LOUISVILLE, KY—Atria Senior Living's management team has secured an investment from Ventas in a $1-billion venture focused on development and redevelopment opportunities in high barrier-to-entry markets. The investment from Ventas coincides with the Atria executives selling 50% of their 66% ownership in their company's management services business to Fremont Realty Capital, the real estate private equity business unit of the Fremont Group, in order to raise growth capital.
Terms of the deal were not disclosed. However, the companies said it values Atria at a substantially higher level compared to the 2012 transaction in which the management team increased their stake to 66% and Ventas acquired 34% of the management business for a reported $242 million. The REIT acquired substantially all of Atria's real estate six years ago.
In connection with the stake sale to Fremont, Ventas has made an additional investment in Atria to maintain its 34% ownership stake without dilution. Ventas will continue to have two representatives serve on Atria's board of directors and maintain certain other rights with respect to governance.
Accordingly, Atria's senior executives, Fremont and Ventas will now own both Atria's management business and the newly formed real estate venture general partnership in shares of 33%, 33% and 34%, respectively. Additionally, the GP intends to raise $300 million to $400 million of limited partner capital to fund the dedicated development and redevelopment strategy.
Atria CEO John Moore says that with the additional capital from Fremont and Ventas, “we can continue to build scale and accelerate our investments in infrastructure and systems to better position us for both the current environment and our maturing industry as it prepares for the demographic wave that is around the corner.” He adds that Fremont's track record and “experience building high-quality businesses for the long-term and the talent of their team will be a great asset for Atria” and that Ventas has been “a supportive and invaluable partner in helping us grow our business, and this transaction puts our management business on a path for further growth and expansion.”
Adds Debra A. Cafaro, Ventas' chairman and CEO, “As a leading national senior care provider with an outstanding management team, Atria has significant growth potential. As Atria now takes the next step to enhance its scale and financial flexibility, the business will be well positioned for growth as a consolidator within a highly fragmented market.”
Since its 2011 acquisition of Atria's real estate, Ventas has invested nearly $3 billion of incremental capital in seniors housing communities operated by Atria, and currently owns 172 Atria-operated communities. Atria has increased the number of communities it manages on a long-term basis from 125 to over 200, doubling its revenue under management since '11.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
