Ventas Completes Skilled Nursing Spin-off

CHICAGO—Ventas Inc. said Tuesday it had completed the previously announced spin-off of most of its post-acute/skilled nursing facility portfolio into an independent, publicly traded REIT. Known as Care Capital Properties Inc., the newly minted REIT began trading on the New York Stock Exchange Tuesday under the CCP ticker and is scheduled to ring the closing bell as the day's trading ends.

For the parent company, the completion of the spin marks “an exciting day for Ventas,” says chairman and CEO Debra A. Cafaro. CCP, she adds, has been launched as “a pure-play SNF REIT with a great team, strong balance sheet and customer relationships and significant market opportunity in the large fragmented skilled nursing market.” The new REIT's CEO, Raymond J. Lewis, adds that his company is “poised for growth and success.”

At it begins trading on the NYSE, CCP owns 355 triple-net leased SNFs and other healthcare assets operated by private regional and local care providers. The REIT's portfolio is diversified by both geography, spanning 37 states, and by operator, with 42 operator relationships.

VTR announced the spin in April, at the same time as it moved to further diversify its holdings with its $1.75-billion acquisition of Ardent Health Services, a deal which closed earlier this month. A month later, the spin-off REIT's registration statement spelled out the rationale for launching as a separate company and spinning off most of the parent company's SNF properties.

“There are 14 publicly traded healthcare REITs representing an aggregate market capitalization of approximately $92 billion,” according to the Form 10. Most of these REITs have specialties other than SNFs, and most focus on healthcare sectors other than SNFs, “resulting in private regional and local operators being underserved.”

The pool of underserved SNF operators is considerable. “According to the American Health Care Association, the SNF industry is comprised of approximately 15,600 facilities and 1.7 million beds, and according to the National Investment Center for the Seniors Housing & Care Industry, there are more than 2,500 SNF operators,” according to the Form 10 filing. With only 14.3% of SNFs owned by publicly traded REITs, according to the AHCA, the large and highly fragmented market provides ample opportunities for consolidation.”

Centerview Partners and Bank of America Merrill Lynch are serving as financial advisors to VTR. Wachtell, Lipton, Rosen & Katz is serving as the company's legal advisor in connection with the spin-off.