Seniors Housing Business

MAY-JUN 2018

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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Page 14 of 40

Acquisitions 14 Seniors Housing Business n May-June 2018 Innovative. Capital. SOLUTIONS. Joint Venture Preferred Equity Mezzanine NNN Lease Welltower, ProMedica form joint venture, will acquire Quality Care Properties for $2 billion Toledo, Ohio — Toledo-based healthcare REIT Welltower Inc. (NYSE: WELL) has entered into an 80/20 joint venture with ProMedi- ca Health System to acquire Qual- ity Care Properties (NYSE: QCP) for nearly $2 billion in cash. The joint venture will acquire the real estate of QCP's princi- pal tenant, HCR ManorCare, the nation's second-largest nursing home chain. Toledo-based HCR ManorCare filed for Chapter 11 bankruptcy in March after struggling to pay rent to QCP, which owns nearly all of the facilities in which HCR Manor- Care operates. QCP won a court approval in April to acquire HCR ManorCare out of bankruptcy. QCP itself is a spin-off of health- care REIT HCP (NYSE: HCP), which created the company in 2016 specifically to remove HCR Manor- Care's 320 properties from its port- folio. As part of the transaction, Pro- Medica has agreed to buy the oper- ations of HCR ManorCare, making the nonprofit healthcare organiza- tion a national U.S. healthcare pro- vider. "This acquisition will enable Pro- Medica to expand their service of- fering beyond acute care hospitals to include home health, post-acute care and residential memory care," says Tom DeRosa, CEO of Well- tower. The HCR ManorCare chain has more than 50,000 employees pro- viding services in 450 assisted liv- ing facilities, skilled nursing and rehabilitation centers, memory care communities, outpatient rehabilita- tion clinics, and hospice and home health agencies operating under the names of Heartland, Manor- Care Health Services and Arden Courts. Through this transaction, Pro- Medica, which operates in six states, will expand its footprint into 30 states, employing approximate- ly 70,000 people with projected an- nual revenues of $7 billion. "ProMedica and Welltower to- gether are redefining the settings where healthcare will be delivered, and ProMedica is committed to the investment necessary to enhance the HCR ManorCare platform," says Mark Ordan, CEO of QCP. "QCP is happy to have played a part in facilitating this exciting next chapter for HCR ManorCare." Goldman, Sachs & Co. LLC and Lazard acted as financial advisors to QCP in the transaction, and Wachtell, Lipton, Rosen & Katz act- ed as legal advisor. Barclays acted as financial advisor to Welltower, and Gibson, Dunn & Crutcher LLP acted as legal advisor. Shumaker, Loop & Kendrick, LLP acted as le- gal advisor to ProMedica. Annaly to acquire healthcare specialist MTGE for $900 million in REIT merger New York City and Bethesda, Md. — New York-based Annaly Capital Management Inc. (NYSE: NLY) has agreed to acquire Bethesda-based real estate investment trust MTGE Investment Corp. (NASDAQ: MTGE) for $900 million in cash and stock. The transaction values health- care real estate specialist MTGE at $19.65 per share. Under the deal, MTGE share- holders will have the option to re- ceive cash, stock or a combination of the two. In addition, Annaly will assume the existing $55 million in MTGE preferred stock. The trans- action is expected to close in the third quarter. MTGE invests in and manages a portfolio of mortgage-backed secu- rities and investments in triple-net leased healthcare real estate. The company is externally managed and advised by MTGE Manage- ment LLC, an affiliate of AGNC Investment Corp. As of Dec. 31, MTGE's portfolio included $6.6 bil- lion in assets. Capital Healthcare Investments, a wholly owned subsidiary of MTGE Investment Corp., acquired The Retreat at Sunbrook (pictured) last year. The assisted living community is located in St. George, Utah.

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