LONG BEACH, CA-Healthcare Property Investors Inc. has agreed to buy Orlando-based CNL Retirement Properties in what the companies are calling the largest transaction in healthcare REIT history. The two say the deal would create the nation’s largest healthcare REIT with a portfolio valued at $11.5 billion.

HCPI says in SEC filings that the $5.2-billion transaction would include a payment of cash and stock by HCPI amounting to $13.50 per outstanding share of CNL Retirement’s common stock, and the assumption or refinancing of approximately $1.6 billion of CNL Retirement’s outstanding debt. The transaction is expected to close by the end of the third quarter, subject to shareholder approval and other customary closing conditions.

Along with the acquisition of CNL Retirement Properties, HCPI has also agreed to acquire CNL Retirement Corp., the external adviser to CNL Retirement Properties, for approximately $120 million in HCPI stock. The Long Beach-based REIT will acquire the advisory firm in a separate deal, with each of the two transactions conditioned on the consummation of the other.

When the deals close, Healthcare Property Investors will own a portfolio of independent and assisted living communities, healthcare facilities and medical office buildings comprising nearly 800 properties in 44 states. The properties operate under names including Sunrise Senior Living Services Inc., American Retirement Corp., HCA Inc., Horizon Bay, Erickson Retirement Communities, LLC and Encore Senior Living, the Cirrus Group and the Dasco Cos.

The parties say that the transaction will produce economies of scale, greater financial resources and operating flexibility for the new entity. In addition, HCPI’s filings say, it will be able to “capitalize on investment opportunities in one of the nation’s mostattractive industries.” The company notes that CNL Retirement is one of a number of CNL companies that include CNL Retirement Corp., an advisory firm, which will bring “acquisitions expertise as well as an attractive pipeline” to the deal.

James Flaherty III, chairman and CEO of HCPI, says that the Long Beach-based company will establish an East Coast office in Orlando as part of the merger. The company’s existing portfolio comprises 534 properties in 42 states.

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