SEATTLE — Emeritus Senior Living is assuming operations of 38 seniors housing communities from Merrill Gardens as part of an agreement that contains a total of 4,400 units across eight states. The majority of the facilities, however, are located in California and Washington. More than 40 percent of the units are designated as independent living facilities, though some properties also contain assisted living and memory care services.
Seattle-based Emeritus intends to retain Merrill Gardens' community employees in the transaction, which is anticipated to close in the next few months. The move will build Emeritus' continuum of care, and for Seattle-based Merrill Gardens the deal provides greater nimbleness of operations for future innovation and development, according to company officials.
Emeritus is the nation's largest assisted living and memory care provider, with a workforce of more than 30,000 and the ability to serve nearly 50,000 residents in 45 states. Completion of the Merrill Gardens transaction will increase the number of senior living communities Emeritus operates nationally to more than 500. Merrill Gardens will then have 26 operating and development communities in six states in its portfolio. The company plans to continue to develop four to five communities per year in select markets.
Health Care REIT (HCN) currently owns 80 percent of the equity in the 38 communities. As part of the transaction, Toledo, Ohio-based HCN will acquire Merrill's 20 percent equity interest in the 38 communities. Emeritus will operate these communities under a long-term, triple-net master lease. Rent in the first year of the lease will total $54 million. This amount is set to increase each year in the manner specified by the lease. The initial lease term is 15 years, though Emeritus has the option to extend the lease for an additional 15-year term. Emeritus has also agreed to pay Merrill a $10 million management contract termination fee.