TOLEDO, Ohio--(BUSINESS WIRE)--Oct. 25, 2005--Health Care REIT, Inc. (NYSE:HCN) announced today the expected impact of the recently announced purchase of Commonwealth Communities Holdings, LLC ("Commonwealth") by subsidiaries of Kindred Healthcare, Inc. ("Kindred") (NYSE:KND). It is anticipated that the transaction will close in the first quarter of 2006.
As of September 30, 2005, the company leases thirteen buildings to Commonwealth or its affiliates, with an investment balance of $171.8 million, annual cash rent of $20.4 million and straight-line rent of $22.2 million. The company also has loans to Commonwealth or its affiliates with a combined balance of $20.7 million as of September 30, 2005.
"We look forward to including Kindred Healthcare as an operator in our portfolio," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "By completing this transaction, we will further strengthen our portfolio by adding a strong public operator, lengthening our lease term, reducing our working capital loans and eliminating more straight-line rent. We have enjoyed our relationship with Commonwealth and we hope that we will have the opportunity to invest with them in the future."
In connection with the sale of Commonwealth to Kindred, the company has agreed to sell four long-term acute care hospitals to Kindred for $80 million and, if the transaction closes, the company expects to record a gain on the sale in the first quarter of 2006. The company is currently recording annual cash and straight-line rent of $8.0 million and $8.7 million, respectively, on these properties. In addition, Commonwealth will repay all outstanding loans, which have an average yield of approximately 12%.
The company will lease to Kindred nine skilled nursing facilities, including two with accompanying assisted living facilities, for initial annual rent of approximately $10.7 million. The master lease will have a fifteen-year term and will contain CPI-based rent increasers that should approximate 2.5% per year. Currently, annual cash and straight-line rent attributable to these facilities is $12.4 million and $13.5 million, respectively. The outstanding straight-line rent receivable will be paid upon the closing of this transaction.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests primarily in skilled nursing and assisted living facilities. At September 30, 2005, the company had investments in 426 facilities in 37 states with 52 operators and had total assets of approximately $2.7 billion. The portfolio included 233 assisted living facilities, 180 skilled nursing facilities and 13 specialty care facilities. More information is available on the Internet at www.hcreit.com.
This document may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern and are based upon, among other things, the possibility that the transaction will close and the effect of that closing; the performance of the company's operators and properties; and the company's policies and plans regarding investments, financings and other matters. When the company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," or similar expressions, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The company's expected results may not be achieved, and actual results may differ materially from expectations. This may be a result of various factors, including, but not limited to: the failure of the transaction to close; the status of the economy; the status of capital markets, including prevailing interest rates; current serious issues facing the health care industry, including compliance with, and changes to, regulations and payment policies; changes in federal, state and local legislation; negative developments in the operating results or financial condition of operators, including, but not limited to, their ability to pay rent and repay loans; changes in the company's ability to transition or sell facilities with a profitable result; inaccuracies in any of the company's assumptions; and changes in rules or practices governing the company's financial reporting. Finally, the company assumes no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements.
CONTACT: Health Care REIT, Inc.
Ray Braun, 419-247-2800
Mike Crabtree, 419-247-2800
Scott Estes, 419-247-2800
SOURCE: Health Care REIT, Inc.