Healthcare Midwest

Ventas buys 72 MOBs for $760 million

Ventas, Inc. has acquired Cogdell Spencer Inc. and its 72 high quality medical office buildings in an all-cash transaction. At closing, Ventas’s investment, including its share of debt, is expected to approximate $760 million to $770 million, before anticipated transaction expenses.

Ventas, Inc. has acquired Cogdell Spencer Inc. and its 72 high quality medical office buildings  in an all-cash transaction. At closing, Ventas’s investment, including its share of debt, is expected to approximate $760 million to $770 million, before anticipated transaction expenses.

Under the terms of the agreement, holders of shares of Cogdell common stock and units of limited partnership interests in Cogdell’s operating partnership, Cogdell Spencer LP (“Cogdell LP”), will receive consideration of $4.25 per share (or unit), representing a premium of 8 percent to Cogdell’s closing price on December 23, 2011 and 13 percent to the average closing price of Cogdell common stock over the past 30 days. The consideration plus anticipated transaction expenses values Cogdell’s properties at a low- to mid- 7 percent net operating income (“NOI”) yield, or slightly over $200 per square foot. Holders of Cogdell’s preferred stock will receive consideration of $25 per share, plus accrued and unpaid dividends through the closing. Cogdell will pay its currently declared common stock dividend as scheduled on January 19, 2012, at which time Cogdell LP will pay a similar distribution on its outstanding limited partnership units. Cogdell and Cogdell LP will not pay further dividends or distributions on their common stock or units pending consummation of the transaction.

“We are delighted to announce this strategic and accretive acquisition that further broadens our footprint in the attractive MOB sector, continues to diversify our business and tenant relationships and keeps our balance sheet strong,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said in a press release. “Cogdell’s high-quality properties enhance our medical office building market presence, especially in the southeast, and provide an opportunity to scale our Lillibridge Healthcare Services subsidiary platform. We look forward to successfully integrating the Cogdell properties into the Ventas portfolio.”

Highlights of the acquired assets are:

  • Acquired MOBs: 68 stabilized (92% occupied), 2 leaseup and 2 in development, 4.2 million square feet;
  • Management business acquired: 44 MOBs, 2 million square feet;
  • Ventas’s MOB portfolio will increase from 11% to 15% of total NOI;
  • Owned MOBs are located in 15 states;
  • Eighty-eight percent of the owned portfolio’s square footage (72 MOBs) is located on hospital campuses or is hospital anchored; and
  • Twelve new business relationships with investment-grade rated hospitals.
“When this acquisition is completed, Ventas will have the leading MOB business in the U.S., with over 20 million square feet owned or managed, and a coast-to-coast presence that is second to none in the healthcare real estate industry,” Ventas Executive Vice President of Medical Property Operations Todd W. Lillibridge said. “We continue to build on our 25 years of experience exclusively in the medical office building and outpatient arena for the benefit of our clients and stakeholders.”