Senior Housing Properties Trust (NYSE: SNH) today agreed to acquire two Boston medical office buildings (MOBs) for $1.125 billion, following an announcement last month that the company would strengthen its focus on private-pay assets.
The acquisition agreement includes SNH acquiring two 15-story biotech MOBs, which include a connected, three-level parking garage in Boston’s burgeoning Seaport District.
The buildings comprise biomedical research facilities, corporate office space as well as parking and retail space, containing 1.65 million gross total square feet, 96% of which is occupied by global pharmaceutical company, Vertex Pharmaceuticals, Incorporated (NASDAQ: VRTX).
Vertex’s most recent Securities and Exchange Commission (SEC) filed financial statements show $1.5 billion of cash and marketable securities. The filing also shows the company’s current equity market capitalization is approximately $19 billion.
The acquisition not only represents a unique opportunity for SNH to further diversify its portfolio, but is also consistent with the company’s strategy to focus on its private-pay assets, says David Hegarty, chief operating officer of SNH. Last month, the REIT sold two Boston area hospitals to move away from Medicare reimbursement risk within its properties.
“Post closing, SNH will remain solidly-positioned with a strong balance sheet and committed to its disciplined strategy of acquiring high-quality, premier properties that create significant value for SNH shareholders,” Hegarty said following the announcement of the MOB deal.
SNH expects this acquisition to be immediately accretive to normalized funds from operations per share by approximately $0.06 to $0.08 per year, the company stated in a release.
SNH received a term loan commitment for $800 million from Jefferies Finance LLC, which also served as the financial advisor for the acquisition, and Wells Fargo Bank with entering into today’s agreement.
The company currently maintains a $750 million unsecured revolving credit facility, which is available to partially fund the acquisition at closing.
Subject to customary closing conditions, SNH expects the acquisition to close in the first half of 2014.
Written by Jason Oliva