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US REITs Care Capital Properties, Sabra Health Care Close Merger.

M2 EQUITYBITES-August 18, 2017-US REITs Care Capital Properties, Sabra Health Care Close Merger


18 August 2017 - Chicago, US-based health care REIT Care Capital Properties, Inc. (NYSE: CCP) closed a merger with Maryland, US-based real estate investment trust Sabra Health Care REIT, Inc. (NASDAQ: SBRA) (NASDAQ: SBRAP) in an all-stock merger transaction to create a healthcare REIT, the company said.

The combined company is expected to have a pro forma total market capitalisation of approximately USD 7.4bn and an equity market capitalisation of approximately USD 4.3bn.

Under the terms of the agreement, CCP shareholders received 1.123 shares of Sabra common stock for each share of CCP common stock they own.

Upon closing of the merger, Sabra shareholders are expected to own approximately 41% and the former CCP shareholders are expected to own approximately 59% of the combined company.

The merger is subject to customary closing conditions, including receipt of the approval of both Sabra and CCP shareholders. The parties currently expect the transaction to close during the third quarter of 2017. The all-stock merger is intended to be a tax-free transaction.

This merger brings together two companies with complementary properties creating a healthcare portfolio of 564 investments. The combined company will have 70 relationships across 43 states and Canada, creating enhanced growth opportunities to strategically partner with top operators.

The combination of Sabra's and CCP's portfolios will improve both REITs' tenant diversification by operator, geography and asset type.

This merger is expected to generate annual cost savings of approximately USD 20m. The transaction is expected to be immediately accretive to Sabra's FFO and AFFO per share and provide the combined company with an attractive earnings growth profile.

Sabra's current management will lead the combined company. The Sabra board of directors will be expanded to eight members, adding CCP's current CEO and two additional directors from CCP.

Upon completion of the merger, the company will operate under the Sabra name

Sabra Health Care REIT operates as a self-administered, self-managed real estate investment trust that, through its subsidiaries, owns and invests in real estate serving the healthcare industry.

Care Capital Properties, Inc. has a diversified portfolio of triple-net leased properties, focused on the post-acute sector.

UBS Investment Bank is acting as financial advisor to Sabra and O'Melveny and Myers LLP and Fried, Frank, Harris, Shriver and Jacobson LLP are acting as legal advisors to Sabra. BofA Merrill Lynch is acting as lead financial advisor and Barclays is acting as financial advisor to CCP. Sidley Austin LLP is acting as legal advisor to CCP.

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Publication:M2 EquityBites (EQB)
Date:Aug 18, 2017
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