Exclusive: ARC Healthcare Near $3.7 Billion Deal For Griffin-American Healthcare

[May 17, 2014]  By Mike Stone and Soyoung Kim
 
 NEW YORK (Reuters) - American Realty Capital Healthcare Trust Inc is in exclusive talks to buy Griffin-American Healthcare REIT II Inc, a deal that could value the healthcare real-estate investment trust at around $3.7 billion, according to people familiar with the matter.

American Realty Capital Healthcare Trust - known as ARC Healthcare - is trying to finalize a purchase agreement in the next two weeks with Irvine, California-based Griffin-American, which owns senior housing and nursing facilities, hospitals, medical office buildings and other medicine-related properties in the United States and Britain, the people said.

Discussions between the two could still fall apart and Griffin-American could turn to other bidders that remain interested in buying the company, cautioned the people, who asked not to be named because the matter is not public.

Spokesmen for Griffin-American and ARC Healthcare declined to comment.

ARC Healthcare, which was created in 2011 as a non-traded REIT, listed on the Nasdaq market in April this year and has a market capitalization of $1.66 billion.
 

The company is led by executive chairman Nick Schorsch, who also runs much larger American Realty Capital Properties Inc, which has a market capitalization of just over $10 billion.

Under Schorsch, New York-based American Realty Capital Properties (ARCP) has pursued major acquisitions in recent years, including buying Cole Real Estate Investments Inc last year for about $7.2 billion to create the largest U.S. net-leased real estate investment trust.

On Friday, ARCP also announced a $1.5 billion sale-leaseback transaction for over 500 Red Lobster restaurant properties. In April, the company ended advanced discussions to buy $5 billion real estate financing company NorthStar Realty Finance Corp, Reuters previously reported.

Griffin-American is a non-traded REIT, meaning that it must file its financials publicly, but its shares do not trade on a stock exchange. The enterprise value of Griffin-American is about $3.4 billion based on its recent quarterly filing with the U.S. Securities and Exchange Commission.

The company has acquired a diverse portfolio of healthcare-related real estate assets comprising medical office buildings, senior housing facilities, hospitals and skilled nursing facilities.

Healthcare REITs have attracted investors hunting for higher yields at a time when interest rates remain low and an aging population boosts demand for senior care facilities and other medical-related properties.

(Editing by Ken Wills)

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