Genesis HealthCare (NYSE: GEN) announced Monday that the company has signed an asset purchase agreement with Revera Inc. to acquire 24 of its U.S. skilled nursing facilities along with its contract rehabilitation business for $240 million.
Under the agreement, Genesis will acquire the real estate of 20 of the 24 facilities and will enter into a long-term lease agreement with Health Care REIT, Inc. (NYSE: HCN) for the remaining properties.
Revera invests with Health Care REIT “as a key strategic capital partner,” and the two entities jointly own 70 retirement communities across Canada, according to Revera’s website.
The transaction is expected to close by this calendar year-end, subject to additional due diligence, regulatory and licensing approvals, and other customary conditions, said Genesis in a statement.
Revera, based in Mississauga, Ontario, Canada, is a owner, operator and investor in the senior living sector. Revera offers independent living, assisted living, memory care, long term care, skilled nursing and other senior services throughout 500 locations in Canada and United States.
Last year, Revera acquired 76% interest in the Sunrise Senior Living Management Company, with HCN owning the remainder. Sunrise manages over 300 communities in the U.S., the U.K. and Canada.
Genesis expects to finance the transaction utilizing a bridge loan from HCN and will subsequently refinance the bridge loan utilizing the HUD financing program or other traditional mortgage financing, Genesis says, adding that it expects the transaction will be accretive to 2016 earnings.
The 24 centers are located in the following states: eight in New Jersey, five in Vermont, three in Washington, two in Connecticut, two in Massachusetts and one in each of Maryland, Virginia, New Hampshire and Rhode Island.
The 24 centers encompass an aggregate of 3,056 beds, employ approximately 3,800 full and part-time employees and had aggregate revenue totaling approximately $280 million in 2014.
“The transaction is a good geographic fit for us, adding high-quality assets and density to our core markets in the northeast, New Jersey and the state of Washington,” said George V. Hager, Jr., Genesis’ Chief Executive Officer, in a statement. “The transaction also aligns nicely with our growth and deleveraging objectives, as it will be accretive to earnings, increase our fixed charge coverage and expand facility ownership to 23% of our inpatient sites.”
Genesis will also acquire the operations of Premier Therapy, Revera’s contract rehabilitation business.
“This transaction supports Revera’s new strategic direction to focus the company on its core strengths in senior living, enabling investment in growth and innovation in its private pay portfolio across Canada, the United States and the United Kingdom,” said Thomas G. Wellner, president and CEO of Revera. “We are pleased that our nursing and rehab team will continue to serve seniors under new ownership that shares our focus on quality care.”
In August of last year, Genesis signed a definitive agreement to merge with Skilled Healthcare Group, Inc. (NYSE: SKH) in a 100% stock transaction.
Written by Cassandra Dowell