HealthLease Properties REIT Announces Acquisition from Mainstreet Property Group and Investment in New Development Fund, and Introduces New Trustee
CARMEL, IN, Dec. 9, 2013 /CNW/ - HealthLease Properties Real Estate Investment Trust (HLP.UN) ("HealthLease" or "the REIT") acquired a newly-built, triple-net leased, 100-unit seniors housing and care facility from Mainstreet Property Group, LLC ("Mainstreet"), the asset manager for the REIT. The facility is leased on a triple-net basis to an operator that is owned fifty percent (50%) by Life Care Services ("LCS"), a leading US provider of seniors housing and care, with retirement communities serving over 28,000 residents in 27 states, and fifty percent (50%) by an affiliate of Mainstreet.
The facility, Wellbrooke of Crawfordsville, is located in Montgomery County, Indiana, and marks the fourth Wellbrooke-branded facility in the state. As with the other properties, Crawfordsville is a Mainstreet Next Generation™ design that transforms seniors housing and care into a hospitality experience by incorporating hotel-like amenities and concierge-based services. Of the 100 units at Crawfordsville, 70 are licensed to provide skilled nursing, rehabilitation and therapy services, while the other 30 provide assisted living.
"As we continue to add Mainstreet-developed properties to our portfolio, we are building a strong brand presence as the leading owner of high-quality seniors' housing and care properties," stated Zeke Turner, Chairman and CEO of the REIT. "This market-leading position helps us attract great operators as tenants who recognize that HealthLease facilities will enable them to provide the best care for their consumers."
Crawfordsville was acquired under the REIT's pre-existing development agreement with Mainstreet, which provides the REIT with a right to acquire any seniors housing and care properties developed by Mainstreet. HealthLease acquired the property for its appraised value of $16,980,000 subject to post-closing adjustments. Part of the consideration to Mainstreet is expected to be from the issuance 181,246 Class B limited partnership units of MPG Healthcare LP, a subsidiary of the REIT, at a price of CDN$9.71 per unit, subject to the approval of the TSX. The MPG Healthcare LP units are exchangeable into REIT units on a one-to-one basis.
Wellbrooke of Crawfordsville is the third Mainstreet-developed property to be acquired by the REIT post-IPO. Mainstreet has informed the REIT that it has a deep pipeline of development opportunities, including eight properties currently under development that will be offered to the REIT upon completion in 2014 with another twelve expected in 2015 and beyond.
To continue to solidify its future acquisition opportunities, HealthLease today also announced that it has committed to an investment relationship with Mainstreet that will advance the development pipeline.
HealthLease has invested US$20 million in the development of between 12 to 16 seniors' housing and care facilities in the United States over the next year. HealthLease's investment will consist of US$15 million of mezzanine financing, which is targeted to produce an annual return of 14% on funds invested by the REIT and US$5 million of equity financing, which is targeted to produce an annual return of 25% on funds invested by the REIT. Mainstreet has committed US$5 million of equity financing to the developments.
"Our relationship with Mainstreet has enabled us to significantly grow the REIT in a relatively short period of time with high-quality assets that attract leading seniors' housing and care operators," said Zeke Turner, Chairman and CEO. "This investment by HealthLease will help us grow the pipeline of acquisitions, allow us to achieve scale and deliver long-term value to our unitholders. I am pleased with our team's innovative effort structuring an investment that provides access to the upside associated with internal development, while still generating current income to the REIT. The unique relationship between Mainstreet and HealthLease is creating significant value for unitholders."
Mainstreet Property Group LLC is a leading developer of seniors' housing and care facilities that has completed over $200 million of property development since 2002. Their unique approach is to create Health Care Resorts™ that offer high-end, hotel-like design. The result is a hospitality-centered product incorporating concierge-based services to specifically cater to the evolving demands of the growing senior population.
Additionally, Marvin L. White was appointed to the Board of Trustees. Marvin is currently the System Vice President & Chief Financial Officer of St. Vincent Health in Indiana.
About HealthLease Properties Real Estate Investment Trust
HealthLease Properties Real Estate Investment Trust (TSX: HLP.UN) owns one of the youngest and highest quality portfolios of seniors housing and care facilities with 45 properties - 12 in two Canadian provinces and 33 in eight U.S. states - for a total of 4,435 beds. The facilities are leased to experienced tenant operators who have significant operational experience. The leases are structured as long-term and triple-net: features that provide stability and dependability to the REIT's cash flow and distributions. The REIT's best-in-class portfolio meets the growing demands of modern seniors by emphasizing features such as hotel-like design, private rooms and baths and hospitality-inspired amenities. For more information, visit www.hlpreit.com.
Forward-Looking Information
This news release contains forward-looking statements which reflect the REIT's current expectations regarding future events. The forward-looking statements involve risks and uncertainties, including those set forth in the REIT's Annual Information Form dated March 6, 2013 under the section "Risk Factors," a copy of which can be obtained at www.sedar.com. In addition, the securities to be acquired by the REIT in the fund will be relatively illiquid and the REIT's acquisition will represent a minority interest and, as such, the REIT will have no control over the Fund. Actual results could differ materially from those projected herein. The REIT disclaims any obligation to update these forward-looking statements.
The securities of Mainstreet Development Fund II, L.P., have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "Act") and may not be offered or sold in the United States or Canada without registration or the filing of a prospectus or an applicable exemption from the registration or prospectus requirements of the Act or applicable Canadian securities laws. This news release does not constitute an offer for sale of these securities in the United States of America or Canada.
SOURCE: HealthLease Properties Real Estate Investment Trust
Scott White
Executive Vice President - Finance
HealthLease Properties REIT
(317) 420-0205
Renée Lam
Investor Relations
TMX Equicom
(416) 815-0700 ext. 258
Share this article