Ventas, Inc. (VTR) recently announced that it is on the look out for prospective tenants for 64 healthcare assets, which are currently leased to Kindred Healthcare, Inc. under four Master Leases. Kindred currently pays an annual cash rent of $77 million for the assets. The lease term of these assets is scheduled to expire April 30, 2013.
Kindred indicated that it intends to renew its leases on 25 health care assets, totaling $46 million of the current annual rent. However, Kindred has already renewed lease term for 8 of the 25 assets. The renewal lease term for these 25 assets commences on May 1, 2013 and is set to expire on April 30, 2018.
Ventas has 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. These assets will be attractive to a wide variety of quality healthcare providers, and is expected to improve its portfolio diversification and broaden its tenant base.
Ventas reported fourth 2011 funds from operations (FFO) of $359.1 million or $1.24 per share, compared to $108.3 million or $0.68 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. With superior quarterly results, Ventas expects its FFO guidance for full year 2012 to be in the range of $3.63 – $3.69 per share.
Ventas is a leading healthcare real estate investment trust. Its diverse portfolio of more than 1,300 assets in 47 states (including the District of Columbia) and two Canadian provinces consists of seniors housing communities, skilled nursing facilities, hospitals, medical office buildings and other properties.
Ventas currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Outperform recommendation on the stock. One of its competitors, HCP Inc. (HCP) also holds a Zacks #3 Rank.
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