The Biggest Senior Housing Deals of 2014

The year in review for the senior housing mergers and acquisition market could be characterized by several traits, primarily the insatiable appetite among investors nurtured by billion-dollar blockbuster transactions.

Both publicly- and non-traded REITs, private equity firms, as well as other operators were the players, acquiring senior housing and health care real estate and an unwavering pace. While some sought to expand into foreign territories both in North America and abroad, others opted to merge, forming combined entities with the vast scale set to consolidate segments of the industry.

It was without a doubt that REITs would continue their growth spree, but they weren’t the only ones making huge moves in the space. So without further delay, here are the biggest senior housing deals of 2014:

#10. September 29—Sabra Acquires 21 Holiday Retirement Properties for $550 Million

Following a string of deals from Holiday Retirement in 2014—some of which are included in this round-up—Sabra Health Care REIT, Inc. (NASDAQ: SBRA) finalized its acquisition of 21 independent living communities from affiliates of Holiday Acquisition Holdings Corp. for a cash purchase price of $550 million.

“This acquisition is transformational for Sabra,” said CEO and Chairman Rick Matros. “Our profile moves significantly, in line with our stated goals including diversification of our asset base into private pay senior housing and continued reduction of our exposure to our largest tenant.”

#9. November 9—Extendicare Sells U.S. Portfolio for $870 Million to Formation Capital

Ontario, Canada-based provider of post-acute senior care services, Extendicare (TSX: EXE) announced the sell-off of nearly all of the company’s U.S. portfolio to Formation Capital, a private equity firm focused on senior housing and health care real estate.

As a result of the transaction, Extendicare will retain only 10 skilled nursing centers in the U.S.

“This transaction realizes our stated objective of separating our U.S. and Canadian businesses,” said Tim Lukenda, president and CEO of Extendicare. “Importantly, this transaction generates substantial cash proceeds that accelerate our vision to further grow our Canadian business and expand our service offering.”

#8. June 2—Holiday Retirement Sells Canadian Portfolio to Ventas for $900 Million

Almost inverse to Extendicare’s strategy, Holiday Retirement unloaded 29 of its independent living communities to Chicago-based real estate investment trust Ventas, Inc. (NYSE: VTR) for approximately $900.

The properties, which represent Holiday’s Canadian portfolio, were transferred for management under Ventas tenant, Louisville, K.y.-based operator Atria Senior Living.

“These high-quality communities are 90 percent occupied and are located in markets with significant concentrations of seniors with high median household income,” said Ventas Chariman and CEO Debra Cafaro. “Our diverse portfolio of productive assets will benefit from the addition of these communities as we continue to focus on delivering reliable, growing cash flow and value to our shareholders.”

#7. March 17—NorthStar to Acquire 80 Senior Living Properties in $1.05 Billion Deal

In its first major acquisition since bringing aboard former HCP, Inc. (NYSE: HCP) CEO Jay Flaherty, NorthStar Realty Finance Corp. (NYSE: NRF) acquired a portfolio of more than 8,500 beds across 43 senior living communities and 37 skilled nursing facilities from Formation Capital and Safanad Limited.

“This transaction represents an initial step towards our goal of expanding NorthStar’s healthcare portfolio into a preeminent healthcare real estate business,” said Flaherty, who oversees the company’s health care real estate platform. “We are enthusiastic that this will be the first of many compelling transactions that we can complete with our partners at Formation Capital.”

#6. April 23—Brookdale and HCP Create $1.2 Billion Joint Venture to Acquire CCRCs

In a move speculated to potentially consolidate the continuing care retirement communities (CCRC) space, senior living giant Brookdale Senior Living (NYSE: BKD) and HCP teamed up for a $1.2 billion joint venture to own and operate 14 entry-fee CCRCs.

As a result, the transaction thus created the largest health care REIT platform to operate and acquire such assets.

“Combining the capital strengths of HCP with Brookdale’s operating platform forms a compelling investment vehicle for our existing entry fee CCRCs and provides for growth in this fragmented asset class,” said Brookdale President and CEO Andy Smith.

#5. August 13—HCN Inks $2.3 Billion Deal with HealthLease, Mainstreet

In yet another blockbuster billion-dollar deal among the REITs, the acquisition of Carmel, Ind.-based HealthLease Properties REIT (TSEL HLP.UN) by Health Care REIT, Inc. (NYSE: HCN) this summer was another portend of consolidation among the sector’s biggest investors.

The $2.3 billion transaction also included HCN entering into a development partnership with post-acute care developer Mainstreet on 45 future properties. Under the terms of the deal, Health Care REIT acquired 17 of Mainstreet’s Next Generation properties currently under construction.

“This transaction again demonstrates HCN’s integral role in the health care delivery continuum,” said Health Care REIT CEO Tom DeRosa. “With Mainstreet, HCN is developing the next generation of post-acute care.”

#4. June 2—Ventas to Acquire ARC Healthcare REIT in $2.6 Billion Deal

Acquiring American Realty Capital Healthcare Trust, Inc. (NASDAQ: HCT) made Ventas the sixth-largest REIT in the country overall.

The $2.6 billion deal added 143 properties from ARC Healthcare, which consists of 78 medical office buildings, 29 senior housing operating communities, 13 senior housing triple-net lease properties, 14 skilled nursing facilities, seven hospitals and two land parcels.

“As a result of this transaction, we believe our shareowners, tenants and operators will benefit from becoming a part of Ventas,” said Thomas D’Arcy, CEO of ARC Healthcare. “Moreover, we are confident that by joining these highly complementary portfolios, the combined company will continue to drive shareholder value.”

#3. February 20—Emeritus to Merge with Brookdale Senior Living in $2.8 Billion Deal

A late Thursday afternoon in February took an entirely different turn upon the announcement that two of the senior housing industry’s largest operating competitors would merge in a transaction valued at $2.8 billion.

The deal, which would create a nationwide network of senior living communities, tallying more than 112,000 units in 1,161 communities across 46 states.

“Combining and maximizing the strengths of our two outstanding companies is certain to be of tremendous advantage in supporting our customers and their families as they face the challenges of aging,” said Emeritus President and CEO Granger Cobb.

#2. October 31—Omega-Aviv Merger to Create $10 Billion SNF REIT Powerhouse

No tricks this Halloween, but rather treats for Omega Healthcare Investors (NYSE: OHI) and Aviv REIT (NYSE: AVIV) whose merger agreement aims to create an unparalleled skilled nursing platform with the potential to become a $10 billion force to be reckoned with.

The deal, which values Aviv at $3 billion, enables the company to combine for 789 skilled nursing properties, more than twice as much as the next public competitor operating in the space.

“This is a strategic combination of two best-in-class companies that have been the most dedicated and successfull investors in the skilled nursing sector over the past few decades,” said Aviv Chairman and CEO Craig Bernfield. “The combined company will now be positioned to be the premier consolidator of SNF real estate for years to come.”

#1. August 5—NorthStar Realty to Acquire Griffin-American Health Care REIT II in $4 Billion Deal

After months of rumors and speculation as to who would be the final suitor to Griffin-American Health Care REIT II, it finally surfaced that NorthStar Realty Finance Corp. would step up and purchase the REIT in a transaction valued at a whopping $4 billion.

Several of senior living’s heaviest-hitting investors had thought to be in the running, triggering a bid-war that even caught the attention of national publications like The Wall Street Journal, which suggested the likes of Ventas, Health Care REIT and ARC Healthcare as possible buyers.

“This acquisition represents a highly desirable portfolio of healthcare real estate assets, which creates the framework for substantial multiple expansion and provides NorthStar Realty an exciting opportunity to un-lock asset and platform value through future acquisitions,” said NorthStar Chairman and CEO David Hamamoto.

The deal is expected to close in the fourth quarter of this year.

Written by Jason Oliva