HCP (NYSE:HCP) announced that it has entered into a definitive agreement to acquire 133 senior housing communities for $1.73 billion, from a joint venture between Emeritus Corporation (“Emeritus” – NYSE:ESC) and Blackstone Real Estate Partners VI, an affiliate of The Blackstone Group (the “Blackstone JV”). As part of this transaction, Emeritus, the nation’s largest assisted living and memory care operator, will enter into a new triple-net, master lease and continue to operate these communities. In addition, Emeritus has committed to investing an additional $30 million, representing $2,900 per unit, to continue improving the real estate and operating performance of the portfolio. Located in 29 states, the portfolio encompasses 10,350 units representing a diversified care mix of 61% assisted living, 25% independent living, 13% memory care and 1% skilled nursing. Concurrent with HCP’s acquisition, Emeritus will purchase nine remaining properties from the Blackstone JV, for which HCP has agreed to provide secured debt financing of $52 million. The Blackstone JV initially acquired the portfolio out of bankruptcy in 2010 and transitioned the operations to Emeritus. The joint venture subsequently invested $42 million in capital improvements representing $4,100 per unit, and these efforts have increased occupancy from 80% to 88%. HCP expects to acquire these properties substantially unencumbered by prepaying almost all of the in-place secured debt. The transaction is expected to be $0.08 and $0.05 per share accretive to HCP’s FFO and FAD per share, respectively, on an annualized basis. HCP plans to finance this transaction consistent with its long-term leverage target of 60% equity and 40% debt. “We are pleased to further expand our strategic relationship with Emeritus, one of our key, best-in-class operating partners. The transaction further demonstrates our thesis of unlocking significant value for our operating partners through real estate driven transactions while providing our shareholders with attractive risk adjusted returns. This transaction is immediately accretive, significantly expands our senior housing portfolio and is structured through the safety of a guaranteed triple-net lease with meaningful upside through contractual rent escalators,” said Jay Flaherty, HCP’s Chairman and Chief Executive Officer.