CHICAGO-Ventas Inc. has signed an agreement that will make thecompany the largest US owner of seniors housing communities. Thelocally-based health care REIT will buy the real estate assets ofLouisville, KY-based Atria Senior Living Group, about 118properties, for $3.1 billion.

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The trust is paying for the acquisition with $1.35 billion ofits common stock (almost 25 million shares), $150 million in cashand the assumption or repayment of $1.6 billion of net debt. LazardReal Estate Partners, the manager of the private equity funds thatown Atria, is contributing CEO Matthew Lustig to the Ventas Boardof Directors as part of the transaction. Also, Atria will spin offits property management division, with Ventas keeping the companyon in exchange for a minority stake in Atria Management Co. and apotential performance-based payment by Ventas in 2015 o 2016.

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Ventas has been on acquisition tear this year, acquiring theminority interest in 58 senior living communities from McLean,VA-based Sunrise Senior Living Inc. in September and locally-basedREIT Lillibridge Healthcare Services Inc., with more than 500properties, in June. Ventas has made six major acquisitions in thepast six years, said CEO Debra Cafaro in a statement.

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Upon closing, expected in the first half of 2011, Ventas willbecome the largest owner of seniors housing nationally, with morethan 35,000 units across 350 properties. The trust will own a totalof 700 assets, including medical office buildings and other healthcare properties, in 44 states and Canada.

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Almost 70% of the new acquisition properties are fromhigh-income, densely populated coastal markets, Cafaro said. Thisincludes 29% of properties from New York, 21% from New England and18% from Northern and Southern California. The trust expects thenew portfolio to generate about $640 million in revenues next year,with a 2011 unleveraged NOI yield of about 6.5%, implying apurchase cost of $230,000 per unit.

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“The addition of 118 exceptional seniors housing assets inhighly desirable locations will increase the portion of our netoperating income received from private pay assets to overtwo-thirds of our total NOI, Cafaro said in the statement.“Moreover, given the inherent growth in the portfolio, we expectthat this transaction will improve Ventas’s growth rate.”

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Ventas’s lead financial advisors are Jefferies & Co. Inc.and Centerview Partners LLC. BofA Merrill Lynch is also acting as afinancial advisor to Ventas. Ventas’s legal advisors are Wachtell,Lipton, Rosen & Katz and Barack Ferrazzano Kirschbaum &Nagelberg. Lazard’s financial advisor is Lazard Fr

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