Windrose Medical (NYSE:WRS)
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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:
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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.
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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.