Editor's Note: HCP Inc. late Tuesday priced a secondary offering of 40 million common shares at $32 per share. The offering was increased from the originally announced 31 million shares due to strong investor demand, the company said, and should net proceeds of about $1.28 billion.
In its largest acquisition in several years, HCP Inc. said it will buy all the real estate assets of HCR ManorCare, which operates more than 300 rehabilitation and nursing facilities, in a deal valued at $6.1 billion. It separately announced a sale of common stock to help pay for the transaction.
The Long Beach real estate investment trust will pay $3.53 billion in cash and $852 million in stock for the properties located in 30 states, which it will lease back to HCR. The value of deal includes $1.72 billion that HCP previously invested in the Toledo, Ohio-based HCR ManorCare. HCP, which specializes in health facilities, also will have an option to buy a 9.9-percent stake in HCR ManorCare for another $95 million.
The announcement came after HCP on Monday afternoon said it would buy out its partner in a separate joint venture that owned 25 senior housing properties valued at $860 million. News of the HCR ManorCare deal came late Monday night, with the stock sale announced Tuesday morning. The deals increase HCP's portfolio to about 1,000 properties, valued at $19 billion.
HCR ManorCare, considered one of the nation’s top nursing home operators, is owned by funds managed by private equity firm Carlyle Group, Its largest concentration of post-acute care, skilled nursing services, assisted living facilities and centers for Alzheimer's and dementia patients are in Ohio, Pennsylvania, Florida and Michigan.
In addition to the stock sale, HCP said it took out a bridge loan worth up to $3.3 billion to complete the deal, which it expects to close late in the first quarter. HCR’s chief executive, Paul Ormond, will be invited to join HCP's board, the REIT said.
“This transaction reinvests our substantial debt investment in a secure long-term, growing income stream,” HCP Chief Executive Jay Flaherty said in a statement. “The acquisition is … an important milestone for our company.”
Shares were up $1.32, or 4 percent, to $33.84 in midday trading on the New York Stock Exchange.
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