MedEquities Shareholders Approve $600M Omega Merger

Shareholders of MedEquities Realty Trust (NYSE: MRT) on Wednesday overwhelmingly approved a plan to merge with fellow real estate investment trust (REIT) Omega Healthcare Investors (NYSE: OHI).

Around 99.9% of the votes cast — representing 79.5% of all outstanding shares as of March 4 — were in favor of the $600 million deal, first announced in January. The transaction is now expected to formally close on Friday, with each MedEquities share converted into 0.235 of an Omega share, along with $2 in cash.

As of this past December 31, the Nashville, Tenn.-based MedEquities’ portfolio consisted of 34 total properties, 20 of which were skilled nursing facilities; the remaining 14 included five behavioral health properties, three acute-care hospitals, two long-term acute care hospitals, a pair of inpatient rehabilitation facilities, one assisted living facility, and a single medical office building.

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“We believe that by investing in facilities that span the acute, post-acute, and behavioral spectrum of care, we will be able to adapt to — and capitalize on — changes in the health care industry and support, grow, and develop long-term relationships with providers that serve the highest number of patients at the highest-yielding end of the healthcare real estate market,” the company noted in its most recent 10-K filing with the Securities and Exchange Commission.

Representatives for MedEquities and Omega did not have any comment on the vote when reached by Skilled Nursing News Thursday afternoon.

Top tenant Creative Solutions in Healthcare operates 10 of the SNFs in MedEquities’ portfolio; the REIT back in November entered into a 15-year lease on the properties with Creative Solutions after replacing OnPointe as the operator of the buildings, all located within Texas.

At the end of 2018, Omega had 924 total health care assets across 41 states and the United Kingdom, according to its annual report — with 735 SNFs and 116 assisted living facilities. The company also held fixed-rate mortgages on 51 SNFs and three assisted living properties.

Speaking on his company’s first-quarter earnings call last week, Omega chief operating officer Daniel Booth was upbeat about the impending transaction, laying out a plan to integrate the two REITs’ systems and meet with the new operators coming into the Omega portfolio.

“We believe the addition of the MedEquities portfolio of high-quality, diversified assets will provide Omega with meaningful growth opportunities,” he said.

Omega also reported solid performance in the transitioned Creative Solutions properties in response to analyst questions.

“Obviously, MRT did a lot of work around that portfolio with the previous tenant,” Booth said. “And when they transitioned it over to Creative, obviously, there was a rent reset, if you will, but other than that there’s nothing else going on.”

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