LONG BEACH, CALIF. — Long Beach-based healthcare trust HCP has entered into agreements for two major acquisitions totaling $6.75 billion. First, the company announced plans to acquire the real estate assets of Toledo, Ohio-based HCR ManorCare for $6.1 billion. The portfolio includes 338 post-acute, skilled nursing and assisted living facilities. The properties are located in 30 states including Florida, Illinois, Michigan, Ohio and Pennsylvania.
HCR ManorCare will continue to operate the properties in the portfolio under long-term, triple-net, master leases. The initial remaining terms of the leases range from 13 to 17 years. With extension options factored in, the remaining terms for the leases range from 23 to 35 years.
In addition, HCP will have the option to acquire a 9.9 percent interest in HCR ManorCare for an additional purchase price of $95 million. The final part of the agreement will include Paul Ormond, chairman, president and CEO of HCR ManorCare, joining HCP's board of directors.
HCP will fund the purchase, in part, with $3.528 billion in cash, some of which will be obtained through a public offering of 31 million shares of common stock. HCP has also received a commitment for a bridge loan of up to $3.3 billion. HCP also plans to fund the purchase with $1.72 billion reinvested from the payoff of its existing debt investments in HCR ManorCare. Finally, shareholders of HCR ManorCare will received $852 million in HCP common stock. The deal is expected to close in the first quarter of next year.
In the second deal, HCP has reached a definitive agreement to buy out its partner's interest in a 25-property senior housing portfolio. HCP will acquire its partner's 65 percent interest for approximately $137 million in cash and the assumption of $650 million in Fannie Mae debt. HCP originally acquired the portfolio through its 2006 acquisition of CNL Retirement Properties. It contributed the properties to the joint venture in 2007. This transaction is expected to close on or before January 31. The partner's name was not released.
— Coleman Wood