Omega Healthcare Plans $295M Purchase of 63-Property Long-Term Care Portfolio

April 21, 2010
By Barbra Murray, Contributing Editor

Taking advantage of an opportunity presented by its Securities Purchase Agreement with commercial lender CapitalSource Inc., Omega Healthcare Investors Inc. has decided to enhance its real estate holdings with the acquisition of a group of 63 long-term care facilities from CapitalSource affiliates for $295M. There’s only a little bit of cash involved in the deal; the Hunt Valley, Md.-based REIT will shell out $34 million and finance the remainder of the purchase price by repaying $261 million in existing debt on the portfolio.

The acquisition will be a significant one for Omega, which owned or held mortgages on 293 skilled nursing facilities, assisted living facilities and other specialty hospitals as of the close of 2009. Upon completion of the transaction, the company will have increased the size of its portfolio by approximately 20 percent. Spanning 19 states and encompassing over 6,600 beds, the group of long-term care properties Omega plans to buy comes with 30 in-place triple net leases that yield annual revenue of approximately $34 million.

Omega wasted little time in exercising its option to snap up the 63-property portfolio from CapitalSource. The REIT’s November 2009 Securities Purchase Agreement with the lender included Omega’s commitment to acquire certain CapitalSource subsidiaries owning 80 long-term care facilities–and a generous deadline of December 31, 2011 to exercise an option to purchase the 63 additional facilities.