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Mainstreet, Health Care REIT partnership valued at $2.3 billion

August 13, 2014
by Lois A. Bowers, Senior Editor
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The nation’s largest post-acute healthcare developer and one of the world’s largest healthcare real estate companies are joining forces in a $950 million deal. Health Care REIT, Inc. (HCN) has agreed to acquire HealthLease Properties REIT (HLP), a company formed by short-stay rehabilitation and long-term care property developer Mainstreet in 2012 as a platform for accessing capital to build its portfolio.

HCN also will acquire 17 of Mainstreet’s Next Generation properties currently under construction and will enter into a development partnership with Mainstreet with respect to 45 future properties, for a combined value of approximately $1.4 billion. The properties are located as far north as Canada, as far west as Arizona and Utah, and as far east as New Jersey and Pennsylvania.

The two agreements, expected to be finalized in the fourth quarter of this year, bring the value of the Mainstreet/HCN partnership to $2.3 billion.

“Throughout HCN’s history, our strategy has been to fuel its growth by forming mutually beneficial partnerships with leading seniors housing and post-acute operators,” Tom DeRosa, CEO of HCN, said in a press release. “We’re excited to expand our relationship-based platform with an innovative developer who shares our mission to improve healthcare delivery.”

DeRosa noted that Mainstreet’s NextGen prototype is designed to move patients out of acute-care hospitals and into a “lower-cost, more consumer-friendly environment.” Patients stay up to 30 days for rehab and therapy in settings designed to be similar to hotels.

Mainstreet says that partnering with HCN will allow Mainstreet to focus on its core business of real estate development.