January 19, 2015
Mike Hargrave

Ventas Completes Merger of HCT, MOB cap rate at 6.2%!

Ventas recently completed its previously announced $2.6 Billion acquisition of American Realty Capital Healthcare Trust (HCT). HCT’s portfolio spans 147 total properties including medical office buildings (78), seniors housing (46), post-acute/SNF (14), hospitals (7) and land (2). According to HCT’s 2Q14 supplemental, the portfolio produced $163,872,000 of NOI during the previous twelve months (TTM). Based on this figure and the $2.6 Billion price paid, the cap rate was 6.3% for the portfolio. HCT ascribed a gross asset value (mostly paid or book) of $2.1 Billion in their supplemental so the $2.6 Billion price implies a price appreciation of roughly 24%.

By using the NOI reported for each property type, we can work out cap rates for MOBs, seniors housing and others. HCT also reported the gross asset value for each sub- sector of their portfolio. The table below lays out the details, however, you can see that MOBs generated a cap rate of 6.2%.

American Realty Capital Healthcare Trust Portfolio Acquisition by Ventas REIT

Property Type Number of Properties Gross Asset Value* TTM NOI* Price VTR Paid** Acquisition Cap Rate***
Medical Office 78 $1,038,994,000 $79,946,000 $1,286,465,414 6.2%
Seniors Housing 46 $741,194,000 $52,081,000 $917,734,314 5.7%
Post-Acute 14 $150,726,000 $16,664,000 $186,626,473 8.9%
Hospital 7 $165,916,000 $15,233,000 $205,434,483 7.4%
Land 2 $3,020,000 -$52,000 $3,739,315
Total 147 $2,099,850,000 $163,872,000 $2,600,000,000 6.3%

Source: Company Filings

*Source: 2Q14 HCT Supplemental, TTM NOI is trailing twelve months through 2Q14.

** Determined by gross asset value as % of total.

*** TTM NOI divided by Price VTR Paid.