Health Care REIT Signed NNN Lease Agreement to Acquire Substantially All of Privately-Owned Genesis HealthCare

Health Care REIT Signed NNN Lease Agreement in Toledo Ohio

NNN Net Lease News

TOLEDO, Ohio--(BUSINESS WIRE)-- Health Care REIT, Inc. (NYSE:HCN) announced that it has signed a definitive agreement to acquire substantially all of the real estate assets of privately-owned Genesis HealthCare (Genesis), a leading provider of short-term post-acute, rehabilitation, assisted living and long-term care services, for a purchase price of $2.4 billion.

Genesis’ highly respected and tenured management team will continue to operate the facilities pursuant to a long-term NNN net lease. HCN will have the right to own certain facilities that Genesis currently leases from third-party landlords, pursuant to fixed price purchase options, as well as any facilities that Genesis acquires or develops during the initial 15-year term of the lease at pre-determined attractive lease yields. In addition, HCN has the option to acquire a 9.9% ownership interest in Genesis for a fixed price equal to $47 million throughout the initial lease term. This option will enable HCN to share in the future growth of Genesis.

The long-term NNN net lease with Genesis will provide for rent in the first year of $198 million with an initial cash yield of 8.25%. The rent, which includes a combination of fixed and CPI escalators, is expected to increase by 3.5% on the first five anniversary dates of the lease and 3.0% per year thereafter. EBITDAR coverage is expected to be 1.5x. Genesis will have a renewal option at the conclusion of the initial term for an additional 15 years with rent increased to the greater of 103% of the prior year’s rent or fair market value.