Seattle—Seniors housing specialist Emeritus has inked a deal to take over operation of 38 properties currently run by Merrill Gardens. The transaction involves properties in California (16) and Washington (14), with the balance scattered across six other states.
Currently Seattle-based Merrill Gardens operates the properties as part of a JV with Health Care REIT, which owns an 80 percent stake in them. As part of the transition, Toledo, Ohio-Health Care REIT plans to buy Merrill Gardens’ 20 percent ownership in the properties for $173 million. Going forward, Emeritus will operate the facilities under a long-term contract.
During the first year of the deal, Emeritus will pay Health Care REIT $54 million in rent and then a little more than that each year for the next 14 years, with an option to extend the arrangement for another 15 years. Merrill Gardens is receiving a $10 million management contract termination fee from Emeritus.
For now, not much is going to change in the operation of the properties, according to Emeritus, though the company will be rebranding them with its name. All together, transaction will add over 4,400 units to the Emeritus portfolio; currently the company has more than 480 properties with about 50,000 residents.
The transaction materialized in part from a series of conversations between Emeritus president and CEO Granger Cobb and Merrill Gardens president Bill Pettit, who, for the past two years, taught a course together on senior living management at the Washington State University School of Hospitality Business Management. Pettit says the company has been approached numerous times over the last two decades by suitors, but “this is the right time to make the change.”