Ventas, Inc. (NYSE: VTR) announced the completion of a series of transactions with Atria Senior Living ("Atria"), one of its leading senior housing operating partners, under which Atria's management team has raised growth capital by selling 50 percent of their ownership in Atria's management business to Fremont Realty Capital ("Fremont"), the real estate private equity business unit of the Fremont Group, the investment office of the Bechtel family.
There is no change in Ventas's real estate ownership as a result of this transaction. The Atria management capital raise, which will support Atria's strategic growth, values Atria at a substantial increase compared to the 2012 transaction in which Ventas acquired 34 percent of the business. Ventas has made an additional investment in Atria to maintain its 34 percent 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.
"We are delighted to support Atria's growth-focused capital raise for its management platform and welcome Fremont as an investor in Atria," said Debra A. Cafaro, Ventas Chairman and Chief Executive Officer. "Since we acquired substantially all of Atria's real estate in 2011, Atria's management business has nearly doubled in size. 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."
Ms. Cafaro continued, "Fremont is an experienced investor and will be an excellent partner given its long-term investment horizon, and its focus on high-quality management teams in attractive businesses. This additional equity investment in Atria's management business is yet another example of the broad-based interest from investors of all types in excellent senior care providers."
"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," said John A. Moore, Atria Chairman and Chief Executive Officer. "We look forward to continuing to collaborate with Ventas in the years ahead as we mutually support each company’s business goals."
Initially, proceeds of the current capital raise have been principally reinvested in Atria. The transactions will result in Ventas owning a 34 percent share of Atria's management services business with Atria senior executives and Fremont owning 33 percent each, respectively.
Since Ventas' initial acquisition of substantially all of Atria's real estate in 2011, Ventas has invested nearly $3 billion of incremental capital in senior housing communities operated by Atria. Ventas currently owns 172 senior housing communities operated by Atria. Atria has increased the number of communities it manages on a long-term basis from 125 to over 200, doubling revenue under management since 2011.