Senior Housing: Nursing-Home Blockbuster

by Peter Grant for the Wall St Journal

HCP Inc.’s blockbuster $6.1 billion purchase of hundreds of nursing homes, one of the largest real-estate deals in recent years, is the latest proof of the increased firepower that publicly traded real-estate investment trusts are wielding in the health-care real-estate world.

HCP’s deal, announced late Monday, would make it the owner of all the real-estate assets of nursing-home giant HCR Manorcare Inc., which is controlled by private-equity firm Carlyle Group LP. To help finance the deal, HCP on Tuesday afternoon priced a stock sale raising $1.28 billion, people familiar with the matter said.

Health-care property has been one of the most active arenas for large-scale acquisitions in recent months, and public REITs have been dominant buyers. Health-care REIT Ventas Inc. is buying the real-estate assets of assisted-living company Atria Senior Living Group in a $3.1 billion deal with private-equity firm Lazard Real Estate Partners. Toledo, Ohio-based Health Care REIT Inc. formed an $817 million partnership with senior-housing company Merrill Gardens LLC.

Nursing-home and senior-housing landlords have benefited from higher stock-market valuations than for the companies that operate those facilities because they’re seen as having a more stable income stream, Stifel Nicolaus analyst Jerry Doctrow said.


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