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NEWPORT BEACH, CA-Nationwide Health Properties Inc. and Chicago-based Brookdale Senior Living Inc. have struck a deal for Nationwide to sell 30 properties comprising 1,476 units in eight states to Brookdale for $148.6 million. Nationwide, a REIT that specializes in healthcare properties, now leases the properties to Brookdale for annual rent that totals about $10 million.
Part of Nationwide's strategy in the deal is to apply the proceeds of the sale, which will be about $78 million, toward approximately $260 million of previously announced acquisitions that are slated to close in the fourth quarter. The $78 million in proceeds will be used to fund the equity portion of the acquisitions.
Douglas Pasquale, NHP's president and CEO, says that timing is a key in the deal. With the Brookdale transaction scheduled to close on Nov. 30, he explains, "We will be able to immediately reinvest the proceeds" in the $260 million of facilities that are lined up for acquisition.
In addition, the sale of the Brookdale assets provides Nationwide with low-cost capital while reducing the REIT's need to access the capital markets. The properties that Nationwide is selling are in Colorado, Florida, Idaho, Ohio, Oklahoma, Oregon, South Carolina and Texas. Brookdale will continue to lease 95 properties from NHP after the acquisition.
The Brookdale deal continues a theme that Pasquale sounded during a recent NHP conference call with financial analysts. He said that the company was acquiring assets "at a pace well ahead of any point in the company's history," and that a large percentage of the acquisitions this year would be senior housing properties.
Pasquale said that the company closed on $40 million of senior housing assets in the third quarter and expected to close on the $260 million in the fourth quarter, about 95% of which would be senior housing. "Assuming that closings occur as planned," Pasquale said, NHP will complete more than $1 billion of investments in 2006, about 75% of which will be senior housing facilities.
The assets that NHP will acquire with the proceeds of the Brookdale sale will be with new customers, reflecting a strategy that Pasquale mentioned in the conference call. He said that "nearly 100% of our 2006 investments are with new customers with which we expect to do considerable business in ensuring years."
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