Health Care REIT, Inc. and Windrose Medical Properties Trust Announce Merger Agreement; Expanded Portfolio Offers Diversificatio
September 13 2006 - 6:31AM
Business Wire
Health Care REIT, Inc. (NYSE:HCN) and Windrose Medical Properties
Trust (NYSE:WRS) announced today that they have entered into a
definitive merger agreement pursuant to which Health Care REIT will
acquire Windrose for approximately $877 million, including the
assumption of Windrose's outstanding debt which totaled
approximately $426 million as of June 30, 2006. The merger will
create a company with investments throughout the health care
delivery system with more than 550 properties in 37 states. The
combined entity would have gross real estate assets of
approximately $4 billion and an enterprise value of approximately
$5 billion based on the closing prices of both Health Care REIT and
Windrose's stocks on September 12, 2006. The merged entity will
offer: -- Expertise and critical mass across all sectors of senior
housing and health care real estate -- Property management and
development capabilities -- Increased portfolio growth through
expanded investment and development opportunities -- Enhanced asset
type diversification, reduced tenant concentration, and a favorable
investment maturity profile -- Improved key portfolio metrics
including higher non-governmental component of tenant revenues
George Chapman, chief executive officer of Health Care REIT
commented, "Our strategic merger with Windrose creates a platform
capable of driving superior growth throughout the full spectrum of
senior housing and health care real estate. The enhanced tenant
base and asset diversification produces an even stronger combined
entity. We intend to capitalize on the additional opportunities
presented in property management and development, while the
increased diversification provided by this combination should
provide a more secure revenue stream through different operating
cycles generating higher quality dividends and incremental value
for our stockholders. Our long-standing relationship with Fred
Klipsch and his management team will provide for a seamless
integration while strengthening our infrastructure. We are also
pleased to announce that Mr. Klipsch will join the board of Health
Care REIT and we welcome his valued addition." Fred Klipsch, chief
executive officer of Windrose remarked, "Windrose enthusiastically
joins a firm with a tradition of excellence and superb
infrastructure and systems. We look forward to the opportunity to
grow our new platform with greater access to reasonably priced
capital, while providing our existing Windrose stockholders with an
approximate 23% increase in annualized dividends per share and an
excellent premium on their investment. The Windrose management
team's broad background in the long-term care sector and our unique
relationship with the Health Care REIT management group make this a
great strategic and cultural fit. Fred Farrar and I will be
intensely focused on a successful integration, continued asset
growth and the pursuit of strategic joint initiatives for the
Windrose Medical Properties Division within Health Care REIT."
Under the terms of the agreement, each outstanding share of
Windrose will be exchanged for 0.4509 shares of Health Care REIT
common stock. At yesterday's closing prices, this represents a
price of $18.06 for each Windrose share. The actual exchange ratio
at closing will be based upon the volume-weighted average price per
share of Health Care REIT common stock on the New York Stock
Exchange for the 10 trading days selected by lot from the 15
trading day period, ending on and including the fifth trading day
prior to the closing of the transaction. The exchange ratio will be
subject to increase up to a maximum of 0.4650 in the event of a
decrease in Health Care REIT's common stock price prior to the end
of such period. Upon closing, Windrose stockholders will own
approximately 15% of Health Care REIT, assuming conversion of all
of the outstanding Windrose convertible preferred stock. The
transaction is expected to close on or about year-end 2006, subject
to the approval of the stockholders of Windrose and other customary
conditions and consents. Completion of the transaction does not
require approval of Health Care REIT stockholders. Health Care REIT
management anticipates that the transaction will be accretive to
2007 fully-diluted FFO per share. Health Care REIT intends to
provide initial 2007 guidance including the expected impact of this
transaction concurrent with the release of fourth quarter 2006
earnings in February 2007. Pending the closing of the transaction,
the companies expect to pay customary common and preferred stock
dividends with any necessary prorations through the actual closing
date. During the period prior to closing, Health Care REIT intends
to provide Windrose with an interim financing line of credit up to
an amount of $150 million to finance additional Windrose
acquisition opportunities. The transaction is structured to qualify
at the REIT level as a tax-free merger, and it is a condition to
closing that each party receives an acceptable tax opinion to that
effect. Windrose stockholders will recognize income for federal
income tax purposes only on any cash received in respect of
fractional shares. Deutsche Bank Securities acted as exclusive
financial advisor to Health Care REIT and JPMorgan acted as
exclusive financial advisor to Windrose. Combined Company Portfolio
Profile: -0- *T
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Portfolio Composition ($000's) (1)
---------------------------------- Concentration by Facility #
Properties Investment (2) % Investment Type -------------
-------------- ------------ Skilled Nursing Facilities 213
$1,340,106 37% Assisted Living Facilities 203 984,600 27% MOBs 80
592,630 16% Independent/CCRCs 35 447,825 12% Hospitals and
Specialty Facilities 22 288,863 8% ------------- --------------
------------ Totals 553 $3,654,024 100% Concentration by Operator #
Properties Investment (2) % Investment ------------- --------------
------------ Emeritus Corporation 50 $358,423 10% Brookdale Senior
Living Inc. 87 288,662 8% Life Care Centers of America, Inc. 26
223,505 6% Merrill Gardens L.L.C. 13 202,012 6% Tara Cares, L.L.C.
34 170,583 5% Remaining operators and tenants 343 2,410,839 65%
------------- -------------- ------------ Real Estate Investments
553 $3,654,024 100% Notes: (1) Data as of June 30, 2006. (2) Real
Estate Investments include gross real estate investments and credit
enhancements which amounted to $3,651,574,000 and $2,450,000,
respectively.
----------------------------------------------------------------------
*T Conference Call Information. Health Care REIT and Windrose have
scheduled a conference call on September 13, 2006 at 10:30 a.m.
Eastern time to discuss the merger announcement. Telephone access
will be available by dialing 800-829-9048 or 913-312-1279
(international). For those unable to listen to the call live, a
taped rebroadcast will be available beginning two hours after
completion of the call through September 27, 2006. To access the
rebroadcast, dial 888-203-1112 or 719-457-0820 (international). The
conference ID number is 2680644. To participate in the webcast, log
on to www.hcreit.com or www.earnings.com 15 minutes before the call
to download the necessary software. Informational slides to
accompany the prepared remarks during the conference call can also
be accessed via these same Web sites. Replays will be available for
90 days through the same Web sites. This release is posted on
Health Care REIT's Web site under the heading Press Releases and on
Windrose's Web site under the heading Press Releases. Health Care
REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust that invests in health care and senior housing
properties. At June 30, 2006, the company had investments in 464
facilities in 37 states with 57 operators and had total assets of
approximately $3.1 billion. The portfolio included 35 independent
living/continuing care retirement communities, 203 assisted living
facilities, 213 skilled nursing facilities and 13 specialty care
facilities. More information is available on the Internet at
www.hcreit.com. Windrose Medical Properties Trust is a self-managed
real estate investment trust based in Indianapolis, Indiana with
offices in Nashville, Tennessee. Windrose was formed to acquire,
selectively develop and manage specialty medical properties, such
as medical office buildings, ambulatory surgery centers, outpatient
treatment diagnostic facilities, physician group practice clinics,
specialty hospitals and treatment centers. More information is
available on the Internet at www.windrosempt.com. Additional
Information and Where to Find It In connection with this proposed
transaction, a registration statement of Health Care REIT, which
will contain a proxy statement/prospectus, will be filed with the
United States Securities and Exchange Commission ("SEC"). Investors
are urged to carefully read the proxy statement/prospectus and any
other relevant documents filed with the SEC when they become
available because they will contain important information.
Investors will be able to obtain the registration statement,
including the proxy statement/prospectus, and all other relevant
documents filed by Health Care REIT or Windrose with the SEC free
of charge at the SEC's Web site www.sec.gov or, with respect to
documents filed by Health Care REIT, from Health Care REIT Investor
Relations at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio,
43603-1475, 419-247-2800 and, with respect to documents filed by
Windrose, from Windrose Investor Relations at 3502 Woodview Trace,
Suite 210, Indianapolis, Indiana, 46268, 317-860-8875. Participants
in the Solicitation The respective directors, trustees, executive
officers and other members of management and employees of Health
Care REIT and Windrose may be deemed to be participants in the
solicitation of proxies from the shareholders of Windrose in favor
of the transactions. Information about Health Care REIT and its
directors and executive officers, and their ownership of Health
Care REIT securities, is set forth in the proxy statement for
Health Care REIT's 2006 Annual Meeting of Stockholders, which was
filed with the SEC on March 28, 2006. Information about Windrose
and its trustees and executive officers, and their ownership of
Windrose securities, is set forth in the proxy statement for the
2006 Annual Meeting of Shareholders of Windrose, which was filed
with the SEC on April 10, 2006. Additional information regarding
the interests of those persons may be obtained by reading the proxy
statement/prospectus when it becomes available. This document may
contain "forward-looking" statements as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements describe, among other things, the beliefs, expectations,
plans and strategies of Health Care REIT, Windrose and the combined
entity that are not based on historical facts. These
forward-looking statements concern and are based upon, among other
things, the prospective merger of Health Care REIT and Windrose;
the possible increase in the size and composition of the portfolios
of each entity and the combined entity; potential benefits
associated with the proposed transaction; the sale of properties;
the performance of the operators and properties of each of Health
Care REIT and Windrose; the ability of each of Health Care REIT and
Windrose to complete the transaction, to integrate their operations
and to achieve expected savings and synergies; the ability to make
new investments and to maintain returns from existing investments;
the ability to enter into agreements with new and existing tenants;
the ability of each of Health Care REIT and Windrose to make
distributions; the policies and plans of each of Health Care REIT
and Windrose regarding investments, financings and other matters;
the tax status of each of Health Care REIT and Windrose as a real
estate investment trust; the ability of each of Health Care REIT
and Windrose to appropriately balance the use of debt and equity;
the ability of each of Health Care REIT and Windrose to access
capital markets or other sources of funds; and the ability of each
of Health Care REIT and Windrose and of the combined entity to meet
earnings guidance. Forward-looking statements include any statement
that includes words such as "may," "will," "intend," "should,"
"believe," "expect," "anticipate," "project," "estimate" or similar
expressions. Forward-looking statements are not guarantees of
future performance and involve risks and uncertainties. Expected
results may not be achieved, and actual results may differ
materially from expectations. This may be caused by various
factors, including, but not limited to: changes in economic or
general business conditions; the status of capital markets,
including prevailing interest rates; issues facing the health care
industry, including compliance with, and changes to, regulations
and payment policies and operators' difficulty in obtaining and
maintaining adequate liability and other insurance; changes in
financing terms; competition within the health care and senior
housing industries and specialty medical property market; negative
developments in the operating results or financial condition of
operators and tenants; the ability to transition or sell facilities
with a profitable result; the failure of closings to occur as and
when anticipated; acts of God; the ability to reinvest sale
proceeds at sufficiently high yields; operator and tenant
bankruptcies or insolvencies; government regulations affecting the
health care sector; liability claims and insurance costs for
operators and tenants; unanticipated difficulties and/or
expenditures relating to future acquisitions; hostile acts of third
parties; changes in rules or practices governing financial
reporting; and other factors affecting the execution of the
transaction and subsequent performance, including REIT laws and
regulations, anti-takeover provisions and retention of key
management personnel; receipt of shareholder and third party
approvals without unexpected delays or conditions; timely
implementation and execution of merger integration plans; the
successful integration of the IT systems and elimination of
duplicative overhead and IT costs without unexpected costs or
delays; and no unanticipated developments relating to previously
disclosed lawsuits or similar matters. In addition, the ability of
Health Care REIT/Windrose to achieve the expected revenues,
accretion and synergy savings also will be affected by the effects
of competition (in particular the response to the proposed
transaction in the marketplace); and other risks and uncertainties
described from time to time in Health Care REIT/Windrose public
filings with the SEC. Neither Health Care REIT nor Windrose assume
any 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.
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