Health Care REIT Inc. (NYSE: HCN) is selling a life sciences portfolio for $573.5 million and plans to reinvest the proceeds in seniors housing and other core components of its portfolio, the company announced Monday.
The deal involves seven life science buildings at the Massachusetts Institute of Technology’s University Park in Cambridge, Mass. HCN held a 49% interest in the properties, which Forest City Enterprises Inc. (NYSE: FCEA and FCEB) will redeem, including HCN’s pro rata share of property-level debt of $174 million. The purchase price equates to a projected 5% cap rate based on forward 12 months net operating income.
“This was a terrific investment for HCN, achieving an unlevered internal rate of return of approximately 15%. Forest City has been an excellent partner, and we appreciate their role in our successful partnership over the last five years,” said Tom DeRosa, CEO of HCN, in a written statement. “The proceeds from this sale will be reinvested accretively in our core business; owning, developing and managing the highest quality seniors housing, post-acute and outpatient medical real estate in the U.S., U.K. and Canada.”
HCN originally invested $327 million in the properties in February 2010, as part of the 51/49 joint equity venture with Forest City.
The deal is expected to close during the second half of the year. HCN says it will release further information as part of its first quarter earnings call, scheduled for Friday.
In March, HCN completed its largest ever overnight stock offering, raising gross proceeds of about $1.5 billion to be used in part for investing in senior housing properties. The offering came on the heels of an announced $2.2 billion investment pipeline for the first quarter of 2015.
The announcement signaled that the large-cap real estate investment trust—the largest non-provider owner of senior housing properties in the country—intends to shift gears after 2014 saw the completion of only $3.7 billion in new investments for the year.
Written by Tim Mullaney