This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Health Care REIT Enters Into Triple Net Lease With Emeritus Senior Living On Seniors Housing Portfolio

Health Care REIT, Inc. (NYSE:HCN) announced today that the company has agreed to enter into a triple net lease with Emeritus Senior Living (NYSE:ESC) on a portfolio of 38 high-quality seniors housing communities currently owned in an 80%/20% joint venture between Health Care REIT and Merrill Gardens. Health Care REIT will acquire Merrill Gardens’ 20% equity interest in the joint venture for $173 million, which includes pro rata mortgage debt of $82 million. The transaction is expected to close in the third quarter upon receipt of regulatory and lender consents.

“This transaction reflects the flexibility of our business model and the power of our relationship investing platform,” said George L. Chapman, Chairman and CEO of Health Care REIT. “We are excited to grow our long-time relationship with Emeritus. Their strong existing footprint in the markets where this portfolio is located will allow for a seamless transition and value creation over the long-term. Merrill Gardens has made the decision to concentrate its efforts on new development projects. Merrill Gardens will continue to be a strategic partner for Health Care REIT.”

Transaction Highlights

Predictable, Attractive Rent Growth with Upside Potential

  • Portfolio overlaps with Emeritus’ existing footprint leading to value creation opportunities.
  • Health Care REIT expects the transaction will be slightly accretive to earnings in year one.
  • The initial term and the renewal term are each 15 years.
  • Health Care REIT will receive $54 million of rent in year one on the 38-property portfolio.
  • Predictable, attractive growth through annual rent escalators equal to the greater of CPI or 4.00% in year two, and the greater of CPI or 3.25% thereafter.
  • Beginning in year three, Health Care REIT will be eligible to receive additional rent in the event that the gross revenue from the portfolio exceeds certain thresholds.
  • Rent will reset to fair market value upon renewal, with a floor of the prior year’s rent plus the escalator, and a ceiling equal to 110% of the prior year’s rent.
  • Health Care REIT and Merrill Gardens will remain joint venture partners in ten high-quality communities with 1,428 units concentrated in affluent, infill markets including Seattle, San Jose and San Diego. Merrill Gardens will continue to manage these communities, serving as a platform for their development projects, which they will self-manage.
  • Health Care REIT will maintain an attractive, modern pipeline of high-end properties through its right of first opportunity on all future Merrill Gardens acquisitions and development projects.

“This high quality, well-located portfolio broadens and strengthens our service offerings in key markets, allowing us to create significant long-term value,” said Granger Cobb, CEO and President of Emeritus. “We are very pleased to welcome these Merrill Gardens communities to our family and to expand our relationship with Health Care REIT.”

Stock quotes in this article: ESC, HCN 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,413.62 -11.23 -0.07%
S&P 500 1,861.94 -0.37 -0.02%
NASDAQ 4,086.9160 +0.6910 0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs