At Chicago-based CCP, CEO Raymond Lewis calls the merger “an outstanding outcome for the shareholders of both companies. Since becoming a public company in August of 2015, CCP has worked hard to reposition our portfolio for success and growth with strategic operators. The combined company will have a diversified portfolio of quality operators and assets, with strong free cash flow, a rock solid balance sheet and a highly competitive cost of capital.” Post-merger, Lewis will join an expanded SBRA board of directors.

Following the merger announcement, Fitch Ratings placed SBRA's 'BB+' ratings on Rating Watch Positive. The ratings agency said that upon completion of the merger and assuming the issuer completes the requisite financings, it envisions upgrading SBRA's Long-Term IDR to 'BBB-'. Fitch on Monday also affirmed CCP's ratings at 'BBB-'.

UBS Investment Bank is acting as financial advisor to Sabra and O'Melveny & Myers LLP and Fried, Frank, Harris, Shriver & Jacobson LLP are acting as legal advisors to Sabra. BofA Merrill Lynch is acting as lead financial advisor and Barclays is acting as financial advisor to CCP. Sidley Austin LLP is acting as legal advisor to CCP.

The SBRA/CCP union follows several other mergers in commercial real estate, both announced and finalized, over the past few weeks:

Kayne Anderson Buys Up Healthcare REIT

Milestone Closes on Sale to Starwood

Kennedy-Wilson, European Arm to Combine

RLJ, FelCor to Merge for $7B Hotel REIT

Merger of UK Fund Managers Would Create CRE Giant

REITs Merge for Shopping Center Giant

(Updated with additional information)

IRVINE, CA and CHICAGO—Another large-scale M&A deal in commercial real estate is on the calendar, as Sabra Health Care REIT Inc. (SBRA) and Care Capital Properties Inc. announced late Sunday evening that they had entered into a definitive merger agreement. The healthcare REIT resulting from the all-stock transaction is expected to have a pro forma total market capitalization of approximately $7.4 billion and an equity market cap of $4.3 billion.

The merger, which is expected to close in the third quarter, will create a portfolio of 564 investments across the US and Canada. Its NOI concentration among the top five tenants will decrease from 69% to 42%, with no tenant accounting for more than 11% of total NOI.

“We have reshaped, diversified and enhanced the Sabra portfolio and this transaction represents a logical and substantial next step on that journey,” says Sabra chairman and CEO Richard Matros, who will lead the combined company from SBRA's Irvine, CA headquarters. “Our balance sheet and access to capital will enable us to continue investing in seniors housing assets to balance our portfolio mix, as we did after our spin-off. The increased scale and portfolio diversification, strengthened balance sheet and earnings profile delivered through the merger position us to capitalize on the opportunity set in front of us in an industry that continues to have attractive fundamentals.”

At Chicago-based CCP, CEO Raymond Lewis calls the merger “an outstanding outcome for the shareholders of both companies. Since becoming a public company in August of 2015, CCP has worked hard to reposition our portfolio for success and growth with strategic operators. The combined company will have a diversified portfolio of quality operators and assets, with strong free cash flow, a rock solid balance sheet and a highly competitive cost of capital.” Post-merger, Lewis will join an expanded SBRA board of directors.

Following the merger announcement, Fitch Ratings placed SBRA's 'BB+' ratings on Rating Watch Positive. The ratings agency said that upon completion of the merger and assuming the issuer completes the requisite financings, it envisions upgrading SBRA's Long-Term IDR to 'BBB-'. Fitch on Monday also affirmed CCP's ratings at 'BBB-'.

UBS Investment Bank is acting as financial advisor to Sabra and O'Melveny & Myers LLP and Fried, Frank, Harris, Shriver & Jacobson LLP are acting as legal advisors to Sabra. BofA Merrill Lynch is acting as lead financial advisor and Barclays is acting as financial advisor to CCP. Sidley Austin LLP is acting as legal advisor to CCP.

The SBRA/CCP union follows several other mergers in commercial real estate, both announced and finalized, over the past few weeks:

Kayne Anderson Buys Up Healthcare REIT

Milestone Closes on Sale to Starwood

Kennedy-Wilson, European Arm to Combine

RLJ, FelCor to Merge for $7B Hotel REIT

Merger of UK Fund Managers Would Create CRE Giant

REITs Merge for Shopping Center Giant