CARMEL, IND. — Mainstreet Health Investments (TSX: HLP-U), an Indiana-based seniors housing owner and developer that trades on the Toronto Stock Exchange, has acquired New York-based Care Investment Trust LLC and its portfolio of 42 seniors housing communities from for $425 million.
Mainstreet is funding the equity portion of the acquisition through the issuance of Mainstreet common shares directly to Tiptree Inc. (NASDAQ: TIPT), a New York-based holding company with roughly $2.4 billion in assets, including Care Investment Trust.
Mainstreet will issue 16.8 million shares of its common stock at $9.75 per share to Tiptree. Mainstreet will also assume $261.2 million of Tiptree’s existing mortgage debt, which carries an interest rate with a weighted average of 4.7 percent.
Upon closing of the deal, which is expected to occur during the first quarter of 2018, Tiptree will become Mainstreet’s largest shareholder with a 34 percent interest.
The Care Investment Trust portfolio consists of 35 independent living, assisted living and memory care properties as well as seven skilled nursing facilities. The 42 properties, 24 of which are leased to long-term, triple-net operators, total 3,178 suites/beds across 11 states. The other 18 properties are leased to seniors housing operators via joint ventures in which Mainstreet owns the majority interest. Mainstreet is seeking wider diversification of its operator base and reduce the percentage of skilled nursing in its portfolio.
“We believe this transaction and the addition of Tiptree as another cornerstone investor will bolster our position in the market and position Mainstreet for the next phase of its growth,” says Scott White, CEO of Mainstreet. “The transaction is evidence of the embedded value in our platform, with a sophisticated investor making a significant investment in our company.”
The transaction increases the size of Mainstreet’s holdings to 80 properties totaling 8,536 suites/beds across the United States and Canada, and is expected to raise the company’s pro forma asset value to $1.2 billion.
Following the closing of the deal, 52 percent of Mainstreet’s portfolio will be comprised of independent living, assisted living and memory care assets, while the remainder will be comprised of skilled nursing and traditional care facilities. In addition, the transaction will shift the balance of Mainstreet’s holdings out of the state of Illinois, which is currently facing a budget crisis.
As part of the transaction, Mainstreet will also rebrand its operating name to Invesque.
For more information on the deal, including the complete list of properties, click here.
Mainstreet’s stock price closed at $9.03 per share on Friday, Nov. 17, down from $9.45 per share in mid-November of 2016. Tiptree’s stock price closed at $7 per share on Friday, Nov. 17, up from $6.45 per share a year ago.
— Taylor Williams