Dec 10 - Fitch Ratings has assigned 'BBB+' ratings to the $700 million
aggregate principal amount 2.00% coupon senior unsecured notes due 2018 and $225
million aggregate principal amount 3.25% coupon senior unsecured notes due 2022
issued by the operating partnership of Ventas, Inc. (NYSE: VTR), Ventas
Realty, Limited Partnership (Ventas Realty), and a wholly owned subsidiary,
Ventas Capital Corporation (collectively, Ventas). The notes are guaranteed by
Ventas, Inc. on a senior unsecured basis.
The 2018 notes were priced at 99.739% of par to yield 2.053% to maturity, or 145
basis points over the benchmark treasury rate. The 2022 notes were priced at
98.509% of par to yield 3.432% to maturity, or 185 basis points over the
benchmark treasury rate.
The company expects to use the net proceeds from the offerings to repay
indebtedness outstanding under its unsecured revolving credit facility and for
working capital and other general corporate purposes, including to fund future
acquisitions and investments, if any.
Fitch currently rates Ventas, Inc. and its subsidiaries (collectively, Ventas)
Ventas Realty, Limited Partnership
Ventas Capital Corporation
--Issuer Default Rating (IDR) 'BBB+';
--$2 billion unsecured revolving credit facility 'BBB+';
--$686.5 million senior unsecured term loans 'BBB+';
--$3.5 billion senior unsecured notes 'BBB+'.
Nationwide Health Properties, LLC (NHP)
--$579.6 million senior unsecured notes 'BBB+'.
The Rating Outlook is Stable.
The ratings reflect:
--The company's diversified healthcare property portfolio that is benefiting
from favorable demographics;
--Strong access to capital and liquidity;
--Appropriate leverage for the rating; and
--A solid management team.
The rating is balanced by:
--Uncertainties regarding the replacement of rent on the 54 remaining Kindred
Healthcare, Inc. skilled nursing facilities;
--The incurrence of increased capital expenditures related to Ventas's May 2011
acquisition of substantially all of the real estate assets and working capital
of Atria Senior Living Group, Inc.(ASLG); however, this is mitigated by the fact
that since the ASLG acquisition as well as the purchases of NHP in July 2011 and
Cogdell Spencer in April 2012, fixed charge coverage has remained and is
expected to remain solid for the 'BBB+' rating.
The portfolio benefits from demand by a growing elderly population for various
segments of healthcare real estate. As of Sept. 30, 2012, operating seniors
housing represented 26% of NOI, followed by triple-net seniors housing (25%),
skilled nursing (23%), medical office (17%) and hospitals (7%). Ventas has
limited exposure to specific geographical regions. The company's largest states
by NOI within the owned portfolio in the third quarter of 2012 (3Q'12) were
California at 12%, Texas at 7%, New York at 7%, and Massachusetts at 6%, with
no other state exceeding 5%, thereby reducing risks related to single-state
healthcare regulatory changes.
The company's payor sources are 70% private pay by NOI, limiting government
reimbursement risk. Further, same-store cash flow coverage ratios of all of the
company's triple-net tenants are solid at 1.7x on average for 2Q'12 (latest data
available), which insulates the company against potential tenant cash flow
deterioration stemming from possible sequestration rate reductions.
Ventas's tenant/operator concentration is limited and includes Kindred at 17% of
3Q'12 NOI, Atria Senior Living, Inc. owned by private equity funds managed by
Lazard Real Estate Partners LLC at 14%, Sunrise Senior Living, Inc. (NYSE: SRZ)
at 12%, and Brookdale Senior Living Inc. (NYSE: BKD) at 10%, with no other
tenant/operator exceeding 5% of NOI.
Access to multiple sources of capital provides further support for the 'BBB+'
rating. In addition to the unsecured bond offerings, the company also has proven
access to the unsecured term loan market, and has proactively raised follow-on
common equity, most recently selling $344 million of common equity (including
the overallotment option) in June 2012.Corporate Rating MethodologyParent and Subsidiary Rating LinkageCriteria for Rating U.S. Equity REITs and REOCs