Sabra Health Care REIT, Care Capital Properties Merge
09 Mai 2017 - 9:51PM
Dow Jones News
By Esther Fung
Health-care real estate landlords Sabra Health Care REIT Inc.
and Care Capital Properties are merging to form a $7.4 billion
company that would create a more diversified real-estate investment
trust with better access to debt markets.
The management team at Sabra will head the company, which will
be based in Irvine, Calif. Sabra, whose portfolio includes skilled
nursing facilities and senior housing, said within the merged
company no one tenant will represent more than 11% of the
annualized net operating income.
The transaction will reduce Sabra's reliance on Genesis
Healthcare, its largest tenant, from contributing about a third of
net operating income to the low teens, said Fitch Ratings in a
note.
Shareholders of Care Capital, whose current portfolio is
primarily skilled nursing facilities, will receive 1.123 shares of
Sabra for each Care Capital share, which would result in them
owning approximately 59% of the combined firm and Sabra
shareholders owning the rest.
The combined company, given its bigger scale, will attract more
investors and greater access to capital markets, which will allow
it to compete better for investment opportunities, Sabra said. The
deal also would generate annual cost savings of around $20 million.
It is expected to be completed in the third quarter.
Investors have been more careful about investing in health-care
REITs that include skilled nursing facilities in part because
revenue from such facilities comes largely from Medicare and
government insurance programs that could face funding cuts.
Some REITs have pared their skilled nursing facilities in recent
years, including Chicago-based Ventas Inc., which spun off 355
skilled nursing facilities and outpatient recovery centers into
Care Capital Properties. Ventas said it later benefited from
stronger growth and achieved a greater portion of its income from
private-pay assets.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
May 09, 2017 15:36 ET (19:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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