TOLEDO, OHIO, AND KENNETT SQUARE, PA. — It's been a big week for the healthcare sector. Fresh on the heels of Ventas' $7.4 billion acquisition of Nationwide Health Properties comes news that Health Care REIT has agreed to acquire almost all of the portfolio of Genesis HealthCare in a $2.4 billion sale-leaseback deal.
Health Care REIT will purchase 147 of Genesis' more than 200 post-acute care, skilled nursing and assisted living facilities. The properties are located in 11 Eastern U.S. states, with the largest concentrations in Maryland, Massachusetts, New Jersey, Pennsylvania and West Virginia. Genesis will lease the facilities back for a 15-year term on a triple-net basis. The lease is valued at approximately $3.86 billion. In addition, Health Care REIT will retain the option to purchase a 9.9 percent interest in Genesis for $47 million and will have the right to own certain facilities Genesis develops or acquires during the initial lease term.
Genesis is headquartered in Kennett Square and is a wholly owned subsidiary of a joint venture between McLean, Va.-based JER Partners and Alpharetta, Ga.-based Formation Capital. The partnership purchased the company in 2007 in a public-to-private deal. Since, then, Genesis has generated 9 percent annual average revenue growth and 14 percent average annual EBITDAR. Genesis has completed $405 million in capital improvements to its portfolio in the past six years and has maintained a 91 percent occupancy rate during that time.
“The sale of Genesis' real estate assets enables JER Partners to achieve our business plan objectives for this investment and distribute capital back to our investors by taking advantage of today's exceptionally strong demand for health real estate assets operated by best-in-class management teams,” said Frank Small, managing director of JER, in a statement.
The deal is subject to approval by Health Care REIT's board of directors and is expected to close during the second quarter. The Toledo-based company currently maintains a portfolio of 880 properties located in 41 states.
— Coleman Wood