New Senior Investment Group Inc. (SNR) stock prices were up by a significant 29.15% shortly after market trading commenced on June 28th, 2021, bringing the price up to USD$8.95 early on in the trading day.
Buyout Transaction
June 28th, 2021 saw Ventas Inc. announce its intentions to buy New Senior Investment Group in an all-stock transaction that is valued at roughly USD$2.3 billion. The move will see the healthcare-focused real estate investment trust expand its footprint into the senior housing market. As per the transaction, existing shareholders of SNR will receive 0.1561 shares of newly issued Ventas shares for every share of SNR. The resulting price of each SNR comes out to USD$9.10, representing a significant 31.7% premium.
Details of the Transaction
With the deal including USD$1.5 billion in debt, a closing date is expected for the second half of 2021. Ventas has cited the eventual recovery of the senior housing industry in a post-pandemic economy as a major reason for their decision to purchase SNR. The transaction is expected to result in the realizing of between USD$16 million to USD$18 million in annualized corporate synergies.
Operating Expense Reports
Operating expenses for the first quarter of 2021 were reported to be 3.2% lower than numbers reported for the same time period of the prior year. This year-over-year difference is largely attributable to reduced spending on occupancy-related expenses and other controllable costs, such as supplies and maintenance. Utilities and insurance expenses were up because of the winter storms earlier in February of 2021 affecting businesses across the United States. Operating expenses stemming from the impact of the pandemic came out to USD$0.3 million, down 46% from the prior year and 45% from the prior quarter.
NOI Margins
The first quarter of fiscal 2021 reported an NOI margin of 36.1%, down from the 39.1 reported in the fourth quarter of 2020. The quarter-over-quarter reduction was largely driven by the occupancy declines that have been persistent since the onset of the pandemic, with the February storms further exacerbating the situation. As operators push for occupancy growth, short-term margins are expected to suffer before picking up in the longer run.
Future Outlook for SNR
With the company set to be acquired, SNR is poised for the expanded facilities that will be made available to it to drive further growth. Current and potential investors are hopeful that management will continue to leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
