Omega Healthcare Investors will acquire MedEquities Realty Trust in a transaction valued at approximately $600 million, the real estate investment trusts announced Wednesday.
The boards of directors of both companies unanimously approved the merger, which is expected to close in the first half of this year. Omega does not plan any changes to its board of directors or executive officers.
Hunt Valley, MD-based Omega operated 917 facilities, including assisted living communities and skilled nursing facilities, in 41 states and the United Kingdom through 67 third-party operators as of Sept. 30; 17.3% of the properties are seniors housing properties. The deal will increase non-skilled nursing assets in Omega’s portfolio, which will see the addition of nine new operators.
Omega will acquire the fee simple interest in Nashville, TN-based MedEquities’ 34 facilities — including an assisted living community in California — operated by 11 operators in seven states as well as approximately $34 million in mortgage loans.
“John and his team have built a high-quality, diversified portfolio, which should provide Omega with meaningful future growth opportunities,” Omega CEO Taylor Pickett said in a statement. “This acquisition reinforces our commitment to the skilled nursing and senior housing industry, while adding new asset types to our portfolio furthering our strategic objectives.”
Under the terms of the agreement, MedEquities stockholders will receive a fixed exchange ratio of 0.235 Omega common shares plus $2 in cash for each share of MedEquities common stock they hold, which equals $10.26 per MedEquities share based on the $35.15 closing price for Omega common stock on Dec. 31. Separately, MedEquities will declare a special cash dividend of $0.21 per share payable to the holders of record of MedEquities common stock as of the end of trading on the New York Stock Exchange on the trading day immediately prior to the closing date of the transaction.
“This is a very compelling transaction for MedEquities’ stockholders. We believe going forward that our stockholders will be in an excellent position from having an investment in Omega’s diversified portfolio,” MedEquities Chairman and CEO John McRoberts said. “Taylor and his team have a long and successful history of asset growth and diversification as well as solid asset management. Additionally, our operators will benefit from Omega’s depth of knowledge of the healthcare industry, their strong capital position and their commitment to support and grow with their tenants.”