Ventas Reaches Favorable Agreements With Kindred Healthcare on Lease Renewals
<0> Ventas, Inc.Lori B. Wittman, 877-4-VENTAS </0>
Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) announced today that it has entered into favorable agreements with its tenant Kindred Healthcare, Inc. (NYSE: KND) to extend the leases on 48 of the 108 licensed healthcare assets whose lease term was scheduled to expire on April 30, 2015 (the “2015 Renewal Assets”). Annual rent on these 48 assets will increase by $15 million effective October 1, 2014. Additionally, Kindred has agreed to pay Ventas $20 million in connection with the execution of these agreements.
“These agreements create certainty for two-thirds of the existing rent for the 2015 renewals and provide an immediate path for Ventas to re-lease the remaining assets,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said. “Ventas and Kindred worked expeditiously and cooperatively to craft mutually beneficial arrangements that will enhance value for both companies’ shareholders and reinforce the positive long-term relationship between the companies,” she added.
The 2015 Renewal Assets consist of 86 skilled nursing facilities (“SNFs”) and 22 long-term acute care hospitals (“LTACs”).
Ventas stated that it is immediately launching its re-leasing program for the remaining 60 SNFs in the 2015 Renewal Assets (the “Re-leasing Assets”). As part of their agreements, Ventas and Kindred agreed to accelerate the expiration of the lease term for the Re-leasing Assets to September 30, 2014. Kindred has also agreed that Ventas will be entitled to transition the Re-leasing Assets to new operators prior to September 30, 2014, at no financial detriment to Ventas.
Ventas’s current annualized net operating income (“NOI”) approximates $1.6 billion. Because the new lease arrangements will take effect in the fourth quarter of 2014, the Company does not expect them to have a material impact on 2013 or 2014 normalized Funds From Operations (“FFO”). Ventas expects the transactions described in this Press Release to result in a net $3 million to ($9 million), or $0.01 to ($0.03) per share, impact on Ventas’s normalized FFO in 2015.
Although the Company expects to successfully re-tenant all of the Re-leasing Assets prior to the end of 2014, there can be no assurance that the Company will be able to reposition these assets on a timely basis, if at all, or that expected normalized FFO and NOI results will be achieved.
Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of more than 1,400 assets in 47 states (including the District of Columbia) and two Canadian provinces consists of seniors housing communities, skilled nursing facilities, hospitals, medical office buildings and other properties. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. More information about Ventas and Lillibridge can be found at and .