Seattle-based senior-living provider Emeritus said Thursday it has reached a deal to take over operations of 38 Merrill Gardens properties in California, Washington and six other states.
The deal, expected to become final in the next few months, includes 14 Washington properties, making Emeritus the state’s largest provider of its kind, according to the company.
Emeritus President and CEO Granger Cobb said the company will keep Merrill Gardens’ employees and change very little other than the name on the buildings, which will now be called Emeritus.
“We have tremendous respect for Merrill Gardens. We’re basically approaching this from a standpoint of, ‘Let’s not change anything,’ ” Cobb said.
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Seattle-based Merrill Gardens operates the 38 facilities as part of a three-year-old joint venture with Health Care REIT, which owns 80 percent of the properties. Health Care REIT, based in Toledo, Ohio, intends to buy Merrill Gardens’ 20 percent ownership stake for $173 million, and Emeritus will operate the facilities under a long-term lease.
Emeritus will pay Health Care REIT $54 million in rent during the first year and slightly more each year for the next 14 years, with an option to extend for an additional 15 years. Emeritus also will pay Merrill Gardens a $10 million management contract termination fee.
Merrill Gardens said it still will have 26 properties in operation or development in six states and continue to add four or five more properties each year in select markets.
The deal gives Emeritus a total of 43 senior-living communities in Washington, with 3,700 residents and 2,300 employees. It has more than 500 properties nationwide.
Locally, Emeritus will assume management of Merrill Gardens properties in West Seattle, Queen Anne and the Northgate area of Seattle.
Meanwhile, Merrill Gardens will retain management of 10 properties in Washington state, including Kirkland, Mercer Island, Renton, and Seattle.
Cobb said the deal helps Emeritus expand beyond its core assisted-living and memory-care services to more independent-living offerings, a primary focus of Merrill Gardens. Only 11 percent of Emeritus’ senior-housing units nationwide are designated for independent living, he noted.
Emeritus already has properties in many of the same markets as Merrill Gardens, so the deal “will allow us to broaden our service offerings” to current residents and their families, Cobb said.
The deal sprang out of a series of conversations between Cobb and Merrill Gardens President Bill Pettit, who recently taught a course together on senior living management at Washington State University’s School of Hospitality Business Management.
Pettit said Merrill Gardens had been approached by potential suitors many times over the company’s 20 years.
Calling Emeritus “the right operator for the 38 communities,” Pettit said the deal will allow Merrill Gardens to concentrate on new development projects. He added that Emeritus’ values “are in sync with ours” and promised a seamless transition for residents and employees.
“Most of the next 60 days will be spent making sure residents are well-informed and feel comfortable with the change,” he said.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org. On Twitter: @amyemartinez