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Omega Healthcare Investors, Inc. (NYSE:OHI) (“Omega”) today announced the closing, effective as of November 27, 2013, of its previously announced $525 million sale/leaseback transaction for 56 facilities operated by Ark Holding Company, Inc. (“Ark Holding”). The sale/leaseback transaction was consummated in connection with the acquisition by merger of Ark Holding by 4 West Holdings, Inc. (“4 West”) on November 27, 2013. Ark Holding was previously owned by private equity firm Behrman Capital. As part of the transaction, Omega acquired title to 55 skilled nursing facilities and 1 assisted living facility and leased them back to the prior operators pursuant to a 50-year capital lease with rental payments to Omega yielding 10.6% per annum over the term of the lease.
The 56 facilities represent 5,717 licensed beds located in 12 states, predominantly in the southeastern United States. The 56 facilities are separated by region and divided among four cross-defaulted Master Leases. The four regions include the Southeast (39 facilities), the Northwest (7 facilities), Texas (9 facilities) and Indiana (1 facility). The initial year one contractual rent is $47 million with 2.5% escalators beginning in year five.
Founded by Behrman Capital in 2007 and based in Memphis, Tennessee, Ark Holding (historically doing business as Covenant Dove) was one of the largest privately held skilled nursing facility operators in the country. New Ark Investment, Inc., as Ark Holding will now be known, has nearly 5,500 employees. Two key employees, Christopher Murphy and Michael Bagley have been retained by New Ark and will remain on as its CEO (promoted from COO) and CFO, respectively.
4 West is an affiliate of Health Care Navigator (“HCN”) and is based in White Plains, New York. HCN is a long term care consulting and advisory company providing services to over 120 skilled nursing and assisted living facilities, representing more than 14,000 beds throughout the country.