HCP and Carlyle's ManorCare in $6 Billion Asset Deal


Real-estate investment trust HCP (NYSE:HCP) gobbled up most of the real-estate assets from nursing and assisted living center company HCR ManorCare for $6.1 billion, marking one of the biggest land grabs of 2010.

The transaction also represents one of the biggest private-equity deals of the year as HCR ManorCare is controlled by private-equity giant Carlyle Group.

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The acquisition gives HCP control of 338 nursing and assisted living facilities in 30 states, with the highest concentrations in Ohio, Pennsylvania, Florida, Illinois and Michigan.

HCP is paying $3.528 billion in cash, $1.72 billion reinvested from the payoff of HCP’s existing debt investments in HCR ManorCare and $852 million in HCP common stock.

“This transaction reinvests our substantial debt investment in a secure long-term, growing income stream that will be highly accretive to HCP’s funds from operations and funds available for distribution,” HCP CEO Jay Flaherty said in a statement.

As part of the deal, HCP will have an option to acquire a 9.9% interest in Toledo, Ohio-based HCR ManorCare for an additional $95 million.

“We at HCR are delighted to have the opportunity to help secure the future of HCR  ManorCare’s operations by partnering with HCP,” said HCR ManorCare CEO Paul Ormond.

Shares of HCP rose 0.65% to $32.72 Tuesday morning, giving it a 2010 gain of 6.4%.