Aviv REIT Q3 Profit Rises; To Merge With Omega Healthcare - Quick Facts

(RTTNews) - Aviv REIT Inc. (AVIV) reported that its net income allocable to common stockholders for the third quarter ended September 30, 2014 rose to $9.69 million from $7.62 million in the same quarter last year. But earnings per share was $0.20, unchanged from last year.

AFFO for the quarter was $28.8 million, or $0.47 per share, compared to $21.8 million, or $0.43 per share last year. The growth in AFFO per share was driven primarily by the Company's strong acquisition activity offset by the additional shares of common stock issued during the second quarter of 2014.

Total revenues for the quarter were $47.37 million higher than last year's $32.87 million.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share and revenues of $47.28 million. Analysts' estimates typically exclude special items.

The company reaffirmed its AFFO guidance range of $1.89 to $1.93 per share for the full year 2014. Analysts expect the company to report earnings of $1.75 per share for fiscal 2014.

In a separate press release, Omega Healthcare Investors Inc. (OHI) and Aviv REIT, Inc. announced that the Boards of Directors of both companies have unanimously approved a definitive agreement under which Omega will acquire all of the outstanding shares of Aviv in a stock-for-stock merger. The transaction values Aviv at $3.0 billion, and creates the premier publicly traded pure-play skilled nursing facility real estate investment trust.

As per the terms of the agreement, Aviv shareholders will receive a fixed exchange ratio of 0.90 Omega shares for each share of Aviv common stock they own.

Based on the closing stock price for Omega on Thursday, October 30th, 2014, this consideration would be equivalent to $34.97 of Omega stock for each Aviv share, representing a premium to Aviv shareholders of approximately 16.2% over Aviv's closing stock price on that day.

Upon closing of the transaction, Omega shareholders are expected to own approximately 70% and Aviv shareholders, together with the limited partners of Aviv Healthcare Properties Limited Partnership ("Aviv OP"), are expected to own beneficially approximately 30% of the combined company.

Following the merger, Taylor Pickett, current Omega CEO, will continue to serve as CEO of the combined company while Craig Bernfield, current Aviv Chairman and CEO, will join the Board of Directors of the combined company.

Preliminary combined company 2015 guidance for Adjusted Funds Available for Distribution or "FAD" to common stockholders is a range of $2.81 to $2.87 per share as compared to Omega's 2014 FAD guidance of $2.58 to $2.61 per diluted share.

Following the merger, Omega will maintain its corporate headquarters in Hunt Valley, Maryland. Dan Booth and Bob Stephenson will retain current roles as COO and CFO, respectively, of the combined company.

The combined companies expect to benefit from approximately $9 million of general and administrative cash savings and additional savings from reduced borrowing costs.

The transaction is expected to close in the first quarter of 2015.