Health Care REIT, Inc. has entered into an agreement to sell its 49 percent interest in seven life science buildings located at Massachusetts Institute of Technology’s University Park, a mixed-use life science campus, in Cambridge, MA.
Forest City Enterprises, Inc. will redeem HCN’s interest for $573.5 million, including HCN’s pro rata share of property-level debt of $174 million.
The purchase price represents a projected five percent cap rate based on forward 12 months net operating income.
“This was a terrific investment for HCN, achieving an unlevered internal rate of return of approximately 15 percent. Forest City has been an excellent partner, and we appreciate their role in our successful partnership over the last five years,” said Tom DeRosa, CEO of HCN. “The proceeds from this sale will be reinvested accretively in our core business; owning, developing and managing the highest quality seniors housing, post-acute and outpatient medical real estate in the US, UK and Canada.”
The two companies entered into a 51/49 equity joint venture for the properties in February 2010. At that time, HCN invested $327 million, including assumed debt, for its 49 percent interest.
The disposition of the life science portfolio is incremental to HCN’s most recently disclosed 2015 disposition guidance of $400 million and is expected to be completed during the second half of 2015.