Ventas to acquire NHP shares for $7.4 billion

Ventas, Inc. (NYSE:VTR) ("Ventas" or the "Company") and Nationwide Health Properties, Inc. (NYSE:NHP) ("NHP") today announced that the Boards of Directors of both companies have unanimously approved a definitive agreement under which Ventas will acquire all of the outstanding shares of NHP in a stock-for-stock transaction valued at $7.4 billion, creating one of the largest publicly traded REITs and the leading healthcare REIT by equity value.

Under the terms of the agreement, NHP shareholders will receive a fixed exchange ratio of 0.7866 Ventas shares for each share of NHP common stock they own. Based on the closing stock price for Ventas on Friday, February 25, 2011, this consideration would be equivalent to $44.99 of Ventas stock for each NHP share, representing a premium to NHP shareholders of approximately 15% over NHP's closing stock price on that day. Upon closing of the transaction, Ventas shareholders are expected to own approximately 65% and NHP shareholders are expected to own approximately 35% of the combined company. The transaction is expected to be immediately accretive to Ventas's normalized Funds From Operations ("FFO") and Funds Available for Distribution ("FAD") after the closing, which is expected to occur in the third quarter of 2011. The all-stock transaction is intended to be tax-free to shareholders. (All figures for Ventas and the combined company are pro forma for Ventas's previously announced transaction to acquire substantially all of the real estate assets of privately-owned Atria Senior Living Group ("Atria"), which is expected to close in April 2011.)

"The combination of Ventas and NHP increases the scale and diversification of the combined company, the strength and flexibility of the company's balance sheet and the quality and geography of the assets," Ventas Chairman and Chief Executive Officer Debra A. Cafaro said. "With Ventas's successful track record of value-creating transactions and NHP's longstanding history of regional, asset-level acquisitions, taken together with one of the strongest balance sheets in the REIT industry, the combined company will have a unique opportunity for continued external growth. We are excited to move forward with the NHP team. This combination unites two similar cultures that share core values and a strong track record of delivering superior returns to shareholders."

"For NHP shareholders, Ventas is the right partner, bringing the right value at the right time. After 25 wonderful years of growth and success, we look forward to joining forces with Ventas, which shares our legacy of financial strength and top-tier returns for shareholders," said Douglas M. Pasquale, NHP's Chairman, President and Chief Executive Officer. "Our shareholders, property operators and tenants will all benefit from our expanded strength, diversification and capabilities. We're pleased that this all-stock transaction offers NHP shareholders a premium and also the opportunity to participate in the combined company's future prospects for dividends and growth. I am personally committed to ensuring a smooth transition and the completion of the transaction as expeditiously as possible."

Strategic and Financial Benefits of Transaction

• Enhanced Scale and Competitiveness. The transaction will create the largest healthcare REIT, with a pro forma equity value of approximately $17 billion, pro forma enterprise value of approximately $23 billion, and over 100 customer relationships. With its enhanced scale and low leverage, the combined company will be well positioned to compete for a broad spectrum of transactions, grow and invest in existing relationships, mine high return redevelopment opportunities in existing portfolios, maintain a cost of capital advantage and leverage the talents of the combined Board and management teams.
• Greater Portfolio Diversification by Geography, Asset Class, Tenant/Operator and Operating Model. The combined company will have a high quality portfolio with greater diversification across all key measures.
  • The combined company will have over 1,300 total assets in 47 states, the District of Columbia and two Canadian provinces.
  • Private pay sources will account for 70% of the combined company's $1.3 billion in NOI.
  • Seniors housing will account for approximately 55% of the combined company's NOI, with skilled nursing facilities and MOBs accounting for approximately 22% and 11%, respectively.
  • High growth seniors housing operating assets will account for 26% of the combined company's NOI, while no single tenant or operator will account for more than 19% and the top three tenant/operators together will represent approximately 46%.
  • The combined company will have strong and extensive relationships with over 100 regional operators and leading tenants and managers, including Atria, Brookdale Senior Living Inc. (NYSE:BKD), Kindred Healthcare, Inc. (NYSE:KND) and Sunrise Senior Living, Inc (NYSE:SRZ).
  • This transaction solidifies Ventas's position as the largest owner of seniors housing in the United States with 643 assets.
  • The combined company will benefit from a truly national MOB footprint that includes Ventas's Lillibridge franchise and NHP's joint venture with Pacific Medical Buildings and extensive hospital and health-system relationships. The combined company will have approximately 14 million square feet of owned and managed MOBs.
  • The combined company will enjoy the stability of triple-net lease assets and higher growth apartment-like cash flows from seniors housing operating assets.

• Accretion and Growth Rate. The transaction is expected to be immediately accretive to Ventas's FFO and FAD. Moreover, the combined regional and national acquisition capability, low leverage and competitive costs of capital, national MOB presence and ability to expand operating assets should enable Ventas to maintain its current growth profile.
• Financial Strength and Flexibility. The transaction results in reduced leverage for Ventas. The combined company will maintain a strong balance sheet and is expected to have the lowest leverage of the large healthcare REITs, with a debt to enterprise value ratio below 30% and net debt to EBITDA ratio approximating 5x at closing. The stronger balance sheet, larger portfolio and increased earnings diversification are expected to improve the combined company's long-term cost of capital and credit profile. Both Ventas and NHP have a track record of prudent balance sheet management. Ventas believes that the strength of the combined company should create positive ratings momentum.
• Continued Strong, Secure, Fast-Growing Dividend. The combined company's shareholders will benefit from a stable and secure dividend with above-average growth potential, as well as a conservative pro forma payout ratio. Ventas, which has increased its dividend 8% annually, on average, since 2004, expects to continue growing its dividend for shareholders of the combined company post closing. Ventas had a conservative FFO payout ratio of 74% in 2010 and is expected to benefit from NHP's stable cash flow from triple-net lease assets, which have no related capital expenditures. Each company intends to continue its current dividend until the close of the transaction.