On Monday, health-care REIT Ventas
The long-term impact on Ventas appears to be very favorable. I also believe that it's a good sign for shareholders because it shows that management is committed to growing operations and that there is rising demand for the company's services.
The properties that were acquired are in metropolitan areas where it's hard to break into the market. The acquired communities maintain average total vacancy rates of 94% and are expected to add $387 million in revenue and $132 million in net operating income, or NOI, for Ventas this year. The acquisition will bring Ventas an initial NOI yield of about 6.2%. The new communities alone are expected to bring 16% more revenue for 2007 than the company's total revenue for all of 2005. The real estate investment trust will announce its 2006 results next month.
Initially, this transaction is expected to dilute the company's normalized funds from operations, or FFO, per share for 2007 by $0.05 to $0.07. However, the deal is expected to be breakeven to the company's normalized FFO per share in 2008 and will bring added diversity to a portfolio that includes operations in 43 states and two Canadian provinces.
The health-care REIT sector has been prospering as of late. Not only is Ventas trading near its all-time high, but competitors Health Care Property Investors
Players in our Motley Fool CAPS community also like the prospects for Ventas. The stock holds an impressive five-star rating, with 91% of the players who have rated the stock saying they're bullish. ShuntSD writes: "REITs in this sector should fare well as baby boomers enter their senior years."
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