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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28, 2011
Health Care REIT, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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1-8923
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34-1096634 |
(State or other jurisdiction
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(Commission
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(IRS Employer |
of incorporation)
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File Number)
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Identification No.) |
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4500 Dorr Street, Toledo, Ohio
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43615 |
(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code (419) 247-2800
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry Into a Material Definitive Agreement.
Purchase Agreement
On
February 28, 2011, Health Care REIT, Inc. (the
Company) entered into a definitive purchase agreement (the Purchase Agreement)
with FC-GEN Investment, LLC, a Delaware limited liability company
(FC-GEN), and FC-GEN Operations
Investment, LLC, a Delaware limited liability company
(OpCo), to acquire 100% of the equity
interests of FC-GEN Acquisition Holding, LLC, a Delaware limited liability company (FC-GEN
Acquisition Holding) (the Acquisition). FC-GEN Acquisition Holding indirectly owns (1) 140
senior housing and care facilities (137 in fee simple and three pursuant to ground leases) and (2)
the leasehold interests in and option to purchase seven senior housing and care facilities in 11 states in the Northeast and
Mid-Atlantic operating under the name Genesis HealthCare. Prior to closing, FC-GEN Acquisition
Holding will (a) contribute the assets, liabilities and equity interests relating to (i) the
business of operating and managing senior housing and care facilities, (ii) joint venture entities
and (iii) other ancillary businesses to OpCo, and then (b) distribute all of the equity interests
of OpCo to FC-GEN. The purchase price for the equity interests of FC-GEN Acquisition Holding is
$2.4 billion (subject to adjustment).
In addition, in conjunction with the Acquisition, the Company will have the option to acquire a
9.9% ownership interest in OpCo for a purchase price equal to
$47 million (subject to certain adjustments) at any time during
the initial 15-year term of the Master Lease (as defined below).
The Acquisition is subject to the fulfillment or waiver of various closing conditions, including,
among other things, obtaining certain governmental and regulatory approvals and landlord consents,
the absence of laws, regulations or orders of a governmental body prohibiting the Acquisition, the
accuracy of the representations and warranties made by, and the absence of a material breach in the
performance of covenants by, FC-GEN and the Company in the Purchase Agreement. The parties have
also made customary representations, warranties and covenants in the Purchase Agreement, including
among others, FC-GENs covenant not to solicit acquisition proposals or participate in discussions
relating to an acquisition proposal.
The foregoing description of the Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the Purchase Agreement,
which is filed as Exhibit 10.1
hereto and is incorporated herein by reference.
The Purchase Agreement has been provided solely to inform investors of its terms. The
representations, warranties and covenants contained in the Purchase Agreement were made only for
the purposes of such agreement and as of specific dates, were made solely for the benefit of the
parties to the Purchase Agreement and may be intended not as statements of fact, but rather as a
way of allocating risk to one of the parties if those statements prove to be inaccurate. In
addition, such representations, warranties and covenants may have been qualified by certain
disclosures not reflected in the text of the Purchase Agreement, and may apply standards of
materiality in a way that is different from what may be viewed as
material by stockholders of, or
other investors in, the Company. The Companys stockholders and other investors are not
third-party beneficiaries under the Purchase Agreement and should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of
facts or conditions of the Company or any of its subsidiaries or affiliates.
Master Lease
Immediately after the closing of the Acquisition, a subsidiary of the Company will enter into a
master lease (the Master Lease) with Genesis Operations, LLC, a Delaware limited liability
company (Tenant), under which Tenant will operate the 140 owned or ground leased facilities and will enter into
a pass through master sub-sublease with an affiliate of Tenant under which such affiliate will operate the seven leased
facilities. The
Master Lease is supported by a guaranty from OpCo.
The initial term will be 15 years (the Initial Term). Tenant will have one option to renew for an
additional term of 15 years. The renewal option is exercisable as to all facilities in the
aggregate only.
The Master Lease will provide that the base rent for the first year will be $198 million, and will
increase at least 1.75% but no more than 3.50% (subject to CPI changes) for each of the years two
through six during the Initial Term and at least 1.50% but no more than 3.00% per year thereafter
(subject to CPI changes).
Tenant and/or OpCo will be subject to certain financial covenants, including requirements to
maintain a minimum payment coverage ratio, a minimum net worth, a minimum cash balance, a minimum
current ratio and a maximum leverage ratio. Tenant will grant the Company the exclusive right and
option to own any facilities that Tenant or its affiliates develop or acquire during the Initial
Term.
The seven senior housing and care facilities leased by FC-GEN Acquisition Holding (the Leased
Facilities) are each subject to a fixed price purchase option (each an Option). Pursuant to the
Acquisition, the benefit of the Options will be transferred to the Company. If the Company
exercises an Option and acquires a Leased Facility (a Purchased Facility), the Purchased Facility
will be leased to Tenant pursuant to the terms of the Master Lease.
The Master Lease will be structured so that Tenant will be responsible for all operating costs
associated with the Facilities, including the payment of operating expenses, real estate taxes,
insurance, building repairs and maintenance and all payments due under the three ground leases.
Tenant will also provide indemnities against liabilities associated with the operation of the
facilities.
The Company will have the right of first offer on the sale of any direct interest comprising less
than a 20% ownership interest in OpCo, other than (1) a transfer between any direct or indirect
owners thereof, or (2) transfers in connection with an initial public offering of OpCo.
Bridge Loan Facility
On February 28, 2011, the Company obtained a commitment from UBS Loan Finance LLC, UBS Securities
LLC, as joint lead arranger, Bank of America, N.A., as co-syndication agent, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as joint lead arranger, Barclays Bank PLC, as co-syndication agent,
Barclays Capital Inc., as joint lead arranger, Deutsche Bank AG Cayman Islands Branch, Deutsche
Bank Securities Inc., as joint lead arranger and co-documentation agent, JPMorgan Chase Bank, N.A.,
as co-syndication agent, J.P. Morgan Securities LLC, as joint lead arranger, Wells Fargo Bank,
N.A., as co-documentation agent, Wells Fargo Securities, LLC, as joint lead arranger, KeyBank
National Association, as senior managing agent, and KeyBanc Capital Markets Inc. to provide a
bridge loan facility to the Company in an aggregate amount of up to $2.4 billion subject to the
terms and conditions set forth therein. The $2.4 billion bridge loan facility is undrawn today, and
the commitments thereunder are available until May 31, 2011. Proceeds from the borrowings under the
$2.4 billion bridge loan facility, if made, will be used to fund all or part of the consideration
for the Acquisition and to pay related fees and expenses.
Availability under the $2.4 billion bridge loan facility is subject to the satisfaction of certain
conditions precedent including, but not limited to, (i) the absence of any continuing default or
event of default, (ii) the accuracy of all representations and warranties customary for
transactions of this type, (iii) receipt of a customary borrowing notice, and (iv) there being no
legal bar to the lenders making the loan or the issuance. Loans outstanding under the bridge loan
facility will bear interest at a rate per annum equal to LIBOR plus a margin ranging from 2.0% to
4.0%.
The Companys obligations under the $2.4 billion bridge loan facility are senior unsecured
obligations, ranking pari passu with other unsecured, unsubordinated general obligations of the
Company.
Item 7.01 Regulation FD Disclosure.
On February 28, 2011, the Company issued a press release announcing the Acquisition. A copy of the
Companys press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
All information in the press release is furnished and shall not be deemed filed with the
Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise be subject to the liability of that Section, and shall not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporated it by reference.
Item 9.01 Financial Statements and Exhibits.
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Exhibits. |
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10.1 |
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Equity Purchase Agreement, dated as of February 28, 2011, by and among the Company, FC-GEN
Investment, LLC and FC-GEN Operations Investment, LLC. |
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99.1 |
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Press Release dated February 28, 2011. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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HEALTH CARE REIT, INC.
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By: |
/s/ GEORGE L. CHAPMAN
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George L. Chapman |
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Its: Chairman, Chief Executive
Officer and President |
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Dated: February 28, 2011