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Ventas to Acquire Schorsch's ARC Healthcare in $2.6 Billion Deal

Chicago-Based Health Care REIT Will Also Acquire 29 Seniors Commmunities In Canada From Holiday Retirement in a Separate Agreement
June 2, 2014
Less than two months after going public, Nicholas Schorsch's American Realty Capital Healthcare Trust, Inc. is being scooped up by health-care real estate giant Ventas, Inc. in a $2.6 billion cash-and-stock transaction.

Ventas (NYSE: VTR), has a market capitalization of nearly $20 billion and a portfolio of nearly 1,500 seniors housing communities, medical office buildings, skilled nursing facilities, hospitals and other properties in 47 U.S. states, Canada and the UK. The REIT will acquire all of the outstanding shares of ARC Healthcare, which listed on the Nasdaq Stock Market in April.

The deal values ARC Healthcare shares at $11.33. Based upon the agreed upon Ventas stock price of $67.13, the transaction represents a 14% premium to ARC Healthcare shareholders based on last Friday's closing price. The transaction is slated to close by the end of the year.

In the same announcement, Ventas also said it will acquire 29 independent living seniors housing communities in Canada from Holiday Retirement in a separate transaction for about $900 million US in cash. That deal is expected to close in the third quarter. Atria will manage the acquired seniors housing communities.

Several news outlets reported that ARC Healthcare Trust emerged last month as a frontrunner in bidding for Griffin-American Healthcare REIT II, a deal potentially valued at $3.7 billion. Ventas was among three other health care REITs looking at Griffin-American, according to published reports, and it was not known how today's Ventas deal potentially affects Schorsch's pursuit of Griffin-American.

In total, Schorsch is raising capital for 16 nontraded REITs, including a health-care focused trust.

In another Schorch-engineered deal announced today, American Realty Capital Hospitality Trust Inc. agreed to buy Equity Inns for an expected $1.93 billion from affiliates of the Whitehall Real Estate Funds.

The Ventas transaction "provides them the opportunity to participate in the future growth of what will become the largest, and in my view, best managed health care REIT and 6th largest overall REIT in the country," said Schorsch, executive chairman of ARC Healthcare.

"Ventas is an ideal strategic partner given its complementary and broadly diversified real estate portfolio, outstanding history of value creation, and extraordinary record of dividend growth," Schorsh said, noting that the ARC Healthcare management team has decided to be paid for the transaction in the combined company's stock.

ARC Healthcare's market capitalization of $1.85 billion, combined with Ventas' $19.1 billion and the Canadian acquisitions, could vault Ventas into the lead as the largest health care REIT, according to data from SNL Financial. The current leader, HCP Inc. (NYSE: HCP), has a currrent market cap of $19.26 billion.

"These acquisitions are consistent with our stated strategy to be the leading owner of health care and senior living properties globally," Ventas Chairman and CEO Debra A. Cafaro said. "With the addition of ARC Healthcare and the Canadian seniors housing communities, we are continuing our focus on private pay assets, expanding our industry-leading MOB footprint and international presence, and increasing our diversification while maintaining a strong credit profile and balance sheet."

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