Ventas reaches agreement with Kindred, ScionHealth

Ventas has entered into agreements with Kindred Healthcare and its parent companies, including regarding the 23 long term acute care hospitals whose lease term is scheduled to mature on April 30, 2025 under the existing Master Lease between Ventas and Kindred. The transactions under the 2024 Kindred Agreements are intended to enhance the facility environment for patient care, strengthen the Kindred Master Lease, provide upside to Ventas and enable Kindred to improve its credit profile. Key terms of the 2024 Kindred Agreements are as follows: The initial annualized cash contractual base rent for the LTACs will be $80M starting May 1, 2025, consistent with the Company’s previously announced expectations, and rent will escalate annually by 2.75% through the extended lease maturity date of April 30, 2030. Ventas also has the right to receive additional revenue-sharing rent annually if revenue at these assets exceeds certain thresholds, and ScionHealth has granted Ventas warrants for 9.9% of its common equity exercisable at the pre-transaction value of the common equity. Kindred has agreed to pay full contractual cash rent through April 2025 on the LTACs. Ventas has also acquired the real estate and related property of five performing LTAC assets for a gross purchase price of $189M. The assets will continue to be operated by Kindred and were added to the existing Kindred Master Lease for an initial 10-year term. Annual cash rent of $16M commenced immediately and will escalate annually by 2.75%. ScionHealth has agreed to use the proceeds to further improve its credit profile and for other bona fide corporate purposes. The transactions should strengthen EBITDARM to rent coverage under the Master Lease to at least 1.3x. Kindred’s obligations under the Master Lease will continue to be guaranteed by ScionHealth. Ventas expects the per share aggregate non-cash impact to its 2024 Normalized FFO relating to the LTAC lease extension to be in line with its previously provided 2024 guidance, commencing in the third quarter of 2024. The annualized Normalized FFO impact of the investment in performing LTACs, funded wholly with equity, is expected to be approximately $0.01 per share. Any additional cash and GAAP impacts to the Company’s 2024 Normalized FFO per share from other aspects of the transactions contemplated by the 2024 Kindred Agreements are not expected to be material.