Mutually Beneficial Agreement to Incentivize Accelerated NOI Performance at 92 Ventas Senior Housing Communities Operated by Sunrise
Advances Ventas’s Right Asset, Right Market, Right Operator TM Senior Housing Strategy
CHICAGO–(BUSINESS WIRE)–Ventas announced today that it has entered into a revised, mutually beneficial and highly aligned management agreement with Sunrise Senior Living to drive enhanced performance and value in Ventas’s portfolio of 92 high-end senior living communities managed by Sunrise.
“At this important juncture, we are pleased to reach this agreement for our market-leading assisted living communities operated by Sunrise,” said J. Justin Hutchens, Ventas’s EVP of Senior Housing. “We are confident the new agreement aligns incentives toward profitable growth. Our enhanced partnership with Sunrise represents the latest step to advance our senior housing strategy and position the portfolio to capture the upside from the senior housing growth trajectory.”
“Sunrise and Ventas have had a successful partnership since 2007, and we are excited to continue to enhance our relationship with today’s announcement,” said Jack R. Callison, Chief Executive Officer of Sunrise. “The revised management agreement further aligns both parties to drive the success of the communities for the benefit of both Ventas and Sunrise stakeholders.”
The revised management agreement provides strong alignment between Ventas and Sunrise while simultaneously incentivizing Net Operating Income (“NOI”) growth at a key inflection point in the ongoing senior housing industry recovery. The near-term financial impact to Ventas is expected to be immaterial. Key terms of the agreement include:
- A new management fee structure, with increased weighting toward NOI performance, and reduced emphasis on revenue;
- Incentive payments upon achieving mutually agreed upon NOI growth targets;
- Enhanced operating flexibility to optimize the go-forward portfolio through selective dispositions;
- Simplification through consolidation of multiple contracts into a single master agreement while maintaining the existing average term through 2035;
- Expansion of data collaboration and analytics further enhancing Ventas Operational InsightsTM platform combined with Sunrise’s operational expertise to drive outperformance; and
- Agreement to assist and cooperate with achieving customary industry-leading Environment, Social and Governance (ESG) commitments in the management contracts with a particular focus on Diversity, Equity and Inclusion.
About Ventas
Ventas Inc., an S&P 500 company, operates at the intersection of two large and dynamic industries – healthcare and real estate. Fueled by powerful demographic demand from growth in the aging population, Ventas owns a diversified portfolio of over 1,200 properties in the United States, Canada, and the United Kingdom. Ventas uses the power of its capital to unlock the value of senior living communities; life science, research & innovation properties; medical office & outpatient facilities, hospitals and other healthcare real estate. A globally recognized real estate investment trust, Ventas follows a successful long-term strategy, proven over more than 20 years, built on diversification of property types, capital sources and industry leading partners, financial strength and flexibility, consistent and reliable growth and industry leading ESG achievements, managed by a collaborative and experienced team dedicated to its stakeholders.
