American Healthcare REIT Prices $712M Equity Offering to Fund Kensington Senior Living Deal
American Healthcare REIT has priced a 13.25 million-share common stock offering at $53.75 per share, creating potential gross proceeds of approximately $712.2 million to support its planned $873 million acquisition of a Kensington Senior Living portfolio.
The Irvine, California-based real estate investment trust structured the offering through forward sale agreements with Morgan Stanley, Citibank and KeyBanc Capital Markets. Under the arrangement, the forward purchasers or their affiliates will borrow shares from third parties and sell them to the underwriters. American Healthcare REIT will not receive cash at the offering’s closing; instead, it expects to receive proceeds when it elects physical settlement, anticipated within about 24 months.
Assuming physical settlement at the initial forward sale price of $53.4176 per share, the company expects net proceeds of approximately $707.1 million. That total could rise to about $813.3 million if underwriters exercise their 30-day option to buy an additional 1.99 million shares.
The equity raise is principally intended to finance the pending purchase of eight luxury senior housing communities operated by Kensington Senior Living. The portfolio comprises 745 units across California, Maryland, New York and Virginia, including assets in the Los Angeles, San Francisco, Washington, D.C., and New York metropolitan areas.
American Healthcare REIT agreed to acquire the properties on Aug. 10 through three separate purchase agreements for an aggregate price of $873 million. The price includes the assumption of approximately $56.46 million of existing Kensington agency debt carrying a 6.35% annual interest rate, but excludes closing costs, prorations and other transaction expenses.
The REIT said it expects the acquisition to be accretive to normalized funds from operations in its first year and consistent with its general acquisition-yield targets. Kensington developed seven of the eight communities and has operated all of them since development or acquisition.
The transaction is expected to close after Aug. 31. The offering and acquisition are not contingent on one another; if the purchase does not close, the company may use eventual offering proceeds for general corporate purposes and future investments.
Connect Money is spotlighting rising stars who have made a valuable contribution to the alternative investments industry. Based on your nomination, we will recognize professionals who have significantly influenced both the workplace and community. The deadline is September 9. Click here to submit your nominations and help us highlight the next generation of leaders.
