As part of its effort to infuse capital, Ventas Inc. (VTR - Analyst Report) recently unveiled the pricing of a public offering of $550 million of 1.55% senior notes due 2016 and $300 million of 5.70% senior notes due 2043. The move will help Ventas generate proceeds that will increase its financial flexibility, repay debt, meet working capital needs and finance acquisitions and investment moves.
Specifically, Ventas priced $550 million aggregate principal amount of 1.55% senior notes at 99.910% of principal amount and $300 million aggregate principal amount of 5.70% senior notes at 99.628% of principal amount. The offering is expected to close on Sep 26, 2013 and the notes were issued by its operating partnership – Ventas Realty Limited Partnership.
A host of financial institutions helped in this offering. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. of The Goldman Sachs Group, Inc. (GS - Analyst Report) , J.P. Morgan Securities LLC, UBS Securities LLC, Barclays Capital Inc., Credit Agricole Securities (USA) Inc., and Morgan Stanley & Co. LLC of Morgan Stanley (MS - Analyst Report) served as joint book-running managers for the notes offering.
Notably, as of Jun 30, 2013, Ventas had $260 million of borrowings outstanding under its unsecured revolving credit facility and $62 million of cash and cash equivalents. During the second quarter 2013, Ventas generated $77.4 million as proceeds from its “at-the-market” equity offering program.
Moreover, at quarter-end, debt to total capitalization stood at 29% and net-debt-to-adjusted-pro-forma-EBITDA (earnings before interest, tax, depreciation and amortization) was 5.3x.
We believe that Ventas’ focus on maintaining a balanced and flexible balance sheet with ample liquidity would enable it to operate efficiently, tide over the near-term constraints and capitalize on potential acquisition and investment opportunities. This, in turn, would help augment its top line. Moreover, debt refinancing would help manage its interest expenses efficiently.
Ventas currently carries a Zacks Rank #3 (Hold). However, another REIT stock that is performing well and is worth a look is Sotherly Hotels Inc. (SOHO - Snapshot Report) , carrying a Zacks Rank #1 (Strong Buy).