MedEquities Realty Trust Closes On Portfolio Of Skilled Nursing And Assisted Living Facilities In California
Investment Activity Since Formation Reaches $348 Million
NASHVILLE, Tenn., April 6, 2015 /PRNewswire/ -- MedEquities Realty Trust, Inc. today announced it has closed on the acquisition of four skilled nursing facilities and one assisted living facility for an aggregate purchase price of $80 million. The Company has an option to purchase an additional skilled nursing facility, which is expected to close in July 2015, for a closing price of $15 million. All six facilities are located in attractive southern California markets.
MedEquities and various affiliates of Life Generations Healthcare have entered into a 15-year master lease pursuant to which MedEquities will lease the facilities to such affiliates. The master lease will be enhanced by a corporate guaranty by Life Generations. Under the option agreement, Life Generations is entitled to additional purchase consideration of up to $10 million, with the amount contingent upon the achievement of certain performance thresholds relating to 2015 aggregate EBITDARM (defined as earnings before interest, taxes, depreciation, amortization, rent and management fees) of the optioned property. Closing of the option property is subject to customary closing conditions.
Founded in 1998 and based in Newport Beach, California, Life Generations Healthcare has a strong reputation for providing high-quality care and has established relationships with managed-care payors and key referral sources for high-acuity patients. Life Generations operates 18 facilities in California totaling approximately 2,000 beds. All Life Generations facilities are rated 4 or 5 stars by CMS.
John McRoberts, MedEquities' Chairman and Chief Executive Officer, noted, "The transaction with Life Generations is the largest we have completed to date – just above our recent purchase of Lakeway Regional Medical Center near Austin for $75 million – and begins a relationship that we expect to result in additional growth over time. We now have 14 assets (including mortgages) in 5 states and have substantially increased the diversification of our portfolio by geography, facility type and by operator. With proceeds from our $163.9 million July 2014 private placement of common stock and our $125 million recent private placement of preferred stock, as well as borrowing capacity under our $200 million credit facility, we have accumulated a strong performing collection of core assets and are well capitalized to continue an active pace of acquisitions."
MedEquities' current consolidated real estate portfolio (including secured mortgages) includes the following properties (dollars in millions):
Property |
Property Type(1) |
Gross Purchase Price |
Kentfield Rehab & Specialty Hospital (2) |
LTACH |
$ 58.0 |
Magnolia Place of Spartanburg |
SNF |
20.0 |
Horizon Specialty Hospital of Henderson |
LTACH |
20.0 |
North Brownsville Medical Plaza |
MOB |
15.2 |
Lakeway Regional Medical Center |
ACH |
75.0 |
Mira Vista Court |
SNF |
16.0 |
Mountain's Edge Hospital |
LTACH |
35.4 |
Life Generations Healthcare portfolio |
4-SNF and 1-ALF |
80.0 |
Mortgage Notes Receivable |
IRF, LTACH |
28.0 |
Total |
$ 347.6 |
(1) LTACH: Long-Term Acute Care Hospital; SNF: Skilled Nursing Facility; MOB: Medical Office Building; ALF: Assisted Living Facility; IRF: Integrated Rehabilitation Facility |
(2) The gross purchase price includes $7.0 million that will be paid to the seller/tenant to fund renovations, which the seller/tenant will draw in full no later than June 30, 2015. As of December 31, 2014, approximately $2.2 million of this amount had been paid. |
About MedEquities Realty Trust
MedEquities Realty Trust is a self-managed and self-administered company that invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company's management team has extensive industry experience in acquiring, owning, developing, financing, operating, leasing and monetizing many types of healthcare properties and portfolios. MedEquities' strategy is to become an integral capital partner with high-quality and growth-oriented facility-based providers of healthcare services on a nationwide basis, primarily through net-leased real estate investments.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about possible or assumed future events, including, among other things, potential acquisitions and future availability under the credit facility. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and variations of these words and other similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results.
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SOURCE MedEquities Realty Trust, Inc.
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