Griffin-American Spends $448M in First Euro Buy

LONDON and NEWPORT BEACH, CA-US-based Griffin-American Healthcare REIT II Inc., will pay nearly $450 million to acquire 44 premium senior care facilities in the UK.

Griffin-American has reached an agreement with with Myriad Healthcare Limited, a provider of high-quality residential care facilities to elderly people in the United Kingdom, to acquire the portfolio of facilities located in England, Scotland and the Channel Island of Jersey for an aggregate purchase price of GBP298.5 million, or approximately $447.8 million.
The majority of the UK Senior Housing Portfolio, is located in England's affluent South East region, primarily in the Home Counties around Greater London, with additional locations near Birmingham, Bristol and Oxford. The Scottish component is made up of six facilities located in affluent areas north of Edinburgh, while two facilities are located in Jersey.

"Since the launch of Griffin-American Healthcare REIT II in 2009, we have consistently stated that our goal is to build a diverse portfolio of healthcare real estate and to establish one of the best REITs in the market on behalf of stockholders," said Jeff Hanson, chairman and chief executive officer of the REIT. "Upon completion of this acquisition, Griffin-American will add a significant international presence to an already extensive national footprint, creating one of the largest and best diversified healthcare REITs in the world in terms of geography, revenue sources and asset types. Further, upon closing, our portfolio will exceed $2.0 billion, based on aggregate purchase price."

Approximately 52% of the portfolio's year-end 2012 revenue was derived from private pay residents, significantly higher than the UK national average of 32%, according to statistics provided by the London School of Economics' Personal Social Services Research Unit.
The agreement calls for an arrangement wherein the UK portfolio will be leased to Myriad Healthcare Limited, operating as Caring Homes, under 35-year net leases with annual rent escalations.

As part of the transaction, the REIT is also providing construction financing for new senior housing developments that it will acquire upon the developments reaching minimum required occupancy and imputed rent coverage ratios. The developments will be acquired by the REIT at construction cost, and will then be leased back to Myriad Healthcare.

Paul Jeffery, CEO of Myriad Healthcare Limited described the deal as “a
transformational event...with a partner which is as committed to growth in the private pay market as we are.

“We have built our success by providing high-quality care for elderly residents in the
UK in first-rate facilities and locations,” Jeffery added. “This partnership allows us to continue to execute this strategy and expand our footprint in the UK's growing private pay elderly care sector."

Founded in 1994, Myriad Healthcare is one of the largest operators of senior residential care homes in the UK. Employing more than 5,000 professionals, the company operates 136 care homes and provides 3,382 beds in elderly care and specialist learning disability care.

"This investment will partner Griffin-American Healthcare REIT II with one of the UK's leading operators of senior care communities and broaden our investment strategy internationally," said Danny Prosky, president and chief operating officer of the REIT. "As in the United States, the population of the United Kingdom is rapidly aging, creating greater demand for senior care. We are pleased to partner with one of the UK's premier operators in the field and to further expand our portfolio in this attractive sector and market."

With completion of the acquisition, the UK Senior Care portfolio would add approximately 962,000 square feet and 2,163 beds to the portfolio of Griffin-American Healthcare REIT II, which currently totals 174 buildings acquired for approximately $1.56 billion, diversified across 28 states and all four clinical asset classes: medical office buildings, skilled nursing facilities, hospitals and seniors housing.

Since Jan. 1, 2012, the portfolio has grown by approximately 255%, based on purchase price. As of March 31, 2013, the Griffin-American Healthcare REIT II property portfolio was 96% leased with a weighted average remaining lease term of approximately nine years and leverage (total debt divided by total assets) of 21.7%.

The acquisition is expected to close during the third quarter of 2013, although closing is subject to receipt of regulatory approvals and other customary closing conditions.
Griffin-American Healthcare REIT II, Inc. is a real estate investment trust organized to invest in a diversified portfolio of real estate properties, focusing primarily on medical office buildings and healthcare-related facilities. The REIT is co-sponsored by American Healthcare Investors and Griffin Capital Corp.