Health Care REIT inks partnership deal for 38 West Coast senior housing communities
Health Care REIT, Inc., a Toledo-based real estate investment trust for senior housing and healthcare real estate, has announced a partnership with Merrill Gardens, LLC, one of the top owners of independent and assisted living retirement communities in the United States.
The partnership has been formed to operate a portfolio of 38 combination senior housing and care communities located primarily in high barrier to entry, affluent West Coast markets. Health Care REIT will own 80 percent interest while Merrill Gardens own 20 percent interest and management of said communities.
“We are pleased to broaden our strategic relationship with our long-time capital partner, Health Care REIT,” said Bill Pettit, president of Merrill Gardens, LLC. “We want to emphasize that the Merrill family will continue to own and operate Merrill Gardens so there will be no change in our day-to-day operations for our residents and team members as a result of this partnership. We look forward to the potential for future growth with Health Care REIT both within the existing portfolio and through new acquisition and development opportunities.”
The transaction uses the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007. Of the 38 communities owned by the partnership, 13 -- currently valued at $307 million -- are currently owned by Health Care REIT while the other 25 -- valued at $510 million -- are owned by Merrill Gardens and its affiliates.
Health Care REIT’s consideration for its 80 percent partnership interest in the additional communities will be a combination of cash and the pro-rata assumption of $249 million of secured debt. Including the existing Health Care REIT portfolio, there will be $381 million of debt secured by the total portfolio, with a current weighted average interest rate of 5.4 percent. The entire portfolio consists of 4,388 units and is currently projected to generate 2011 NOI after management fees of approximately $60 to $63 million. The transaction is anticipated to close in September.
