeline for $1.5 billion from affiliates of The Blackstone Group.