HCP’s $1.1B Offering Pays for ManorCare Purchase

In response to a stronger than anticipated interest among the investment community, the healthcare real estate REIT just announced the pricing of its public offering of 30 million shares of common stock--a marked increase over the 24 million shares announced just a day earlier--at $36.90 per share.

March 24, 2011
By Barbra Murray, Contributing Editor

Give the people what they want. HCP is doing just that. In response to a stronger than anticipated interest among the investment community, the healthcare real estate REIT just announced the pricing of its public offering of 30 million shares of common stock–a marked increase over the 24 million shares announced just a day earlier–at $36.90 per share. Proceeds from the offering are expected to total just a smidgen over $1.1 billion.

In addition to the 30 million shares of common stock being put up for grabs, 4.5 million shares will be available for purchase by the underwriters. BofA Merrill Lynch is the sole book-running manager for the offering. Citi, J.P. Morgan, UBS Investment Bank and Wells Fargo Securities are onboard as joint lead managers.

The vast majority of the net proceeds from the offering, approximately $852 million, have been earmarked for one purpose; financing of the planned $6.1 billion acquisition of the bulk of HCR ManorCare Inc.’s real estate assets. The portfolio encompasses 338 post-acute, skilled nursing and assisted living facilities spanning 30 states. The REIT will use the $852 million to fund the stock portion in cash rather than issuing 25.7 million shares of its common stock to HCR ManorCare.

HCP has been busy stockpiling funds for the HCR ManorCare transaction. In December 2010, just one week after announcing the deal, HCP closed a nearly $1.5 billion public offering of 46 million shares of common stock at a price of $32.00 per share. At that time, the REIT said it would rely on those proceeds, as well as future debt offerings, cash on hand, a $3.3 billion bridge loan and other means to fund the multi-billion-dollar HCR ManorCare purchase.

HCP’s most recent public offering of common stock is on track to close on March 28.