Two of the nation's smallest healthcare real estate investment trusts have agreed to merge, forming the fifth-largest healthcare REIT when measured by market capitalization, according to the National Association of Real Estate Investment Trusts in Washington.
The definitive agreement approved by the boards of Omega Healthcare Investors in Ann Arbor, Mich., and Health Equity Properties in Winston-Salem, N.C., will involve the issuance of about $145 million in Omega stock. Health Equity shareholders will receive 0.393 shares of Omega common stock in exchange for each share of Health Equity common stock held.
The stock of both REITs is traded on the New York Stock Exchange.
Health Equity will be folded into Omega, creating a combined investment portfolio of 153 healthcare facilities in 19 states with 17 independent healthcare operators. The combined REIT will have a market capitalization of about $390 million.
Stockholders of both REITs must approve the transaction. Meetings to vote on the proposed merger are expected during the third quarter of this year.
After the merger, there will be 15.5 million shares of Omega common stock outstanding. The combined company will have about $48 million in revenue, $470 million in total assets and $340 million in equity capital.
Robert L. Parker, Omega's chairman, and Essel W. Bailey Jr., Omega's president, will continue in their respective roles, and Omega's board of directors will oversee the merged REIT. Health Equity CEO William G. Benton wasn't available to comment on his plans.
In a joint statement, Messrs. Benton and Bailey said the proposed merger provides opportunities to grow through greater financial resources and enhanced access to capital, and will enable significant additional investments with middle-market operators of nursing homes and subacute-care facilities. It also will provide stockholders with a more balanced portfolio, with no state or healthcare operator representing more than 15% of investments or revenues.