10. Subsequent Events

Acquisition of Capella Healthcare Hospital Portfolio

In July 2015, we entered into definitive agreements pursuant to which we will acquire a portfolio of seven acute care hospitals currently owned and operated by Capella Healthcare, Inc. (“Capella”), a privately held company, as well as acquire an equity interest in the ongoing operator of the facilities. The table below sets forth pertinent details with respect to the hospitals in the portfolio:


Hospital	Location	Type	Licensed Beds
Capital Medical Center	Olympia, WA	Acute care		110
EASTAR Health System	Muskogee, OK	Acute care		320
Carolina Pines Regional Medical Center	Hartsville, SC	Acute care		116
St. Mary’s Regional Medical Center	Russellville, AR	Acute care		170
National Park Medical Center	Hot Springs, AR	Acute care		166
Southwestern Medical Center	Lawton, OK	Acute care		199
Willamette Valley Medical Center	McMinnville, OR	Acute care		88


Total Licensed Beds				1,169

Our investment in the portfolio will include our acquisition of real estate assets, the making of mortgage and acquisition loans, and an equity contribution to the operator of the facilities, for a combined purchase price and investment of approximately $900 million. We and current Capella management, who will continue to manage and operate the facilities, have formed a joint venture that will be the acquirer of Capella. After closing of the merger, we will acquire from and lease back to Capella its interests in five acute care hospitals for an aggregate purchase price of approximately $390 million and fund loans secured by first lien mortgages on two hospitals for an aggregate of approximately $210 million. The real estate leases and mortgage loans will have an initial combined GAAP yield of 9.1%, which is reflective of their 15-year terms with four 5-year extension options, plus consumer price-indexed increases, limited to a 2% floor and a 4% ceiling annually. The remaining approximately $300 million investment in the operations of Capella will be in the form of a $290 million acquisition loan to Capella, which will have a fixed interest rate equivalent to the initial lease and mortgage loan rate, and we would have a 49% interest in the equity of the operator, with management owning the remaining 51%. We expect to complete this transaction in the second half of 2015.

Financing

On July 27, 2015, we received commitment to provide a senior unsecured bridge loan facility in the original principal amount of $1.0 billion to fund the Capella transactions, if necessary. Borrowings under the bridge facility, if any, will bear interest at a rate equal to, at our option, LIBOR plus an applicable margin varying from 1.025% to 2.250% per annum or a Base Rate plus an applicable margin varying from 0.025% to 1.25% per annum, depending upon the ratings of our unsecured senior indebtedness and the total leverage ratio or unsecured leverage ratio. We will pay certain customary structuring and underwriting fees and, in the event we make any borrowings, funding and other fees in connection with the bridge facility. The bridge facility will mature 364 days after the closing date of the Capella transactions. The funding of the bridge facility is contingent of customary conditions, including but not limited to the execution and delivery of definitive documentation and the consummation of the Cappella transactions as described above. We cannot assure you that we will be able to successfully borrow under the bridge facility on the terms described herein or at all.

On August 4, 2015, we entered into an amendment to our revolving credit and term loan agreement to increase the current aggregate committed size to $1.25 billion and amend certain covenants in order to permit us to consummate and finance the Capella transactions. The increase in the credit agreement availability reduced the availability of the bridge facility by $100 million to $900 million.

On August 6, 2015, we completed an underwritten public offering of 28.75 million shares of our common stock, resulting in net proceeds of approximately $337.1 million, after deducting estimated offering expenses (which is inclusive of the underwriters’ option to purchase 3.8 million additional shares). The offering is expected to close August 11, 2015, subject to customary closing conditions. We intend to use the net proceeds from the offering to partially fund our Capella acquisition described above. Once the offering is completed, our availability under the bridge loan facility will be reduced to approximately $0.6 billion.

Other

On August 4, 2015, we filed Articles of Amendment to our charter with the Maryland State Department of Assessments and Taxation increasing the number of authorized shares of common stock, par value $0.001 per share available for issuance from 250,000,000 to 500,000,000.

On July 31, 2015, we entered into definitive agreements to acquire several acute care hospitals and a freestanding clinic in northern Italy for an aggregate purchase price to us of approximately €90 million. The acquisition will be effected through a newly-formed joint venture between us and affiliates of AXA Real Estate, in which we will own a 50% interest. Upon closing, the facilities will be leased to an Italian acute care hospital operator, pursuant to a long-term master lease. Closing of the transaction, which is expected during the second half of 2015, is subject to customary real estate, regulatory and other closing conditions.

On July 30, 2015, we sold a long-term acute care facility in Luling, Texas for approximately $9.7 million, resulting in a gain of $1.5 million. Due to this sale, we wrote off $0.9 million of straight-line receivables. On August 5, 2015, we sold six wellness centers in the United States for total proceeds of approximately $9.5 million (of which $1.5 million is in the form of a note), resulting in a small net gain.