Omega Healthcare Investors to Acquire MedEquities Realty Trust

  • Anticipated annual FFO, AFFO and FAD accretion of approximately $0.05 per Omega share.
  • Operator diversification will increase with 9 new operators.
  • Property type diversification will increase non-skilled nursing assets modestly by $296 million, including $75 million invested in a hospital facility leased to a subsidiary of Baylor, Scott & White Health.
  • Significant synergies expected.
  • Omega will acquire the fee simple interest in 34 facilities operated by 11 operators in 7 states.
  • Omega will acquire approximately $34 million in mortgage loans.
 Omega Healthcare Investors, Inc. (NYSE: OHI) (“Omega”) and MedEquities Realty Trust, Inc. (NYSE: MRT) (“MedEquities”) today announced the execution of a definitive merger agreement under which Omega will acquire all of the outstanding shares of MedEquities. The transaction represents an enterprise value of approximately $600 million for MedEquities and further diversifies Omega’s assets and operators. The boards of directors of both companies have unanimously approved the transaction.

Under the terms of the agreement, MedEquities stockholders will receive a fixed exchange ratio of 0.235 Omega common shares plus $2.00 in cash for each share of MedEquities common stock held by them, which represents a value of $10.26 per MedEquities share based on the $35.15 closing price for Omega common stock on December 31, 2018. Separately, MedEquities will declare a special cash dividend of $0.21 per share payable to the holders of record of MedEquities common stock as of the end of trading on the New York Stock Exchange on the trading day immediately prior to the closing date of the transaction. There are no changes planned to Omega’s board of directors or executive officers related to the merger transaction.

Taylor Pickett, Omega’s Chief Executive Officer stated, “John and his team have built a high quality diversified portfolio, which should provide Omega with meaningful future growth opportunities.” Mr. Pickett continued, “This acquisition reinforces our commitment to the skilled nursing and senior housing industry, while adding new asset types to our portfolio furthering our strategic objectives.”

John McRoberts, Chairman and Chief Executive Officer of MedEquities added, “This is a very compelling transaction for MedEquities’ stockholders. We believe going forward that our stockholders will be in an excellent position from having an investment in Omega’s diversified portfolio. Taylor and his team have a long and successful history of asset growth and diversification as well as solid asset management. Additionally, our operators will benefit from Omega’s depth of knowledge of the healthcare industry, their strong capital position and their commitment to support and grow with their tenants.”

Approvals and Timing
Completion of the transaction is subject to satisfaction of customary closing conditions, including the approval by the stockholders of MedEquities. The transaction is expected to close in the first half of 2019. Completion of the transaction is not subject to approval by Omega’s stockholders and is not subject to any financing contingency.

Bryan Cave Leighton Paisner LLP is serving as legal advisor to Omega. Morrison & Foerster LLP is serving as legal advisor and Citigroup Global Markets Inc. is serving as exclusive financial advisor to MedEquities.

About Omega
Omega is a real estate investment trust that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure. The assets span all regions within the US, as well as in the UK.

About MedEquities
MedEquities Realty Trust is a self-managed and self-administered real estate investment trust that invests in a mix of healthcare properties and healthcare-related real estate debt investments within the acute, post-acute and behavioral sectors of healthcare services. MedEquities’ strategy has been to become an integral capital partner with high-quality and growth-oriented facility-based providers of healthcare services on a nationwide basis, primarily through net-leased real estate investments.

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