8-KAcquisitions & DispositionsMaterial AgreementsFinancial Events+1

WELLTOWER INC. 8-K Report, Material Agreement (Jan 11, 2013)

Filed January 11, 2013For Securities:WELL

Summary

Health Care REIT, Inc. (now Welltower Inc.) filed an 8-K on January 11, 2013, reporting two significant events. First, the company entered into a new, larger $2.75 billion unsecured credit facility ($2.25 billion revolving and $500 million term loan), replacing its previous $2 billion facility. This new agreement provides increased financial flexibility and extends maturity dates for its borrowing capacity. Second, and more impactful for investors, the company announced the completion of its previously announced acquisition of Sunrise Senior Living, Inc.'s real estate business for approximately $3.4 billion. This strategic acquisition, funded partly by the new credit facility and existing cash, is expected to significantly expand the company's senior housing portfolio.

Key Highlights

  • 1Health Care REIT, Inc. completed a significant acquisition of Sunrise Senior Living, Inc.'s real estate business for approximately $3.4 billion on January 9, 2013.
  • 2The company entered into a new, expanded unsecured credit facility totaling $2.75 billion ($2.25 billion revolving, $500 million term loan), replacing its prior $2 billion facility.
  • 3The new credit agreement offers greater financial flexibility with options for extending maturity dates and increasing the total facility amount.
  • 4Interest rates on the new credit facility are variable, based on the company's debt ratings, with applicable margins for LIBOR loans ranging from 1.175% to 1.350% and for base rate loans from 0.175% to 0.350%.
  • 5The prior $2 billion unsecured credit agreement was terminated effective January 7, 2013, with all outstanding amounts repaid.
  • 6The acquisition of Sunrise's real estate business was funded by a combination of cash on hand (including proceeds from recent securities offerings) and the new credit facility.
  • 7As part of the Sunrise transaction, the company acquired a 20% interest in the purchaser of Sunrise's management business.

Frequently Asked Questions

This 8-K filing announces two key events for Health Care REIT, Inc.: the completion of its acquisition of Sunrise Senior Living, Inc.'s real estate business and the establishment of a new, larger credit facility.

The acquisition was funded by a combination of the company's cash on hand, including proceeds from recent public offerings of its securities, and funds available under the newly established $2.75 billion credit facility.

The new agreement provides a $2.25 billion unsecured revolving credit facility and a $500 million unsecured term credit facility. It has varying maturity dates (March 31, 2017 for revolving, March 31, 2016 for term), includes sublimits for letters of credit and swingline loans, and allows for potential increases up to an additional $1 billion. Interest rates are tied to the company's debt ratings.

The termination of the prior $2 billion credit agreement indicates that it has been replaced by the new, larger, and potentially more favorable $2.75 billion credit facility, demonstrating a refinancing effort and increased borrowing capacity for the company.