Ventas Sells Senior Housing Communities; Settles Lawsuit

Ventas, Inc. recently announced it sold twelve seniors housing communities to Assisted Living Concepts, Inc. for a total of $100 million in cash, settling a lawsuit Ventas filed against ALC.

Prior to the sale, ALC, a Milwaukee-area long-term care provider, was the tenant of the communities. At closing, the leases were terminated, Ventas no longer owns any assets that ALC operates, and the parties agreed to dismiss their pending litigation in the U.S. District Court for the Northern District of Illinois, according to a Ventas statement.

“Ventas stands for excellence in seniors housing,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said. “This transaction allows ALC’s new chief executive officer and its board of directors to focus their attention and resources on providing quality care for its residents.”

Ventas Realty, Chicago, the landlord for eight assisted living facilities operated by Assisted Living Concepts Inc., had been alleging in its lawsuit that ALC violated its lease agreement after regulators in multiple states determined the care at several facilities was detrimental to residents.

The suit, filed April 26 in U.S. District Court for the Northern District of Illinois, cites violations at three facilities in Georgia and Alabama.

The twelve communities sold to ALC contain 696 units in five states, including five in Georgia, four in South Carolina and one each in Florida, Alabama and Pennsylvania. The transaction was funded through Assisted Living Concepts’ $125 million revolving credit agreement.

Under the terms of the transaction, ALC also paid Ventas’s expenses in connection with the litigation.

“We are pleased to reach a mutually satisfactory arrangement with Ventas and to have acquired these 12 residences,” said Charles Roadman, Assisted Living president and CEO. “While we have had some recent regulatory challenges at several of these properties, we are taking actions to address these challenges and to enhance their quality.”

Assisted Living Concepts operates more than 200 senior living residences in 20 states, including Wisconsin. The company had revenue of $234.5 million last year.

According to a Ventas statement, the company’s transaction was necessary to “protect our assets, our shareholders, and importantly, to protect the residents of our communities. The company added: “We have been working cooperatively with the state regulators who have been extremely supportive of our actions.”

Ventas’ total annual base rent under its leases with ALC was approximately $7.2 million on a GAAP basis and $6.6 million on a cash basis.

Ventas, Inc., an S&P 500 company, is a leading healthcare real estate investment trust. Its diverse portfolio of more than 1,400 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.

Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.

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