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.