Ventas Inc. (
, a leading healthcare real estate investment trust (REIT),
recently signed a 'new LTAC lease' agreement with
Kindred Healthcare Inc. (
to lease 10 long-term acute care hospitals (LTACs), comprising
1,066 licensed hospital beds. The agreement will take effect from
May 1, 2013 and the initial annual rent will be $28 million. The
lease agreement bears an initial term of 10 years and includes
annual CPI-based escalations ranging from 0-4%.
The new lease agreement will replace a previous lease agreement
with Kindred Healthcare encompassing 10 LTACs and scheduled to
expire on April 30, 2013. The rent for these LTACs period from May
1, 2012 to April 30, 2013 is $22 million.
Kindred Healthcare, a real estate investment trust (REIT),
provides healthcare services through its subsidiaries. It operates
hospitals, nursing centers and a contract rehabilitation services
business across the United States. As of December 31, 2011, it
operated 121 LTAC hospitals, 5 IRFs, 224 nursing and rehabilitation
centers and 6 assisted living facilities.
In addition, Ventas also announced its plan to re-lease 54
nursing and rehabilitation centers, which will commence on May 1,
2012 and will carry an annual rent of around $57 million or
approximately 4% of Ventas' NOI. The lease agreement will expire on
April 30, 2013. As a matter of fact, if Ventas lease these
properties for 10% more or less than the current rent, then it will
not impact Ventas' normalized funds from operations (FFO) in second
quarter 2012. Presently, the company is searching for a suitable
tenant for the properties.
These 54 assets were previously leased to Kindred Healthcare. Of
the 89 healthcare properties leased to Kindred, it will now be
responsible for 35 properties through both the new LTAC Lease and
previously exercised lease renewals. Effective May 1, 2013, the
total annual rent for these properties will be approximately $76
million. The rent for the assets for the period from May 1, 2012 to
April 30, 2013 is $69 million.
Ventas reported first quarter 2012 recurring FFO of $263.9
million or 91 cents per share, which beat the Zacks Consensus
Estimate by 2 cents. With superior quarterly results, the Zacks
Consensus Estimate for 2012 and 2013 are pegged at $3.71 and $3.95,
respectively, representing an annual growth of 10.09% and
Chicago, Illinois-based Ventas invests, finances, leases and
manages healthcare properties. Its diverse portfolio contains more
than 1,400 assets in 47 states (including the District of Columbia)
and two Canadian provinces consists of seniors housing communities,
medical office buildings, hospitals, skilled nursing facilities and
Ventas currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock. One of its competitors,
also holds a Zacks #3 Rank.
HCP INC (HCP): Free Stock Analysis Report
KINDRED HLTHCR (KND): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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