Health Care REIT, Inc. (HCN) has agreed to acquire the outstanding units of HealthLease Properties Real Estate Investment Trust (HLP_UN.TO) for C$14.20 per unit on a fully diluted basis in an all-cash transaction worth around $950 million, including debt assumption. The HealthLease portfolio consists of 53 high-quality seniors housing, post-acute care and long-term care communities that are managed by well-respected operators under long-term triple-net lease deals. The portfolio's purchase price represents a 7.0% initial cash yield. HCN expects the acquisition of the portfolio to be accretive to HCN's FFOPS and FADPS by around $0.04 in year one.
Further, HCN has teamed up with Mainstreet Property Group, the external management company of HealthLease. All existing deals between HealthLease and Mainstreet would be terminated at closing and HCN would not absorb any employees from either company. Mainstreet is the largest developer of seniors housing and post-acute facilities in the U.S.
Also, HCN inked an agreement with Mainstreet to provide mezzanine financing at attractive mid-teen interest rates and receive purchase rights at HCN's option for an additional 45 Next Generation development projects managed by well-respected operators under long-term triple-net lease agreements. The Future Pipeline represents a $1.0 billion acquisition pipeline at a 7.7% initial cash yield, which is anticipated to be meaningfully accretive. The Future Pipeline is anticipated to close in tranches upon completion of construction beginning in 2016 through the first quarter of 2017.
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