Thursday, March 23, 2006

Hearthstone Assisted Living Enters $419 Million Sale Leaseback of 32 Facilities Across US

Nationwide Healthcare Properties - March 22, 2006

Nationwide Health Properties, Inc. (NYSE: NHP) announced today that it has entered into definitive agreements for the acquisition and master leaseback of the 32-facility, ten-state real estate holdings of Hearthstone Assisted Living, Inc. The purchase price is $419 million plus an estimated $12 million of debt defeasance and closing costs. The transaction is anticipated to close by May 31, 2006.

In tandem with the transaction, Hearthstone's President and CEO Tim Hekker and partners will acquire 100% ownership of the company that will operate the Hearthstone facilities. Hearthstone's principal selling shareholders include Fremont Realty Capital, funds advised by Apax Partners, L.P. and Kosberg & Associates.

NHP will receive rent at an initial lease rate of 8.06% plus one percent annual fixed rent increases for an average rent yield of 8.66% over the 15-year initial term. NHP will also receive CPI-based annual rent increases of up to 2% of Hearthstone's annual gross revenue. At the beginning of the eighth year, the minimum rent is reset for the remainder of the initial term to the greater of fair market rent or 110% of the prior year's total rent. Hearthstone has agreed to provide NHP with an exclusive acquisition right on its next $150 million of potential new investments, as well as a right of first offer/last look on an additional $150 million of potential new investments.

The portfolio's current occupancy rate is approximately 89% and consists of 3,097 units. Hearthstone derives substantially all of its revenues from private-pay sources. The lease will provide for a $6 million security deposit. Sphere: Related Content

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