Ventas enters definitive agreement to acquire Lillibridge

Ventas, Inc.,Jun 24 2010

Ventas, Inc. (NYSE: VTR) ("Ventas" or the "Company") said today that it has entered into a definitive agreement to acquire 100 percent of Lillibridge Healthcare Services, Inc. (with its related entities, "Lillibridge") and real estate interests in 95 medical office buildings and ambulatory facilities ("MOBs"). Lillibridge, a premier Chicago-based, fully-integrated healthcare real estate company, owns, develops and manages MOBs, and offers strategic, financial and operational real estate advisory services, principally for highly rated, not-for-profit healthcare systems nationally. The purchase price is between $300 million and $400 million.

“With Ventas's strong balance sheet and access to capital, we will be able to meet all the real estate needs of our clients - leading not-for-profit, highly rated healthcare and hospital systems - and also expand our franchise”

"This strategic acquisition of Lillibridge represents an important breakthrough for Ventas in our goal to be a national leader in the growing area of MOBs and ambulatory facilities - a market estimated at $173 billion and expected to grow over 30 percent in the coming years," Ventas Chairman, President and Chief Executive Officer Debra A. Cafaro said. "The powerful combination of our strong balance sheet and access to capital, with Lillibridge's leading operating platform that provides a full complement of development, construction, management and advisory services to highly rated healthcare systems, offers a compelling solution for hospitals as they expand, consolidate and evolve to meet increasing demand for medical care."

With the completion of the acquisition, Ventas will manage or own 154 MOBs with 8.4 million square feet in 20 states including the District of Columbia. It will operate the MOB business under the Lillibridge name with its existing Chicago-based leadership, including Chief Executive Officer Todd Lillibridge, the company's founder. Lillibridge will be named Ventas's Executive Vice President, Medical Properties, reporting to the CEO.

"Todd Lillibridge and his team have built a remarkable firm characterized by high integrity, strong relationships with clients, a nationally recognized brand in healthcare real estate services and an excellent track record. We look forward to welcoming Todd and his team to Ventas," Cafaro added.

TRANSACTION TERMS

In the transaction, Ventas will acquire:

A. a 100 percent interest in 37 MOBs comprising 1.9 million square feet of space; and

B. a 20 percent joint venture interest in 24 MOBs comprising 1.5 million square feet and a 5 percent joint venture interest in 34 MOBs comprising 2.3 million square feet. Ventas will be the managing member of these joint ventures and the property manager for the properties. An institutional third party holds the remaining property interests, and Ventas will have a right of first offer on those interests.

"With Ventas's strong balance sheet and access to capital, we will be able to meet all the real estate needs of our clients - leading not-for-profit, highly rated healthcare and hospital systems - and also expand our franchise," Lillibridge said. "We believe Ventas is the right fit for our clients, employees and our business as we move into our third decade of healthcare real estate. We are excited about growing our business by delivering comprehensive capital and real estate solutions to our hospital partners."

TRANSACTION BENEFITS

1. Instant scale in the MOB space, with a combined portfolio of 154 MOBs and 8.4 million square feet.
2. Increased net operating income (NOI) from MOBs, expected to be 8 percent versus 5 percent of Ventas's annualized run-rate NOI. Ventas's NOI derived from private pay sources will increase to 58 percent from 56 percent.
3. Occupancy of 86 percent at Lillibridge's owned MOB portfolio as of March 31, 2010. Lillibridge also property manages for third parties an additional 33 MOBs with 1 million square feet, located in 7 markets in 6 states.
4. Access to higher yielding development opportunities, and full property management and advisory capabilities for hospital systems.
5. Existing relationships with health and hospital systems rated "A" to "AA," including Ascension Health, Catholic Health Initiatives and Ohio Health.
6. Highly desirable "on campus" locations with the sponsoring hospital or health system for 92 percent of the acquired MOBs.
7. Extensive knowledge and experience from Lillibridge's senior management team, which has a 25+ year track record in acquiring, developing and managing MOBs, and advising highly rated hospital systems. Lillibridge has served over 250 hospitals and health systems nationwide.

The transaction is expected to be modestly accretive to Ventas's 2010 normalized Funds From Operations ("FFO") per share after costs and expenses of the transaction and transition and integration expenses. The Company said it expects to fund the transaction with a combination of cash on hand, borrowings under its revolving credit facilities and assumed secured mortgage financing. Currently, the assets to be acquired are primarily financed with prepayable secured debt, most of which is expected to be repaid at or following closing. Ventas has agreed to the seller's request that specific financial terms of the transaction remain confidential.

Completion of the transaction is subject to satisfaction of certain closing conditions. Ventas expects the acquisition to be completed in the third quarter of 2010, although there can be no assurance that the transaction will close or, if it does, when the closing will occur.

More information on the Lillibridge acquisition can be found on Ventas's website at www.ventasreit.com/lillibridge.

Goldman, Sachs & Co. is acting as Ventas's lead financial advisor and Barclays Capital Inc. is also advising Ventas. Barack Ferrazzano Kirschbaum & Nagelberg LLP is serving as its legal counsel.

2010 NORMALIZED FFO AND FAD GUIDANCE

Ventas expects to update its expectations for 2010 normalized FFO and Funds Available for Distribution ("FAD") per diluted common share during the third quarter of 2010, but is under no obligation to do so. The Company's normalized FFO and FAD guidance (and related GAAP earnings projections) for all periods is subject to certain assumptions and qualifications, including those referenced above, and others that have been previously disclosed. Many of these assumptions and qualifications are subject to change and outside the control of the Company. There can be no assurance that the Company will achieve its expectations.