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Sentio Healthcare to Be Acquired for Estimated $14.65 Per Share

May 5, 2017

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Sentio Healthcare to Be Acquired for Estimated $14.65 Per Share

May 5, 2017 | by James Sprow | Blue Vault

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Kayne Anderson Real Estate Advisors (“KAREA”), the real estate private equity arm of Kayne Anderson Capital Advisors, L.P., Sentio Healthcare Properties, Inc. (“Sentio” or the “REIT”), Sentio Investments, LLC (the “Advisor” or “Sentio Investments”) and KKR (NYSE: KKR) today announced a definitive merger agreement under which affiliates of KAREA will acquire Sentio by way of merger. Under the terms of the agreement, which was unanimously approved by the board of directors of Sentio, KAREA will acquire all of the outstanding shares of Sentio in an all­ cash transaction based on an estimated total asset value of $825 million.

Sentio is a public, non­listed real estate investment trust, externally advised by Sentio Investments, with a portfolio of 34 properties including senior housing communities and medical office buildings in 16 states across the U.S. Under the terms of the agreement, Sentio stockholders will receive: (i) no less than $14.37 per share in cash at the closing of the merger; (ii) up to an additional $0.55 per share in cash at the closing of the merger based upon final pricing calculations; and (iii) one contingent value right for each share of common stock of Sentio held. The contingent value right represents a proportionate interest in up to an additional $8.76 million (subject to certain increases under the terms of the agreement) that could be released at the end of three years subject to reduction as a result of certain indemnification rights of KAREA under the merger agreement. Should the maximum amount of funds in the escrow be released to the stockholders, the result would be up to an additional $0.29 per share in cash. The resulting range of total cash consideration to the stockholders is between $14.37 and $15.21 per share (subject to certain increases under the terms of the merger agreement). Sentio’s current estimate of the amount payable per share of common stock at closing is $14.65 per share. The amount to be received at the closing of the merger will be set by KAREA and Sentio two business days prior to the special stockholder meeting called to approve the proposed merger transaction.

“This exceptional outcome for our stockholders would not have been possible without our operating partners delivering outstanding resident and patient care each day in our communities. We have always viewed that as the key to strong results in this industry,” said John Mark Ramsey, CEO of the REIT and the Advisor. “This transaction validates the board’s goal of optimizing stockholder value by establishing a unique partnership between our operating partners, Sentio Investments, and KKR, an industry leading global investment firm. KKR’s partnership, along with their industry and capital markets expertise, has been a valuable asset to the Company and its stockholders.”

“The addition of the high­quality Sentio assets further solidifies KAREA’s position as one of the largest owners of healthcare real estate with a strong composition of premier assets,” said David Selznick, Chief Investment Officer of KAREA. “This acquisition represents a compelling opportunity for KAREA to create value through property renovations, facility expansions and other operational enhancements. We are pleased to be building off of the success that Sentio has had with the portfolio and its operators, and believe that this transaction will enable us to continue to generate best­in­class returns for our investors.”

“We have been fortunate for the opportunity to support John Mark and his impressive team at Sentio over the last four years, and we are proud of the results. Sentio and its talented operating partners have delivered high quality care to thousands of American seniors, allowing the Company to triple in size and achieve outsized shareholder returns since our 2013 commitment. And we are pleased to be leaving the Company and its communities on even stronger footing, under the highly capable stewardship of Kayne Anderson,” said Billy Butcher, Member of KKR.

Approvals and Timing Completion of the transaction is subject to the approval of the Sentio stockholders and satisfaction of various closing conditions. The transaction is currently expected to close in the third quarter of 2017.

Pending the closing of the merger, Sentio expects to continue to declare and pay customary common and preferred stock dividends and distributions through the actual closing date of the merger. Distributions have been at the annualized rate of $0.50 per share in 2016. The most recent net asset value per share for Sentio of $12.45 was effective March 23, 2016, which is also the DRIP price. Sentio’s initial public offering in 2008 was at $10.00 per share and had raised $132.3 million including DRIP by its close in 2011.

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April 14, 2016

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