Ventas Prices Senior Notes - Analyst Blog

In order to enhance its financial flexibility, the healthcare real estate investment trust (REIT) – Ventas Inc. VTR – announced the pricing of $300 million of 1.250% senior notes (due 2017) and $400 million of 3.750% senior notes (due 2024) at 99.815% and 99.304% of principal amount, respectively. The notes sale is slated to close on Apr 17, 2014, conditioned upon customary closing requirements.

Guaranteed on a senior unsecured basis by the company and issued by its operating partnership, these notes would help Ventas reap proceeds that it would use to pay back its debt under revolving credit facility and for meeting its working capital needs.

Paying back of debt helps in efficiently managing its interest expenses while funding operational needs as well as future acquisitions and investments go a long way in enhancing bottom line.

Given its diversified portfolio, opportunistic investments and a strong balance sheet position, Ventas is well poised for a strong growth trajectory going forward. In addition, aging population and rising healthcare expenses offer significant growth opportunities to the company. However, an expected rise in interest rate in the long run and Ventas' substantial exposure to long-term leased assets remain our concerns.

Ventas is expected to release its first-quarter 2014 results on Apr 25, 2014, prior to the market opening. The Zacks Consensus Estimate for funds from operations (FFO) for the quarter is currently pegged at $1.07 per share, reflecting a year-over-year increase of 3.69%.

Ventas currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may also consider stocks like Boston Properties Inc. BXP, Cousins Properties Incorporated CUZ, and Duke Realty Corporation DRE. All three stocks have a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.