Omega, Aviv Finalize Creation of $11 Billion SNF REIT

Omega Healthcare Investors, Inc. (NYSE: OHI) has completed its acquisition of all of the outstanding shares of Aviv REIT, Inc. (NYSE: AVIV), finalizing a high-profile stock-for-stock merger that creates a real estate investment trust (REIT) with total market capitalization of approximately $11.1 billion, Omega announced Wednesday.

The deal forms a combined company with equity market capitalization of approximately $7.8 billion. 

“The combined company will be the premier publicly traded REIT focused principally on skilled nursing facilities (SNFs), with a diversified portfolio of investments including over 900 properties located in 41 states and operated by 81 different operators,” Hunt Valley, Md.-based Omega said in a statement.

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In October of last year, the companies announced their plans to merge. Following that announcement, Chicago-based Aviv announced its largest acquisition in 30 years, at $305 million for 29 properties.

Taylor Pickett will continue to serve as Omega’s CEO following the closing of the merger transaction.

“We believe that the combination with Aviv and the expertise and proven track records of the combined management team firmly positions Omega to continue as the leading consolidator in the large, highly fragmented SNF industry,” Pickett said in a statement. 

Craig M. Bernfield, former Aviv Chairman and CEO, and Norman R. Bobins and Ben W. Perks, former directors of Aviv, were appointed to the Omega Board of Directors effective as of the closing of the merger transaction.

“I am confident that our vision to substantially grow Aviv’s platform of high quality properties and operators will be implemented through the combination of these two outstanding companies, and I believe that our combined industry knowledge, experience and relationships will be the key to our future success,” Bernfield said.

Steven J. Insoft, former President and CEO of Aviv, was appointed Omega’s chief corporate development officer as of the closing of the merger transaction.

Under the terms of the merger agreement, each outstanding share of Aviv common stock was converted into 0.90 of a share of Omega common stock.

In connection with the merger, Omega issued approximately 43.9 million shares of common stock to former Aviv stockholders and holders of certain vested equity incentive awards of Aviv.

“On a fully diluted basis following the closing of the merger transaction, legacy Omega stockholders own approximately 72% of the combined company, and former Aviv stockholders, together with the limited partners of Aviv Healthcare Properties Limited Partnership, beneficially own approximately 28% of the combined company,” Omega said.

On April 1, 2015, Omega also closed an amendment to its revolving credit and term loan facility, increasing the size of the revolving credit facility to $1.25 billion, and adding a new $200 million term loan facility.

Also on Wednesday, OHI Healthcare Properties Limited Partnership also closed on a new $100 million term loan facility.

“Simultaneous with the closing of the merger transaction, all of Aviv’s outstanding unsecured debt was repaid or otherwise satisfied and discharged,” Omega said. “As of the close of business on April 1, 2015, Omega and its affiliates had outstanding revolving credit facility borrowings of $320 million and term loan facility borrowings of $500 million.”

In connection with the merger transaction, Morgan Stanley & Co. LLC acted as the exclusive financial advisor to Omega, and Bryan Cave LLP, Doran Derwent, PLLC, Hunton & Williams LLP and Kaye Scholer LLP acted as legal counsel. PJT Partners and Goldman, Sachs & Co. acted as financial advisors to Aviv and Sidley Austin LLP acted as legal counsel.

Written by Cassandra Dowell

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