(Photo illustration by Peter Dazeley/Getty)
UPDATES: 8/14/14, 11:15 a.m. EDT. The names of the lawyers from Borden Ladner Gervais have been added to the sixth paragraph of this story. 8/18/14, 12:48 p.m. EDT. Arnold & Porter’s legal team has been added to the fifth paragraph.
Health Care REIT, a Toledo-based real estate investment trust that Bloomberg reports is the nation’s largest health care landlord by market value, has agreed to pay at least $950 million for HealthLease Properties in the latest big deal in the senior housing sector.
Sidley Austin, Arnold & Porter, Toledo-based Shumaker, Loop & Kendrick and Canada’s Borden Ladner Gervais are advising HCN on its proposed purchase of Toronto-based HealthLease, which owns 53 senior living and long-term care communities throughout North America.
The total value of the transaction could reach $2.3 billion by 2017 after taking into account another $369 million partnership HCN reached with HealthLease’s owner Mainstreet Property Group to buy 17 living facilities being built in Denver, Indianapolis and Kansas City, Mo. HCN also has the option to buy another 45 projects under development by Mainstreet that are valued at $1.4 billion, according to the Indianapolis Business Journal.
Taking the lead for HCN on the transactions are Sidley Austin corporate partners Matthew McQueen and David Zampa, both of whom have a long history with the REIT. Both lawyers previously advised HCN on its $845 million acquisition of Sunrise Senior Living in 2012 and $2.4 billion buy of 147 properties from Genesis HealthCare in 2011. (Zampa also advised HCN on its $877 million merger with Windrose Medical Properties Trust in 2006.) Other Sidley lawyers working on the current matter for HCN include real estate partners Paul Monson and Anthony Aiello and associates Brendan Bowes, Molly Novy and Matthew Stoker.
Arnold & Porter tax practice head Joseph Howe III and associate Josh Scala in Washington, D.C., are serving as special REIT counsel to HCN on the transaction, where they are handling U.S. and cross-border tax issues. Howe previously advised HCN on its deals with Genesis and Sunrise, including another deal with the latter earlier this year to increase its stake in Sunrise’s management company.
Paul Mingay, national leader of the public M&A group at BLG, is heading a team serving as Canadian counsel to HCN on its purchase of HealthLease that includes capital markets partner Jason Saltzman, tax leader Stephen Fyfe, tax partner Steve Suarez, commercial real estate partner Serge Lakatos, national antitrust vice chair Subrata Bhattacharjee, commercial litigation leader John Blair and associates Andrew Bunston, Kerry Burgi, Travis McArthur and Jon Smithen.
Shumaker Loop, which represented HCN on its deals with Sunrise and Genesis, is fielding a team led by REIT practice coheads Mary Ellen Pisanelli and Cynthia Rerucha, corporate partner Michael O’Callaghan, environmental partner Mark Mercer and associates Zachary Madden and Nicholas Malone.
Pisanelli, who like HCN is based in Toledo, serves as outside general counsel to the REIT. HCN’s past general counsel is Jeffrey Miller, a former Shumaker Loop real estate partner promoted on July 31 to chief operating officer of the REIT. Another former Shumaker Loop real estate partner, Charles Hiller, serves as the REIT’s associate general counsel. William Ballard Jr., a former of counsel with Indiana’s Bingham Greenebaum Doll, is an independent member of HCN’s board of directors.
For its part, Mainstreet, which has sought to develop high-end senior living centers, has turned to a legal team from Blake, Cassels & Graydon led by M&A partners Eric Moncik and Michael Gans, finance partner Will Fung and associates Robert Agar, Kenneth Prichard and Robert Seager. Christopher Lukaart serves as general counsel for Mainstreet, whose associate general counsel is Julie Elliott. The Carmel, Ind.-based investment firm is controlled by Indiana entrepreneur Zeke Turner, the son of the state’s House Speaker Pro Tempore P. Eric Turner, cleared in an ethics probe earlier this year. (The elder Turner, a Republican, weathered a primary challenge in May.)
Stephen Pincus, a member of the executive committee and chair of the REIT and income securities practice at Toronto-based Goodmans, is advising HealthLease on its proposed sale to HCN. Pincus previously led a team from the firm that handled a $107.3 million initial public offering for HealthLease in Canada in 2012.
Other Goodmans lawyers working on the current deal for HealthLease include corporate partner Mark Spiro, tax partners Jarrett Freeman and Jon Northup, health care regulatory partner and seniors housing division chair Michelle Roth, Investment Canada Act and corporate partner Joel Schachter, antitrust cohead and counsel Richard Annan and associates Jennifer Ehrlich, Gail Jaffe and Chat Ortved. HealthLease, which is managed by Mainstreet, expects its sale to HCN to close by year’s end.
Reuters reports that the aging U.S. population and growing demand for senior living and medical services has real estate investment firms keeping their outside counsel busy on a bevy of deals in recent months.
Just last week, NorthStar Realty Finance Corp. turned to Paul, Weiss, Rifkind, Wharton & Garrison for counsel on its $3.4 billion buy of Griffin-American Heathcare REIT II, which was advised by Latham & Watkins, McGuireWoods and Morris, Manning & Martin. In June, Wachtell, Lipton, Rosen & Katz advised Ventas, one of the nation’s largest health care REITs, on its $2.6 billion buy of American Realty Capital Healthcare from American Realty Capital Properties, which turned to Proskauer Rose and Venable for counsel on the transaction.