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HealthLease Properties REIT acquires seniors housing and care facility

HealthLease Properties Real Estate Investment Trust has acquired a newly-built, triple-net leased, 100-unit seniors housing and care facility from Mainstreet Property Group, the asset manager for the REIT.

The facility is leased on a triple-net basis to an operator that is owned 50 per cent by Life Care Services (LCS), a US provider of seniors housing and care, with retirement communities serving over 28,000 residents in 27 states, and 50 per cent by an affiliate of Mainstreet.
The facility, Wellbrooke of Crawfordsville, is located in Montgomery County, Indiana, and marks the fourth Wellbrooke-branded facility in the state. As with the other properties, Crawfordsville is a Mainstreet Next Generation design that transforms seniors housing and care into a hospitality experience by incorporating hotel-like amenities and concierge-based services. Of the 100 units at Crawfordsville, 70 are licensed to provide skilled nursing, rehabilitation and therapy services, while the other 30 provide assisted living.
"As we continue to add Mainstreet-developed properties to our portfolio, we are building a strong brand presence as the leading owner of high-quality seniors' housing and care properties," says Zeke Turner, chairman and CEO of the REIT. "This market-leading position helps us attract great operators as tenants who recognise that HealthLease facilities will enable them to provide the best care for their consumers."
Crawfordsville was acquired under the REIT's pre-existing development agreement with Mainstreet, which provides the REIT with a right to acquire any seniors housing and care properties developed by Mainstreet. HealthLease acquired the property for its appraised value of USD16,980,000 subject to post-closing adjustments. Part of the consideration to Mainstreet is expected to be from the issuance 181,246 Class B limited partnership units of MPG Healthcare LP, a subsidiary of the REIT, at a price of CAD9.71 per unit, subject to the approval of the TSX. The MPG Healthcare LP units are exchangeable into REIT units on a one-to-one basis.
Wellbrooke of Crawfordsville is the third Mainstreet-developed property to be acquired by the REIT post-IPO. Mainstreet has eight properties currently under development that will be offered to the REIT upon completion in 2014 with another 12 expected in 2015 and beyond.
To continue to solidify its future acquisition opportunities, HealthLease has committed to an investment relationship with Mainstreet that will advance the development pipeline.
HealthLease has invested USD20m in the development of between 12 to 16 seniors' housing and care facilities in the US over the next year. HealthLease's investment will consist of USD15m of mezzanine financing, which is targeted to produce an annual return of 14 per cent on funds invested by the REIT and USD5m of equity financing, which is targeted to produce an annual return of 25 per cent on funds invested by the REIT. Mainstreet has committed USD5m of equity financing to the developments.

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