Healthcare real estate investment trust (REIT) Omega Health
(OHI 33.80, -1.35, -3.84%) announced this morning its intention to purchase all
of the outstanding shares of healthcare property manager MedEquities Realty
(MRT 9.87, +3.03, +44.30%) for an enterprise value of approximately $600 mln.
Under the terms of the deal, MedEquities stockholders will receive a fixed exchange ratio of 0.235 Omega common shares plus $2.00 in cash for each share of MedEquities common stock held by them, which represents a value of $10.26 per MedEquities share based on the $35.15 closing price for Omega common stock on December 31.
The deal is anticipated to bear “significant synergies” and will immediately result in an annual FFO, AFFO, and FAD accretion of approximately $0.05 per Omega share. Per the deal, Omega will acquire the fee simple interest in 34 facilities operated by 11 operators in 7 states and approximately $34 mln in mortgage loans. There are no changes planned to Omega’s Board of Directors or executive officers related to the merger transaction.
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.
The two parties expect the deal to close in the first half of 2019.
Much like the broader market, in general the real estate sector unwound to close out 2018. Declining stock values in the REIT space saw shares of MedEquities decline 36% from the start of September though the end of the year. In contrast, Omega saw its stock rise nearly 6.4% during that time due in part to favorable sentiment about the future.
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