NEWPORT BEACH, CA-Some 32 assisted-living facilities in 10 states are the focus of a newly minted $419-million sale-master leaseback. Locally based REIT Nationwide Health Properties is acquiring the portfolio from Hearthstone Assisted Living in Houston. The deal, which also includes some $12 million of debt defeasance and closing costs, is expected to close in May.

According to a accompany statement, the master leaseback includes an 8.7% effective rent yield; up to 2% CPI-based annual rent escalators; and exclusive rights on $150 million of potential new investments. In addition, Hearthstone president and CEO Tim Hekker and partners will acquire 100% ownership of the company that will operate the Hearthstone facilities. Hearthstone’s principal selling shareholders include Fremont Realty Capital, funds advised by Apax Partners, LP and Kosberg & Associates.

NHP has also agreed to finance $15 million of Hearthstone’s future facility expansions at lease rates current at that time.

“We have continually reiterated our belief in both the short and long-term growth potential of the senior housing sector,” says Donald D. Bradley, NHP’s chief investment officer. “Given the quality of the assets we are acquiring–all of which were built by Hearthstone starting in 1996–the strength of the operating team, Hearthstone’s financial condition and the structure of the transaction, this investment represents a significant opportunity for the company.”

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