Ventas, the giant Chicago-based health care real estate investment trust (REIT), is about to become the largest owner of seniors housing communities nationally with the purchase of Atria Senior Living Group’s real estate assets for $1.5 billion in cash and stock.

The blockbuster deal announced Friday, Oct. 22, will give Ventas a portfolio of 118 private pay seniors housing assets located in wealthy coastal regions. The properties are situated in the New York metro area, New England, Boston and California.

Ventas will pay $1.35 billion in common stock, or a fixed 24.96 million shares, $150 million in cash, and will assume or repay $1.6 billion of net debt. The deal is expected to close in the first half of 2011.

The portfolio includes 35,500 units in 110 stable assets and eight redevelopment assets. The median size is 110 units and the median age of the properties is 12 years. The facilities have an average occupancy rate of more than 87%.

“The addition of 118 exceptional seniors housing assets in highly desirable locations will increase the portion of our net operating income received from private pay assets to over two-thirds of our total NOI and will establish Ventas as the largest owner of seniors housing communities in the United States” said Debra Cafaro, chairman, president and CEO of Ventas, in a prepared statement.

CEO Debra Cafaro, Ventas

Ventas owns nearly 600 assets in 44 states. The REIT expects the new portfolio to generate approximately $640 million in revenue in 2011 and NOI to range between $186 million and $196 million. Industry experts say that health care REITs have been building up their cash reserves, setting the table for potentially more big deals.

Based in Louisville, Ky., Atria is the fourth largest operator of assisted living properties in the country. The company is owned by private equity funds managed by Lazard Real Estate Partners. Atria operates buildings in high-income locations, a big plus because these are private-pay facilities.

Before closing, Atria plans to spin off its management company, Atria Management Co., which will continue to operate the assets under a management contract with Ventas. As part of the deal, Ventas will own a minority interest in the new management entity that will be spun off to operate the buildings.

The transaction marks the second mega deal in the seniors housing sector in the last two months. Health Care REIT announced an $817 million joint venture in August with Merrill Gardens. That deal was the first of its kind in the seniors housing sector under the REIT Investment Diversification and Empowerment Act of 2007. Some observers expect the Merrill Gardens transaction to spark similar deals that take advantage of the act.

The seniors housing industry is widely believed to be hitting a sweet spot because of the combination of little new construction and rising consumer demand. This is especially true at assisted living properties where elders can’t put off a move because they need help.

The stock price of Ventas (NYSE: VTR) closed at $52.35 per share on Friday, Oct. 22, down $2.40 from the previous day’s close.