Ventas to Take Ownership of Properties Supporting $486M Santerre Mezzanine Loan, Including 64 Seniors Housing Properties

by Jeff Shaw

CHICAGO — Ventas Inc. (NYSE: VTR) has announced that it intends to take ownership of the collateral that supports its approximately $486 million mezzanine loan to Santerre Health Investors.

The Santerre mezzanine loan is secured by equity interests in entities that collectively own a diverse pool of medical office buildings, seniors housing communities, triple-net leased skilled nursing facilities and hospital assets in the United States.

Ventas expects to take ownership of the Santerre portfolio through a “loan to own” structure that converts the outstanding principal amount of the Santerre loan to equity, with no additional consideration being paid.

The Santerre portfolio includes 16 large-scale seniors housing communities, representing nearly 20 percent of the net operating income (NOI) of the Santerre portfolio, with approximately 1,900 units and 74 percent current occupancy. The assets are “located primarily in attractive markets across five U.S. states.”

The communities are predominantly operated by an existing Ventas operating partner that has been the long-time manager of the assets.

Also included in the portfolio are 48 skilled nursing facilities and hospital assets, representing nearly 40 percent of the NOI of the Santerre portfolio. While these assets were materially challenged by the COVID-19 pandemic, Ventas believes they have potential upside value.

The portfolio also features 88 medical office buildings, representing over 40 percent of the net operating income of the portfolio, with over 3 million square feet across 18 states. The MOBs are predominantly affiliated with health systems and are currently managed by third-party property management and leasing firms.

Ventas expects to complete the process of taking ownership of the properties in the second quarter of 2023. Ventas has received approximately 90 percent of the interest due in March 2023 under the loan, and the interest due in January and February 2023 was previously paid in full.

The company’s ownership of the equity in the Santerre portfolio will be subject to an existing $1 billion non-recourse senior loan. The loan features an interest at 1.84 percent above LIBOR and matures in June 2023. Ventas will have the right to extend the maturity of the ;oan to June 2024 and expects to exercise that right.

Ventas is a Chicago-based REIT and the second-largest owner of seniors housing in the country, owning 720 properties totaling 66,208 units as of June 1.

Santerre Health Investors is a Maryland-based company and, prior to this transaction, was the seventh-largest owner of seniors housing in the country, owning 129 properties totaling 12,964 units as of June 1.

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