Strategic Acquisition of Canadian Senior Housing Portfolio in Partnership with Le Groupe Maurice - June 3, 2019
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Strategic Acquisition of Canadian Senior Housing Portfolio in Partnership with Le Groupe Maurice June 3, 2019
Forward-Looking Statements; Non-GAAP Financials
This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements of expectations, beliefs, future
plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. The forward-looking statements
are based on management’s beliefs as well as on a number of assumptions concerning future events. Readers of these materials are cautioned not to put
undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other
factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. The most important
factors that could prevent the Company from achieving its stated goals include, but are not limited to: (a) the ability and willingness of the Company’s
tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the
Company, including, in some cases, their obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and
liabilities; (b) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy
their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness;
(c) the Company’s success in implementing its business strategy and the Company's ability to identify, underwrite, finance, consummate and integrate
diversifying acquisitions and investments, including investments in different asset types and outside the United States; (d) the accuracy of estimates and
assumptions that the Company used to underwrite its acquisition of the interests in the joint venture with Le Groupe Maurice and to determine the projected
impact and benefits (including financial) of the transaction, and the potential for such estimates and assumptions, as well as the expected impact and
benefits, to change as additional information becomes available; (e) macroeconomic conditions such as a disruption of or a lack of access to the capital
markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the
federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (f) the nature and extent of future
competition, including new construction in the markets in which the Company’s seniors housing communities and medical office buildings are located; (g)
the extent and effect of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies,
procedures and rates; (h) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (i) the ability of the
Company’s tenants, operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s properties, to
deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients; (j) the Company’s ability and willingness to
maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (k) consolidation activity in the seniors housing and
healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or
managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; and (l) the other factors set forth
in the Company‘s periodic filings with the Securities and Exchange Commission.
This presentation contains certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures in the Investors
Relations section of the Company’s website: https://www.ventasreit.com/investor-relations/non-gaap-financial-measures.
The Company has not provided a reconciliation of its forecasted expected NOI growth ranges for the acquired portfolio to their most directly comparable
GAAP measure because the Company is unable to quantify certain amounts that would be required to be included in the comparable GAAP measure
without unreasonable efforts. For example, an estimate of the related GAAP measure would depend on seniors housing operator revenue and expenses
and foreign exchange rate movements, and such data are not currently available or cannot be currently estimated with confidence. Accordingly, the
Company believes that providing a reconciliation would imply an unwarranted degree of reliability of the assumptions underlying the estimated GAAP
measure and may be misleading to investors.
2
Le Groupe Maurice Transaction Overview
Ventas invests in C$2.4B high-quality, Canadian seniors housing portfolio through 85/15% partnership with leading
operator & developer Le Group Maurice; LGM to continue to manage portfolio
Le Groupe Maurice (“LGM”) is a market leader in design, development and management of independent living in Quebec
Founded in 1998, LGM has a high quality Canadian portfolio of 35 apartment-like, large-scale senior housing communities
Transaction
Overview Ventas is acquiring LGM’s portfolio through an 85/15% partnership with LGM, which will continue to manage the portfolio;
LGM founder and principals to remain invested
Ventas will have exclusive rights to own and fund all current and future developments under a pipeline agreement
C$2.4B(1) total portfolio valuation (at 100%, including assumption of C$1.3B of debt) for 31 communities and 4 in-progress
developments:
28 stable assets: C$2.0B purchase price, C$255K per unit, estimated 5.5%(2) yield, acquired at or below replacement cost
Portfolio / 3 lease-up assets providing near term growth: C$0.3B purchase price, C$290K per unit, estimated 5.5%(2) stabilized yield
Transaction
Valuation 4 in-progress developments: C$0.1B invested to date; C$0.4B projected total cost, C$280K per unit, estimated 6.5%(2)
stabilized yield
VTR investment equals 85% of C$2.4B and pro-rata share of returns
Exclusive development pipeline: LGM anticipates developing 2 to 3 new communities each year
Transaction expected to be $0.03 accretive to normalized FFO per share in 2020(2)
Financial Target 4% net operating income (“NOI”) CAGR over next 5 years from 31 assets; target 2020 NOI of C$123-129M(2)(3)
Highlights 4 in-progress developments and additional 2-3 new starts per year expected to continue growth profile(2)
Ventas’s Canadian footprint expected to increase to 7% of VTR NOI (21% SHOP NOI)
Two-Step Transaction
First step,
Highlights of the Transaction
Stable, growing cash flows from 31 Class A, institutional quality, apartment-like seniors housing
1 communities and 4 in-progress developments in high density core urban markets
2 Investment in Quebec’s strong seniors housing market
3 Target 4% NOI CAGR over next 5 years from 31 in-place and lease-up assets(1)
4 Attractive valuation for stable cash flows with embedded growth
5 Exclusive rights to future development pipeline
Establishes new high quality platform for growth with top Canadian seniors housing
6
developer / operator; builds on Ventas’s successful strategy with leading operators
7 Diversification of Ventas’s portfolio, business model and operator base
8 Positive financial impact
1. Forecasted estimates are based on a number of assumptions that are subject to change. There can be no assurance that the Company will achieve these estimated results.
4
Stable, Growing Cash Flows from Class A, Institutional Quality, Apartment-
Like Seniors Housing Communities
28-community stabilized portfolio has nearly 97% occupancy, RevPOR of over C$2,600,
and >280 unit average size(1)
Ékla Floréa
Quebec City Montreal
Caléo Station Est
Boucherville Montreal
Les Jardins Millen Sevä
Montreal Montreal
Le 22 Boréa
Montreal Montreal
1. Information was provided by LGM and is as of the date of the acquisition. RevPOR is defined as revenue per occupied unit.
5
High Level Amenities Attract Younger Residents
Newly Constructed Portfolio (Units)(1)
Residents are offered high quality and innovative
services on an a la carte basis, allowing residents to 4,272
choose best suited package
All meals are optional via “meal tickets”
Housekeeping & laundry
Entire portfolio built after 2000
Handyman Average community is 8 years old
Top tier amenity package encourages active and
engaging common areas
Indoor pool, spa, sauna, indoor beach, movie
theatre, virtual golf, pool tables and bowling alley
1,984
Innovative technologies used to continuously
improve and optimize operations
1,890
Large touch screen TV for residents to review daily
activities, menus; to be extended to mobile app for
residents and families
771
Building design and daily operation prioritize resident
safety and security
Diversified product offering includes rental units,
condo units, and care units
0 to 4 Years 5 to 9 Years 10 to 14 Years 15+ Years
Average LGM resident length of stay is four years
1. Information was provided by LGM and is as of the date of the acquisition.
6
Compelling Quebec Seniors Housing Profile
Highest Penetration Rate in Canada(1)
• Large, thriving independent living market
Best Seniors • ~18% penetration rate (2x Canadian average) 17.9% …and in-line with 17.7% in Montreal, a +140 bps
Housing increase over past 5 years
Market in • >93% occupancy,170 bps above the national average
Canada and 190 bps improvement since 2013
• High quality product at affordable rates
8.8% 9.2%
8.3%
• Seniors expected to see 3.6% CAGR growth over next 5.8% 5.7% 5.5% 5.4%
20 years, doubling in total size
Favorable • Growth requires 6,600+ new SH units annually over
Demos next 20 years to keep up with demand
• Required supply equivalent to 20 large-scale, 300+ unit
projects each year Quebec Sask. B.C. Manitoba Alberta Ontario Atlantic Canada
Occupancy Above 93%(2) Strong Senior Population Growth(3)
CAGR: 3.6%
1,600,000 14.5% 16.0%
1,400,000 14.0%
10.7%
10.6%
…and +190 bps improvement over past 5 years
10.3%
11.1%
1,200,000 12.0%
9.7%
1,000,000 8.1% 10.0%
8.9%
8.7%
8.5%
8.4%
8.4%
800,000 8.0%
8.2%
8.2%
8.1%
7.9%
7.6%
7.5%
600,000 6.0%
7.3%
7.0%
6.9%
6.8%
6.7%
400,000 4.0%
6.5%
6.2%
6.2%
6.2%
200,000 2.0%
682,700 1,005,350 1,379,300
0 0.0%
'11 '12 '13 '14 '15 '16 '17 '18 '11 '12 '13 '14 '15 '16 '17 '18 '11 '12 '13 '14 '15 '16 '17 '18 2018 2028 2038
Province of Quebec Montreal Canada
75+ Population % of Total Population
1. CMHC Senior Housing Report, Quebec 2018.
2. CMHC and Statistics Canada, 2018.
3. NBFM Research Report, Healthcare Facilities: Initiating Coverage, 2018. 7Portfolio in High-Density, Urban Markets in Quebec
Subject – Existing Quebec City Portfolio Highlights
Subject – Development
Purpose-Built, Class A /
Institutional Quality
Apartment-Like
Communities
Strategically Located with
Montreal ~90% of Units in Montreal and
Quebec City
Top Tier Amenities for Active
Adult Lifestyle
Montreal Detail
Scalable Platform with
Opportunity for Sizeable
Development Pipeline
8Strong Organic Growth Opportunity for 31-Property Operating Portfolio
Target NOI
CAGR: 4%(1)
Strong Projected Portfolio NOI Growth(2)
• Stable portfolio provides a strong base of in-
place cash flow
• Near term growth as 3 lease-up communities
stabilize
• 10 most recently completed and stabilized
developments averaged 25% occupancy in
month 1 and leased to 90%+ in 12 months on
average
• Strong initial occupancy in 3 lease-up
communities:
− L’Initial: 71% (opened Feb-19)
− ORA: 50% (opened Apr-19)
− Margo: 66% pre-leased (expected to open
Jun-19)
Current Year 5
1. Forecasted estimates are based on a number of assumptions that are subject to change. There can be no assurance that the Company will achieve these estimated results.
2. Information provided by LGM and is as of acquisition date.
9Growth Opportunity From Four In-Progress Developments
IVVI Vast
Laval, Quebec Sainte-Julie, Quebec
Elogia II Liz
Montreal, Quebec Montreal, Quebec
C$0.4B of development underway at targeted ~6.5% stabilized yield(1)
Large scale developments with size ranging from 285 to 400 units; scheduled deliveries late 2020 to 2021
Total development cost per community expected to range between C$85M and C$115M
1. Forecasted estimates are based on a number of assumptions that are subject to change. There can be no assurance that the Company will achieve these estimated results. Yield determined by dividing forecasted year one
stabilized NOI for applicable properties by their purchase price allocations plus, in the case of in-process developments, their projected total project costs. Property considered stabilized once it achieves 95% occupancy.
10Le Groupe Maurice: Exciting New Platform For Growth
Business Highlights Strong Track Record of Organic Growth
• Founded in 1998, grew organically through development 40 Organic growth via development
from 1 property in 2000 to 35 today(1) 35 of ~2 new communities annually
• 4th largest seniors housing operator in Canada with over 30
2,000 employees(2); Quebec-focused
25
# Properties
• Fully integrated designer, developer and operator with top
20
industry occupancy rates and a strong brand name
15
• Named one of the 50 Best Managed Companies in Canada
for the 5th straight year(3) 10
5
• Plans to develop 2 to 3 communities annually
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Management Team Occupancy Rates Above Industry Average(4)
100.0%
95.0%
Luc Maurice
President and Founder
90.0%
Founded Groupe Maurice in 1998
85.0%
2013 2014 2015 2016 2017 2018
Industry Average GM
LeStable
Groupe Maurice (Stable)
Top tier occupancy rates attributed to superior property
management, operational excellence and unique product offering
1. Includes 4 development assets.
2. Source: CBRE; ordered by existing units in Canada.
3. Deloitte. 11
4. CMHC Senior Housing Report for the respective years.LGM Builds On Ventas’s Successful Strategy With Leading Operators
Platform Scalable Investments Industry Leaders
C$2.4B (USD $1.8B) • Leading seniors housing operator in Quebec with 20 years in
Investment(1) business and strong brand
Quebec • Fully integrated designer, developer and operator with top industry
Seniors Target ~1.5x Growth in 5 occupancy rates
Housing Years from In-Progress
Devs. + • Historic growth via development from 1 property in 2000 to 35 today
2 - 3 New Devs. per Year(2) • High demand market with expected additional developments
• 20M square feet
$5.3B Investment
Medical • Leading national MOB business
Office • >160 hospital and health system affiliations
>7x Growth
• 30+ year experienced platform
• Top 10 national senior care provider
$6.1B Investment
US Seniors • 34% Ventas investment in Atria operating company
Housing • Strong alignment
2x Growth
• Unmatched scale, data and operational sophistication
$2.0B Investment • 6.1M square feet currently
Research &
• >$1.5B development pipeline
Innovation
33% Growth • Funding significant projects with top-tier universities
$1.4B Investment • 31 hospitals in 7 states
Health
• Experienced capital backing
Systems
Ardent Scaled 2x • Ardent filed for IPO
Long Term Partnership with Leader in Canada with Growth Potential
1. At 100% ownership.
2. Forecasted estimates are based on a number of assumptions that are subject to change. There can be no assurance that the Company will achieve these estimated results.
12Transaction Further Diversifies VTR Portfolio, Business Model and Operators
Canada NOI Canada SHOP NOI
In Place Pro Forma In Place Pro Forma
Canada,
Canada,
Canada, 7% Canada,
12%
4% 21%
Ex-
Ex-
Canada, Ex-
Ex-Canada, Canada,
96% Canada,
93% 79%
88%
Operator NOI
Key Takeaways(1)
In Place Pro Forma
• Le Groupe Maurice becomes a top 10 VTR operator,
Other,
Atria, 19%
Other, with estimated 4% NOI from LGM’s apartment-like
Atria, 18%
23% 22%
communities
Lillibridge, Eclipse,
Eclipse,
11% 3%
Lillibridge,
• Canada NOI estimated to increase to 7%
3% Holiday, 10%
Holiday, 3%
3%
Le Groupe
• Canada SHOP NOI estimated to increase to 21% of
PMB, 5% Maurice,
4%
Brookdale, SHOP NOI
Brookdale 9%
Ardent, PMB, 5%
6% , 9% Sunrise,
Kindred, Sunrise,
Ardent, 6%
Kindred, Wexford,
8% • Canadian portfolio increases from 41 properties to 76
6% Wexford, 7% 9% 6% 7%
properties
Source: Data per Q1 2019 press release, supplemental and earnings conference call dated 4/26/2019. Totals may not add due to rounding.
1. Forecasted estimates are based on a number of assumptions that are subject to change. There can be no assurance that the Company will achieve these estimated results.
13Highlights of the Transaction
Stable, growing cash flows from 31 Class A, institutional quality, apartment-like seniors housing
1 communities and 4 in-progress developments in high density core urban markets
2 Investment in Quebec’s strong seniors housing market
3 Target 4% NOI CAGR over next 5 years from 31 in-place and lease-up assets(1)
4 Attractive valuation for stable cash flows with embedded growth
5 Exclusive rights to future development pipeline
Establishes new high quality platform for growth with top Canadian seniors housing
6
developer / operator; builds on Ventas’s successful strategy with leading operators
7 Diversification of Ventas’s portfolio, business model and operator base
8 Positive financial impact
1. Forecasted estimates are based on a number of assumptions that are subject to change. There can be no assurance that the Company will achieve these estimated results.
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