Welltower Inc. and Quality Care Properties Inc. unanimously approved a definitive agreement under which Welltower will acquire all of the outstanding shares of QCP in an all cash deal for $20.75 per share offer. Concurrent with the agreement, Welltower formed an 80/20 joint venture with ProMedica, a leading regional not-for-profit health system, containing the real estate of QCP’s principal tenants, HCR ManorCare and Arden Courts.
ProMedica also revealed it has entered into a definitive agreement to acquire the operations of HCR ManorCare and Arden Courts, the nation’s second largest provider of post-acute services and long-term care. The partnership will enable ProMedica to gain immediate scale in the fast-growing home health, post-acute and memory care markets, obtain a best-in-class portfolio of assets staffed by highly trained and dedicated healthcare professionals, and develop a diversified business that can better evolve with the current healthcare industry.
Upon completion of the transactions, Welltower and ProMedica will enter into a new lease agreement with key terms as follows:
15-year absolute triple-net master lease with full corporate guarantee of A1/A+ rated ProMedica.
8% initial cash yield with property level EBITDAR coverage of 1.8x.
ProMedica will invest as much as $400M of growth and upgrade capital over the next five years.
Underlying portfolio EBITDAR comprised of 70% Post-Acute and 30% Seniors Housing.
Year one escalator of 1.375% and 2.75% annual escalator thereafter.
Welltower also recently revealed results for the first quarter, noting that it delivered $137 million of pro rata development projects with an expected stabilized yield of 9.3%. “In a challenging environment for seniors housing, we have delivered a quarter in line with expectations and with positive same store growth,” said CEO Tom DeRosa. “We completed $613 million of acquisitions and developments, including three of the previously announced rental CCRC communities in top markets managed by Sunrise Senior Living, and will continue to grow with our best-in-class partners through our relationship investing model.”