By Dow Jones Business News, June 27, 2013, 05:33:00 PM EDT

By Tess Stynes

Health Care REIT Inc. ( HCN ) agreed to acquire joint-venture partner Merrill Gardens' 20% equity interest for $173 million, in a deal in which assisted-living company Emeritus Corp. ( ESC ) will operate the properties under a long-term master lease.

The deal includes pro rata mortgage debt of $82 million.

Under the agreement, Health Care REIT, a senior-housing and health-care-focused real-estate investment trust, will expand its long-time relationship with Emeritus--a provider of assisted living, memory care and home health-care services.

Health Care REIT Chairman and Chief Executive George L. Chapman said "Their strong existing footprint in the markets where this portfolio is located will allow for a seamless transition and value creation over the long-term."

Mr. Chapman also said that privately held Merrill Gardens decided to concentrate its efforts on new development projects, but will remain a strategic partner for Health Care REIT.

Emeritus will lease a total of 38 senior housing communities, representing approximately 4,400 units. The communities are concentrated primarily in Washington and California, with more than 40% of the units designated for independent living.

Rent in the first year of the 15-year lease is set at $54 million and will increase each year. Emeritus has the option to increase the lease for an additional 15-year term.

Under the deal, set to close in the third quarter, Emeritus will pay a $10 million management-contract termination fee to Merrill Gardens.

Read more:

Health Care REIT to Acquire Venture Partner's Stake in $173 Million Deal