American Realty Capital Healthcare Trust being acquired by Ventas

Newly listed HCT being snapped up by the giant health care REIT in a stock and cash transaction valued at $2.6 billion

Jun 2, 2014 @ 8:11 am

By Bruce Kelly

REIT, nontraded REIT, nicholas Schorsch, american realty capital
+ Zoom
(Bloomberg News)

Nicholas Schorsch's newly listed American Realty Capital Healthcare Trust Inc. is being acquired by giant health care REIT Ventas Inc. in a stock and cash transaction valued at $2.6 billion, or $11.33 per share.

With the ticker symbol HCT, the ARC Healthcare Trust Inc. launched as a nontraded real estate investment trust in 2011 and listed in April. The offer by Ventas (VTR), represents $1.38 more than ARC Healthcare Trust's closing price Friday, or about a 14% premium to investors.

Mr. Schorsch is executive chairman of the ARC Healthcare Trust. So far, the REIT's sponsor, American Realty Capital, has listed or merged about a half-dozen nontraded REITs since 2012, by far the most in an industry that faced criticism during and after the credit crisis for locking up investor cash in illiquid deals.

The transaction is scheduled to close at the end of the fourth quarter. Ventas is a giant REIT, with nearly $20 billion in market capitalization. Upon the closing of the transaction, ARC Healthcare Trust shareholders are expected to own about 8 percent of Ventas' shares of common stock then outstanding.

In the transaction, ARC Healthcare Trust shares will generally be converted into a fixed number of Ventas shares, based upon a negotiated Ventas stock price of $67.13. In the transaction, ARC Healthcare shareholders will have the option to elect to receive either 0.1688 Ventas common shares or $11.33 in cash for each share of ARC Healthcare Trust's common stock they own.

Ventas on Monday announced another, separate $900 million all-cash deal to purchase 29 senior citizen housing communities in Canada. On Friday, Ventas shares closed trading at $66.80.

Debra Cafaro, chief executive of Ventas, said in an interview Monday there were plenty of future opportunities in health care real estate, driven particularly by a generally aging population and the expansion of health care due to the Affordable Care Act.

“The health care market is a trillion-dollar market, is still highly fragmented and growing,” Ms. Cafaro said. “Public health care REITs only have about 12% to 15% of that trillion-dollar pie. Compare that to malls, with REITs owning 60% or more of malls.”

Mr. Schorsch pointed to the strength of Ventas' balance sheet, with an investment grade rating from credit agencies and its level of leverage, as being particularly attractive to ARC Healthcare Trust shareholders. “Our assets on her balance sheet make a win win,” he said.

ARC has raised about $1 billion so far for its second health care REIT, American Realty Capital Healthcare Trust II Inc., Mr. Schorsch said. Its goal is to eventually raise $1.8 billion to $2 billion from retail investors.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Advisor Group's Jamie Price: The real reason why most advisers don't have a succession plan in place

Eighty percent of advisers do not have a succession plan in place, though about half of them already know they will need to transition their businesses within the next 10 years, according to Jamie Price, president and CEO of Advisor Group.

Latest news & opinion

DOL Fiduciary Rule: What you need to know about Acosta's decision

Labor Secretary Alexander Acosta confirmed that the agency's fiduciary rule will become applicable on June 9. Find out what advisers and firms should know when it goes into effect.

Acosta declines to extend delay of DOL fiduciary rule

Labor Secretary finds no legal basis to delay implementation; rule to become applicable June 9

Phyllis Borzi says opponents of DOL fiduciary rule face uphill climb to further delay or dilute it

Former assistant Labor secretary who crafted the rule says President Trump won't be able to get rid of it simply because he doesn't like it.

Shrinking talent pool puts strain on advisory firms

Attrition, cuts in training programs and new competition make it difficult to fill job openings

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print