GE Healthcare Financial Services to Expand Real Estate Equity Presence Through $1.4 Billion Transaction

GE Healthcare Financial Services has signed a definitive agreement to acquire six senior housing portfolios valued at $1.4 billion from Alpharetta, Ga.-based Formation Capital LLC, which invests in and provides services to the senior housing and care industry. The transaction – expected to close in the third quarter of 2006 – will bring GE Healthcare Financial Services’ real estate investments to over $4 billion. “We are excited to make a strong addition to our equity portfolio with a solid, long-term partner like Formation Capital,” said John Cobb, Senior Managing Director for GE Healthcare Financial Services’ real estate finance team. “We have been providing debt products to the long-term care industry for over 10 years. This acquisition of senior living facilities marks the largest to date for our healthcare real estate team and positions us as a strong player in the equity market. We look forward to increasing our investments in the long-term care market in the years ahead.”

Through this transaction, GE Healthcare Financial Services will acquire Formation Capital’s ownership interests in portfolio assets operated by Laurel Healthcare, Centennial Healthcare, Opis Health Services, Harrington Healthcare, Sovereign Health Services and Epsilon Healthcare.

The combined acquired portfolios include 186 skilled nursing facilities and more than 21,000 beds, with an average occupancy rate of more than 90 percent. Fifty percent of the assets are located in Florida while the remaining properties are diversified across 20 states, including Mich., N.C., Ohio, Ind., Mass., and Miss. As the new owner of these facilities, GE Healthcare Financial Services plans to contract with Formation Capital to provide asset management services. The individual properties will continue to be operated by their current providers under long-term leasing arrangements.

GE Healthcare Financial Services and Formation Capital have had a strong working relationship for more than five years. GE Healthcare Financial Services has provided Formation Capital with several senior debt facilities for various long-term care projects, totaling over $400MM. This transaction is the largest to date between the two organizations.

“This transaction is a prime example of why Formation Capital continues to work with GE Healthcare Financial Services,” said Arnold Whitman, CEO of Formation Capital. “To finalize this agreement, we combined the financial expertise and resources of GE Healthcare Financial Services with our industry acumen and the operational excellence of some of the nation’s top operators. Together, we’ve formed a dynamic partnership and have positioned both of our organizations for continued growth.”