Here are 11 things to know about the transaction.
1. The spinoff transaction will enable HCP to improve its portfolio quality and increase its focus on core growth businesses — senior housing, life science and medical office — that consist of a diversified group of leading operators and tenants primarily within the private-pay sector, officials said.
2. After the spinoff is completed, HCP’s diversified portfolio is expected to consist of more than 860 properties, generating annual portfolio income of approximately $1.4 billion.
3. Lauralee Martin, president and CEO of HCP, spoke positively of the transaction. “We believe this transaction gives HCP the ability to re-confirm itself as a blue-chip, innovative and relationship-oriented healthcare REIT. Post spin, HCP will own a stable, private-pay portfolio that has a track record of delivering consistent, attractive returns,” she said in a prepared statement. “The transaction also gives our shareholders ownership of a separate company structured with the tools and flexibility to maximize the value of its assets.”
4. In conjunction with the spinoff, Mark Ordan has joined HCP as a senior advisor to focus on the HCR ManorCare investment and will lead SpinCo as CEO upon completion of the transaction.
5. SpinCo is expected to have a real estate portfolio composed of more than 320 properties, led by facilities operated by HCR ManorCare, with expected in-place annual rent of approximately $485 million.
6. Upon completion of the planned spinoff, HCP shareholders will receive shares of SpinCo via a pro rata special distribution.
7. SpinCo expects to file its initial Form 10 registration statement with the Securities and Exchange Commission in the next 30 days, and the spinoff is expected to be completed in the second half of 2016.
8. The transaction is expected to be a taxable distribution for U.S. income tax purposes. The spinoff distribution is generally expected to have the net effect of a tax-free return of capital.
9. The transaction is subject to certain conditions, including the effectiveness of SpinCo’s Form 10 registration statement and final approval and declaration of the distribution by HCP’s board.
10. Barclays and Morgan Stanley & Co. are acting as financial advisors to HCP, and Paul, Weiss, Rifkind, Wharton & Garrison and Skadden, Arps, Slate, Meagher & Flom are serving as legal counsel.
11. On the same day HCP announced the transaction, Fitch Ratings downgraded the ratings of HCP, including its long-term issuer default rating, from “BBB+” to “BBB.” Fitch has also placed the ratings on rating watch negative.
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