Chicago-based Ventas Inc. has completed the first phase of its pending sale of 36 owned skilled nursing facilities that are currently operated by Kindred Healthcare Inc. to facilitate Kindred’s exit from its skilled nursing facility business. Upon the completion of Kindred’s SNF sale to an affiliate of BlueMountain Capital Management LLC, Ventas received its allocable portion of proceeds for the 22 Ventas SNFs sold in the phase for a total purchase price of $488 million which represents a seven percent cash yield on rent for these assets.
“We are delighted to work with Kindred to position both companies for continued success,” said Debra A. Cafaro, Ventas Chairman and Chief Executive Officer. “We are also pleased with the successful completion of the majority of our skilled nursing facility sales as we continue to deemphasize our SNF business in a profitable way. These actions differentiate our high-quality portfolio of leading properties.”
Ventas continues to expect to receive aggregate proceeds of $700 million for the sale of the 36 Ventas SNFs by year end 2017, inclusive of the completed sale. The total anticipated sale price represents a seven percent cash yield on current annual cash rent of $50 million and an eight percent GAAP yield. According to a prepared statement, Ventas is expected to record a gain exceeding $600 million for the sale of the 36 Ventas SNFs. Following the sales of the Ventas SNFs, the company’s percentage of net operating income received from SNFs will be only 1% of its aggregate NOI.
As disclosed in the company’s second quarter 2017 earnings press release, the timing and volume of SNF closings will have a significant impact on 2017’s second half results because larger, earlier dispositions coupled with the anticipated repayment of LIBOR-based debt will reduce funds from operations based metrics by approximately $0.01 per share per month. The early completion announced today of the majority of the Ventas SNF sales is therefore expected to reduce 2017 normalized FFO by approximately $0.01 per share per month, which started on September 1, 2017.