Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events

Subsequent Events

(22) Subsequent Events

On October 16, 2012, the Company entered into a definitive agreement to acquire 133 senior housing communities for $1.73 billion, from a joint venture between Emeritus Corporation (“Emeritus”) and Blackstone Real Estate Partners VI, an affiliate of Blackstone (the “Blackstone JV”). Located in 29 states, the portfolio encompasses 10,350 units representing a diversified care mix of 61% assisted living, 25% independent living, 13% memory care and 1% skilled nursing. Based on current operating performance, the 133 communities consist of 99 that are stabilized and 34 that are currently in lease–up.

Emeritus will continue to operate the communities pursuant to long-term triple-net leases. To the extent any of the communities are leased to a subsidiary of Emeritus, the leases will be guaranteed by Emeritus. The leases provide total contractual rent in the first year of $105.5 million. The contractual rent will increase annually by the greater of the percentage increase in the Consumer Price Index (“CPI”) or 3.7% on average over the initial five years, and thereafter by the greater of CPI or 3.0% for the remaining portion of the initial lease term. At the beginning of the sixth lease year, rent on the 34 lease-up properties will be increased to the greater of the percentage increase in CPI or fair market, subject to a floor of 103% and a cap of 130% of the prior year’s rent.

The properties will be grouped into three comparable pools with initial terms of 14 to 16 years. Emeritus has two extension options, which, if exercised, bring total available lease terms to 30 to 35 years.

Concurrent with the acquisition, Emeritus will purchase nine communities from the Blackstone JV, for which the Company has agreed to provide secured debt financing of $52 million with a four-year term. The loan is secured by the underlying real estate and is prepayable at Emeritus’ option. The interest rate on the loan will initially be 6.1% and will gradually increase during its four year term to 7.05%.

On October 19, 2012, the Company completed a public offering of 22 million shares of common stock and received net proceeds of $979 million.