TOLEDO, OHIO — Health Care REIT Inc. (NYSE: HCN) has agreed to acquire HealthLease Properties REIT (HLP), a publicly traded Canadian company, in a transaction valued at $950 million. HCN has also entered into a partnership with Mainstreet Property Group, the external management company of HealthLease, to acquire 17 of its Next Generation properties currently under construction.
In addition, HCN will also enter into a development partnership with Mainstreet with respect to 45 future properties, for a combined value of approximately $1.4 billion.
In total, the transaction represents a potential $2.3 billion investment.
The geographic footprint of this transaction reaches as far north as Canada, as far west as Arizona and Utah and as far east as New Jersey and Pennsylvania.
The closing of HCN’s purchase of HLP remains subject to the approval of the REIT’s unit holders as well as other customary closing conditions. That transaction, as well as the closing of HCN’s partnership with Mainstreet, is expected to occur in the fourth quarter of this year.
“Throughout HCN’s history, our strategy has been to fuel its growth by forming mutually beneficial partnerships with leading seniors housing and post-acute operators,” says Tom DeRosa, CEO of HCN. “We’re excited to expand our relationship-based platform with an innovative developer who shares our mission to improve healthcare delivery. Mainstreet’s award-winning NextGen prototype gets patients out of acute-care hospitals and into a lower-cost, more consumer-friendly environment.”
Partnering with HCN will allow Mainstreet to return to its core business of real estate development and grow the company. Mainstreet will redeploy capital, expand operator relationships and continue its record of high-paying job creation, according to company officials. Mainstreet anticipates thousands of jobs at its projects nationwide and plans to add 20 new jobs in the coming year alone at its headquarters in Carmel, Ind.
“At Mainstreet, we’re grateful and humbled to team up with such a great partner as HCN to lead the nation in the development of post-acute healthcare properties,” says Zeke Turner, founder and CEO of Mainstreet and chairman and CEO of HLP. “Americans deserve better choices for their healthcare and this partnership is built to offer just that.”
Mainstreet formed HLP in 2012 as a platform for accessing capital to build its portfolio. The developer of short-stay rehabilitation and long-term care properties acquires and develops desirable, concierge-based healthcare properties.
HealthLease owns a modern, high-quality portfolio of seniors housing, post-acute and long-term care communities, with 53 properties in two Canadian provinces and eight U.S. states.
HCN, a S&P 500 company with headquarters in Toledo, Ohio, invests across the full spectrum of seniors housing and healthcare real estate. The company also provides property management and development services. As of June 30, 2014, the company’s portfolio consisted of 1,224 properties in 46 states, the United Kingdom and Canada.
HCN’s stock price closed at $63.51 per share on Tuesday, Aug. 12, slightly up from $63.14 per share a year ago.
— Danielle Everson