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Healthcare real-estate investment trust Care Capital Properties has entered into a definitive agreement to acquire six behavioral health hospitals in a sale-leaseback transaction for $400 million and to fund up to $50 million in capital expenditures to finance expansion and improvements in the portfolio.
The portfolio is comprised of six behavioral health hospitals located in California, Arizona and Illinois, which are currently owned by affiliates of Signature Healthcare Services, one of the largest private behavioral health care providers in the US.
Following the completion of the transaction, which is expected in the second quarter of 2017, Care Capital will lease the properties to affiliates of Signature on a ten-year triple-net basis, with five renewals of five years each. The initial GAAP yield on the transaction is expected to be approximately 8.7 percent, and the investment was underwritten at 1.5x EBITDAR coverage on cash rent.
"We are extremely pleased to announce this investment in a best-in-class portfolio of purpose-built behavioral real estate with a leading operator in the space. We are excited to establish a new relationship with Signature, which has an outstanding track record as a behavioral health care provider," said Raymond Lewis, chief executive officer of Care Capital.
"This accretive transaction will enable us to efficiently recycle capital from our dispositions and diversify our portfolio into a new industry sector with a strategic operator, favorable investment attributes and strong cash flows."
Signature CEO Soon Kim, MD, commented: "We look forward to partnering with CCP on this portfolio. Signature is committed to the behavioral health space and will continue to invest in growing our platform through our development pipeline and by expanding existing facilities in underserved markets. We look forward to the potential of growing our relationship with CCP."
The transaction will be funded through cash on hand, disposition proceeds and borrowings under the Company’s revolving credit facility.
Care Capital Properties, Acquisition, M&A, Healthcare, Hospital, Signature Healthcare, US