Griffin-American Healthcare REITs Combine, Plan IPO

Griffin-American Healthcare REIT III will acquire Griffin-American Healthcare REIT IV in a tax-free, stock-for-stock transaction to create a combined company with a gross investment value of approximately $4.2 billion.

In addition to the merger, Griffin-American Healthcare REIT III has agreed to acquire the business and operations of American Healthcare Investors (AHI), the co-sponsor of both REITs and the external advisors of GAHR III and GAHR IV. This acquisition should occur immediately before the REIT merger, which is expected to close in the fourth quarter of 2021

Following this maneuvering, the new company will be called American Healthcare REIT. Its capabilities in acquisitions, asset management, finance, accounting and tax, are expected to provide operational cost savings of approximately $21 million annually.

The combined company will own 314 medical office buildings, comprising approximately 19 million square feet of space. The company, which will be the 11th largest healthcare REIT globally, should be set up well for an IPO after the mergers.

Jeff Hanson will be named executive chairman of American Healthcare REIT, while Danny Prosky will be named president and chief executive officer and Mathieu Streiff will be named chief operating officer. In all, more than 100 employees of AHI will become employees of the new company. AHI employees and executives will retain similar roles and titles with American Healthcare REIT.

The AHI acquisition will be paid for with operating partnership units of GAHR III’s operating partnership. The units may be converted into American Healthcare REIT stock and will be subject to customary long-term lock-ups.

“We believe that merging these complementary portfolios together, along with the sponsor company, will create a portfolio with meaningful scale and diversification, as well as drive significant operating efficiencies and earnings accretion for stockholders, well-positioning the company for future growth that should be rewarded in the public markets,” said Jeff Hanson, chairman and chief executive officer of GAHR III and GAHR IV in a prepared statement

After transactions fell sharply in Q3, according to a report from Irving Levin Associates, M&A is heating up in the healthcare sector in 2021. In April, for instance, Michigan-based investment firm Mitchell Family Office inked a $168 million bridge loan by Lument to acquire the skilled nursing division of American Health Partners, a play that was part of a larger plan by MFO to acquire all interests of AHP.