), a health care real estate investment trust (REIT), crafted a
favorable lease renewal deal with its tenant
Kindred Healthcare Inc.
). The move will ensure that Ventas receives majority
(two-thirds) of its existing rent for the 2015 renewals and
offers a way for re-leasing the rest of the assets.
CUBESMART (CUBE): Free Stock Analysis Report
KINDRED HLTHCR (KND): Free Stock Analysis
SOVRAN SLF STOR (SSS): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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Specifically, Ventas' deal helped extend leases on 48 of the 108
licensed healthcare assets - 86 skilled nursing facilities (SNFs)
and 22 long-term acute care hospitals. The lease term for these
assets was scheduled to expire on Apr 30, 2015. Ventas managed to
increase the annual rent on these 48 assets by $15 million from
Oct 1, 2014, while it would receive $20 million from Kindred for
the execution of these agreements.
Moreover, for the rest of the 60 SNFs, Ventas disclosed the
launch of its re-leasing program. Both the companies consented to
speeding up of the expiration of the lease term for the
re-leasing assets to Sep 30, 2014. Also, Ventas has been
permitted to switch the re-leasing assets to new operators
earlier than Sep 30, 2014, without any financial damage to
With the new lease arrangements effective fourth-quarter 2014
onwards, Ventas does not anticipate the moves to bear any
material impact on its normalized funds from operations (FFO) for
2013 or 2014. It expects 2015 normalized FFO to bear an impact of
negative 3 cent - 1 cent per share.
We believe that going forward, Ventas' diversified portfolio,
strategic acquisitions, favorable lease renewal deals and decent
balance sheet would provide the tempo for riding on the growth
Ventas currently carries a Zacks Rank #3 (Hold). However, two
other REITs that look promising are
Sovran Self Storage Inc.
), both carrying a Zacks Rank #1 (Strong Buy).