HCP To Acquire HCR ManorCare Real Estate Assets for $6 Billion

HCP (NYSE:HCP) announced that it has executed an agreement to acquire HCR ManorCare’s 338 post-acute, skilled nursing and assisted living facilities located in 30 states, with the highest concentrations in Ohio, Pennsylvania, Florida, Illinois and Michigan.  The transaction will represent almost the entire real estate portfolio of privately-owned HCR ManorCare, Inc. ("HCR ManorCare").  HCR ManorCare will receive $3.528 billion in cash, $1.72 billion reinvested from the payoff of HCP’s existing debt investments in HCR ManorCare (original cash investment of $1.49 billion) and $852 million in HCP common stock issued directly to the shareholders of HCR ManorCare.  As part of the deal, HCR ManorCare will grant HCP an option to acquire a 9.9% interest in HCR ManorCare for an additional purchase price of $95 million.

HCP is using a bridge loan in an amount up to $3.3 billion to complete the HCR ManorCare acquisition and HCP intends to issue debt and equity securities to fund the remaining portion of the purchase price.  HCP expects the acquisition to close late in the first quarter of 2011.

"This transaction reinvests our substantial debt investment in a secure long-term, growing income stream that will be highly accretive to HCP’s funds from operations and funds available for distribution," said Jay Flaherty, HCP’s Chairman and Chief Executive Officer. "The acquisition is consistent with our ‘5×5’ business model and an important milestone for our Company. Pro forma for this transaction, HCP will have $19 billion in assets comprised of a well-balanced portfolio of 1,000 properties."


As part of the sale, HCR ManorCare and its affiliates will continue to operate the assets pursuant to a long-term triple-net master lease supported by a guaranty from HCR ManorCare.

Paul Ormond added, "We at HCR are delighted to have the opportunity to help secure the future of HCR ManorCare’s operations by partnering with HCP. Going forward, our company leadership remains the same, we will continue our high level of investment in training and facilities, and our employees will continue to provide the same high-quality care that our patients and residents expect. HCR ManorCare’s priority has always been to focus on providing the highest quality care and caring possible to meet the needs and expectations of those we serve, and we selected HCP as our partner because of our shared vision and its industry leading franchise."

For more information, see the HCP 8-K