Health Care REIT has trio of deals planned for $2.3B

Toledo firm could gain 115 senior housing communities

Health Care REIT, based in Toledo, is the country’s largest real estate investment trust specializing in properties related to senior-living and medical facilities.

Toledo’s Health Care REIT Inc. reported Wednesday that it has entered into three related deals, at a potential long-term cost of $2.3 billion, to acquire 53 existing housing communities for seniors, another 17 communities under construction, and the rights to buy an additional 45 planned complexes.

Health Care REIT is a real estate investment trust that specializes in properties related to senior-living and medical facilities.

It is the largest such company in the United States by market capitalization, or the total value of its stock shares.

The first of the three transactions announced Wednesday is a $950 million all-cash deal, including debt assumption, to acquire Toronto-based HealthLease Properties Real Estate Investment Trust.

HealthLease, which was formed in 2012, owns 53 senior housing communities located primarily in Indiana and North Carolina, and in the Canadian provinces of Alberta and British Columbia. The acquisition is expected to close by year’s end.

Health Care REIT also said it has formed a partnership with Mainstreet Property Group, of Carmel, Ind., a senior housing developer that helped form HealthLease.

Under the partnership, Health Care REIT will pay Mainstreet $369 million for 17 state-of-the-art senior housing communities that the developer has under construction and expects to finish by the first quarter of 2016.

The properties are primarily in the Indianapolis, Denver, and Kansas City areas.

Lastly, Mainstreet will give Health Care REIT the right to purchase 45 senior housing communities it plans to build between 2016 and the first quarter of 2017.

The unfinished and planned projects will be completed in stages, necessitating multiple transactions over the next three years, the Toledo company said. Overall, the Mainstreet properties will cost Health Care REIT about $1 billion when all the transactions have closed.

A health-care, real estate investment trust acquires, plans, develops, and often manages real estate properties in the health-care field, including senior-living communities, medical office buildings, inpatient and outpatient medical centers, and life-science facilities.

With 1,224 properties in 46 states, the United Kingdom, and Canada, Health Care REIT is one of the largest health care trusts in terms of total properties. But even adding the 115 properties would not make it the largest. Chicago-based Ventas Inc. has 1,438 properties.

However, the Toledo company is first in asset value at $23.6 billion. HCP Inc. ranks second at $21.8 billion, followed by Ventas Inc. at $19.7 billion. Health Care REIT also has the largest market capitalization in the industry at $20.04 billion.

Investors showed their approval of the HealthLease and Mainstreet deals by boosting shares of Health Care REIT, which is traded on the New York Stock Exchange under the ticker symbol HCN, by 2.25 percent Wednesday. The company’s stock closed at $64.95, up $1.44.

The HealthLease and Mainstreet deal is the largest announced by Health Care REIT since Tom DeRosa was named chief executive of the Toledo real estate investment trust in April after the sudden resignation of longtime CEO George Chapman. Mr. DeRosa is a former Rouse Co. executive and had been on Health Care REIT’s board.

A key incentive for Health Care REIT was the chance to acquire Mainstreet’s state-of-the-art housing complexes.

Mainstreet calls its properties “Next Generation” communities — a trademarked brand in which each facility has a mix of 70 post-acute beds and 30 assisted living beds, high-end common areas and amenities, private rooms and baths, and large rehabilitation therapy space.

Health Care REIT officials have stated many times that the company won’t acquire just any properties; it wants those that represent the future of health care.

“This transaction demonstrates HCN’s integral role in the health care delivery continuum. With Mainstreet and our operating partners, HCN is developing the next generation of post-acute care and connecting leading health systems, post-acute providers, and seniors housing operators to deliver integrated health care delivery platforms that will improve quality of care, create operating efficiencies and reduce costs,” Mr. DeRosa said.

“Integrated health care delivery systems will help keep patients out of acute care hospital beds, which is key to driving down costs and managing within the Affordable Care Act.”

Mainstreet CEO Zeke Turner also praised the impending partnership.

“We’re delighted to be partnering with a company like HCN, whose strategy is so well-aligned with our goals. This transaction positions Mainstreet with a capital partner that can help us execute on our vision of transforming the seniors housing and post-acute industries,” he said.

Health Care REIT said that when Mainstreet completes its new properties they will be managed by two of the Toledo company’s partners, Genesis health care and Trilogy, plus a third company, the Ensign Group, which Health Care REIT will form a new relationship with after the deal closes later this year.

Health Care REIT added that when the HealthLease acquisition closes in the fourth quarter, it will will keep the current operators of those 53 properties in place.

The Toledo company said it has no plans to hire any employees of either HealthLease or Mainstreet as part of the deal.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.