SEATTLE-Emeritus Corporation, the nation's largest provider of assisted living and memory care services, has entered into definitive agreements with Health Care REIT, Inc. and Merrill Gardens under which Emeritus will lease a total of 38 senior housing communities, currently owned by a joint venture comprised of HCN and Merrill Gardens.
The communities are located in eight states, concentrated primarily in Washington and California, and offer independent living, assisted living and memory care services. They represent approximately 4,400 units, and more than 40% are currently designated as independent living.
“Expanding in the independent living arena complements our well-established assisted living, memory care and home healthcare services,” said Granger Cobb, the company's president and CEO. “It enables us to better meet the evolving needs of the growing senior population. This accretive transaction also represents an opportunity to consolidate community operations in what continues to be a fragmented market, while expanding our relationship with Health Care REIT.”
Upon consummation of the transaction, HCN will acquire Merrill Gardens' 20% equity interest in the properties and Emeritus will operate them under a long-term triple-net master lease. Rent in the first year of the lease will amount to $54 million and will increase each year in the manner specified in the lease. The initial term of the lease is 15 years, and Emeritus has the option to extend the lease for one additional 15-year term.
In connection with the transaction, the company and Merrill Gardens entered into a master operations transfer agreement. Emeritus will pay to Merrill Gardens a $10.0 million management contract termination fee. Final closings of the transaction is subject to customary closing conditions. Additional information on the transaction will be provided at the Emeritus second quarter 2013 earnings release conference call to be held in early August.
Emeritus Senior Living is the nation's largest assisted living and memory care provider, with the ability to serve nearly 50,000 residents. Over 30,000 employees support nearly 480 communities throughout 45 states coast to coast.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
