Omega Healthcare Investors, Inc. (NYSE: OHI) today announced that it has entered into a securities purchase agreement with CapitalSource Inc. (NYSE: CSE) and several of its affiliates to purchase entities owning 80 long term care facilities (“Facilities”) for approximately $565 million. The purchase price includes a purchase option (“Option”) to acquire entities owning an additional 63 Facilities for approximately $295 million.
$565 Million of New Investments
The securities purchase agreement is anticipated to close as follows:
First Closing – At the first closing, the Company will acquire entities owning 40 Facilities and the Option to purchase entities owning 63 additional Facilities for approximately $294.4 million, consisting of: (i) $184.2 million in cash and a promissory note; (ii) $50.8 million in Omega common stock; and (iii) assumption of $59.4 million of 6.8% debt associated with the acquired properties maturing on December 31, 2012. The first closing is expected to occur on December 31, 2009 subject to the terms and conditions of the securities purchase agreement.
The 40 Facilities, representing 5,264 available beds, located in 12 states are part of 15 in-place triple net leases among 12 operators. The 15 leases generate approximately $31 million of annualized revenue.
Second Closing – At the second closing, the Company will acquire entities owning 40 additional Facilities for approximately $270.4 million, consisting of: (i) $65.1 million in cash; (ii) assumption of $20.0 million of 9.0% subordinated debt maturing in December 2021; (iii) assumption of $55.7 million, 6.41% (weighted-average) HUD debt maturing between January 2036 and May 2040; and (iv) the anticipated assumption of $129.6 million, 4.85% HUD debt generally maturing in 2039. The second closing is expected to occur on April 1, 2010 subject to the terms and conditions of the securities purchase agreement.
The 40 Facilities, representing 4,882 available beds, located in 2 states are part of 13 in-place triple net leases among 2 operators. The 13 leases generate approximately $30 million of annualized revenue.
At September 30, 2009, Omega had $191 million of availability under our $200 million credit facility; a large portion of which we expect to use to finance the initial closing. The Company is currently reviewing multiple financing proposals in anticipation of the second closing.
The purchase price payable at each closing and the form of consideration to be paid is subject to a number of adjustments set forth in the purchase agreement. The Company expects the transaction to be immediately accretive to its adjusted Funds From Operations.
Purchase Option for $295 Million of New Investments
The Option to acquire entities owning an additional 63 Facilities is exercisable for cash consideration of $295.2 million by Omega at any time through December 31, 2011.
The 63 Facilities, representing 6,529 available beds, located in 19 states are part of 30 in-place triple net leases among 18 operators. The 30 leases generate approximately $34 million of annualized revenue.
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