CHICAGO — Ventas Inc. (NYSE: VTR) released its quarterly report last week, combining an update on its handling of the COVID-19 pandemic with an announcement about restructuring its agreements with one of its main seniors housing tenants.
The Chicago-based REIT has terminated its master lease with independent living giant Holiday Retirement, moving the 26 Ventas-owned, Holiday-operated communities to individual management contracts. Holiday paid $100 million to Ventas as part of the master lease cancelation.
Under the new management agreement for the 26 Holiday communities, Ventas will pay Holiday a management fee equal to five percent of gross revenues. The management agreement is terminable by Ventas without penalty 30 days’ notice.
“This mutually beneficial transaction enables us to retain upside in our 26 communities over time, receive significant value from the Holiday lease guarantor and preserve our operational flexibility,” says Debra Cafaro, Ventas chairman and CEO.
On the COVID-19 front, Ventas has distributed over 10,000 free tests to its seniors housing communities, in addition to the 14,000 already being used to fully test all staff and residents at the company’s Atria Senior Living portfolio. To date, 9,000 tests have been returned from Atria, and Ventas reports less than 1 percent of staff has tested positive.
“Combined with digital tracking and tracing and appropriate use of PPE [personal protective equipment], Atria is building a new normal model to run its senior housing business safely and thoughtfully,” says Cafaro. “In a positive sign, Atria has moved in 300 residents since early March all under full quarantine and PPE protocol.”
In addition to expanding testing, Ventas offered rent deferrals to operators in need, assisted in acquiring PPE and other supplies, and helped tenants find government assistance programs for financial relief.
Ventas intentionally increased its liquidity at the onset of the pandemic, and reports it has $3.2 billion in cash on hand. It also plans to reduce its capital expenditures in 2020 by between $300 million and $500 million. The company has paused some of its ground-up developments that were early in the construction process.