Benzinga | Jun 28, 2021 09:10AM EDT

Ventas To Acquire New Senior Investment Group; Transaction Valued At $2.3B

Positions Ventas to capture powerful senior housing upside at cyclical inflection point

Adds high quality independent living portfolio in advantaged markets with positive supply demand fundamentals

Builds on existing relationships with leading operators and deep experience in independent living

Attractive valuation and accretive transaction

Ventas, Inc. (NYSE:VTR) ("Ventas") and New Senior Investment Group Inc. (NYSE:SNR) ("New Senior") today announced that they have entered into a definitive merger agreement pursuant to which Ventas will acquire New Senior in an all-stock transaction (the "Transaction"), valued at approximately $2.3 billion, including $1.5 billion of New Senior debt.

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New Senior has a high-quality, geographically diversified portfolio of 103 private pay senior living communities, including 102 independent living communities, totaling 12,404 units and located across 36 states in the United States.

Under the terms of the agreement, New Senior shareholders will receive 0.1561 shares of newly issued Ventas stock per share of New Senior common stock. Based on the closing price of Ventas common stock on June 25, 2021, this represents approximately $9.10 per New Senior share, a 31% equity premium based on New Senior's 30-day trading average, and a 10% premium on New Senior's total enterprise value.

The Transaction valuation is expected to represent approximately a 6% capitalization rate on expected New Senior 2022 Net Operating Income ("NOI") and is expected to be approximately $0.09 to $0.11 accretive to Ventas's normalized funds from operations per share on a full year basis.

"Building on the strong momentum we are experiencing in our business, we are delighted to announce this strategic and accretive acquisition with New Senior that expands Ventas's position in senior housing at an important inflection point in the cycle as the senior housing industry rebounds," said Debra A. Cafaro, Ventas Chairman and CEO.

"The transaction provides Ventas shareholders with an attractive valuation and accretion, and further positions us to win the recovery. 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."

J. Justin Hutchens, Ventas's EVP, Senior Housing, added, "I am excited to include the New Senior assets in our portfolio. These independent living communities represent a strong fit with our existing portfolio, as we enhance our senior housing business to capture upside from the industry recovery."

"New Senior's independent living communities are located in advantaged markets, enjoy positive supply demand fundamentals, appeal to a large and growing middle market senior demographic, have demonstrated superior financial performance and are rapidly growing occupancy and leads."

"We are pleased to have reached this agreement with Ventas, which provides immediate, full and fair value to our shareholders," said Susan L. Givens, President and Chief Executive Officer of New Senior. "It was a pleasure to work with the focused and knowledgeable Ventas team. Our Board and management team have concluded that combining with Ventas will provide all of our stakeholders the opportunity to benefit from the upside potential of a combined company that has enhanced size, scale, relationships and financial strength."