Ventas to Pay $217M for Cogdell Spencer

Ventas Inc., an owner of senior housing and assisted living facilities, will pay $217 million to buy healthcare real estate company Cogdell Spencer Inc., Reuters reported. At $4.25 per share, the deal represents a premium of 8% over Cogdell’s most recent closing price.

(Reuters) – Healthcare real estate firm Ventas Inc will buy peer Cogdell Spencer Inc for about $217 million in cash to broaden its presence in the medical office building market.

Ventas, which is the biggest U.S. owner of senior housing and assisted living facilities, has been actively consolidating with its $5.8 billion buy of Nationwide Health Properties earlier this year and its $1.5 billion deal for Atria Senior Living Group.

Cogdell shareholders will get $4.25 per share, representing a premium of 8 percent over the stock’s last close. Including assumption of debt, the transaction is valued at $760-$770 million, the companies said in a joint statement.

Shares of Cogdell were up 9 percent at $4.27, while those of Ventas were flat at $54.72 in Tuesday early trading on the New York Stock Exchange.

Holders of Cogdell’s preferred stock will receive $25 per share, plus accrued and unpaid dividends through the deal closing.

Cogdell will also pay its currently declared common stock dividend as scheduled on Jan. 19.

The deal is expected to be financed through the assumption of existing Cogdell mortgage debt and other Ventas borrowings.

The transaction, which is expected to close in the second quarter of 2012, will immediately add to Ventas’ normalized funds from operations, about 3-5 cents per share on a full-year basis, excluding merger-related costs.

After the deal, “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,” Todd Lillibridge, executive vice-president of medical property operations at Ventas, said.

As a diversified healthcare REIT, the biggest part of Ventas’ business is in assisted, independent and senior living facilities, but the company is also present in the hospital and medical office space, which analysts say is one of the fastest growing segments for health REITs.

Healthcare REITs themselves do not provide healthcare services, but lease their properties to care facility operators.

Centerview Partners LLC and Morgan Stanley & Co were acting as financial advisors to Ventas, while Cogdell was being advised by Citi.