Ventas, Inc. ( VTR ) recently announced that its subsidiary, Ventas Realty Limited Partnership, has obtained a new $500 million unsecured term loan. The term loan consists of two tranches, a 3-year and a 5-year maturity and also bears the option of extending its borrowing capacity to $900 million.
The company expects to use the proceeds from the term loan to repay borrowings outstanding on its $2 billion unsecured revolving credit facility and for general corporate purposes.
Through the strategic move, the company seeks to attain financial flexibility and diversify the company with respect to its capital position in order to enhance share holders' value. With the closing of this loan, the company terminated the term loan that it assumed with its acquisition of Nationwide Health Properties, Inc.
At the end of third quarter 2011, the company had $57.5 million in cash and short-term cash investments.
Ventas reported third quarter 2011 funds from operations (FFO) of $264.2 million or 91 cents per share compared with $108.9 million or 69 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to net income.
Ventas is one of the top performing healthcare REITs in the U.S., with one of the largest and most diversified portfolios in the healthcare sector with exposure to all types of facilities. The product diversity of the company allows it to capitalize on opportunities in different markets based on individual market dynamics, and provides a hard-to-replicate competitive advantage over its peers.
Ventas currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, HCP, Inc ( HCP ) currently has a Zacks #3 Rank, which translates into a Hold rating.