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All Signs Point Toward More MOB Activity

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At a recent Revista’s investor panel, HRE professionals discussed why more MOB acquisitions, fundraising, and sales are anticipated this year.

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Healthpeak Properties, Physicians Realty Trust Enter $21B Merger

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Healthpeak Properties and Physicians Realty Trust have entered into a definitive agreement to combine in an all-stock merger valued at $21 billion.

The new company will operate a portfolio of 52 million square feet of health-care facilities, of which 40 million square feet represent outpatient properties in Dallas, Houston, Nashville, Phoenix and Denver. The partners expect to generate run-rate synergies of more than $40 million by the end of the first year, and $60 million by the end of the second year.

Healthpeak will also assume Physicians Realty Trust’s existing debt and will enter into a new five-year, $500 million loan at a rate of SOFR plus 85 basis points. The tax-free transaction is expected to close in the first half of 2024.

Transaction Details

Under the agreement, each Physicians Realty Trust common share will be converted into 0.674 of a newly issued Healthpeak common share. Healthpeak and Physicians Realty Trust shareholders will own 77 percent and 23 percent of the combined company, respectively. The new firm will pay an annualized dividend of $1.20 per share.

Barclays and Morgan Stanley & Co. are Healthpeak’s lead financial advisors, along with J.P. Morgan, Mizuho Securities USA, RBC Capital Markets and Wells Fargo serving as additional advisors. Latham & Watkins LLP is acting as legal advisor for the firm. Physicians Realty Trust worked with BofA Securities and KeyBanc Capital Markets as lead financial advisors, along with BMO Capital Markets Corp. Baker McKenzie is acting as legal advisor.

The medical office market is returning to more stable fundamentals, after having weathered recent economic headwinds, a recent IPA report on the matter shows. Medical office projects only represent 10.7 percent of the overall national office pipeline. The main challenge the sector’s expansion is facing is the health-care labor shortage, rather than supply-related obstacles.

 

Source: CPE

Physicians Realty Trust Closes On $750 Million Deal Acquiring A 14 Medical Office Building Portfolio

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Physicians Realty Trust has acquired a 14-building medical office portfolio from Landmark Healthcare Facilities for approximately $750 million, in an off-market transaction.

Spread across eight states, the Class A medical facilities totaling roughly 1.4 million square feet were 95 percent leased at the time of sale. The REIT will continue to partner with Landmark in the property and facility management of the traded assets.

With most assets in Florida and Michigan, the portfolio comprises:

• 200,583-square-foot UF Health Jacksonville North in Jacksonville, Florida
• 164,186-square-foot Baptist Medical Center Belhaven in Jackson, Mississippi
• 141,205-square-foot Burns POB (professional office building) in Petoskey, Michigan
• 121,834-square-foot TGH Brandon Healthplex in Brandon, Florida
• 100,490-square-foot Beaumont POB in Sterling Heights, Michigan
• 99,055-square-foot Lafayette MOB in Lafayette, Louisiana
• 94,572-square-foot Beaumont Health and Wellness Center in Rochester Hills, Michigan
• 90,156-square-foot Hospital Hill MOB in Kansas City, Missouri
• 89,159-square-foot Raritan Bay Medical Center in Old Bridge, New Jersey
• 85,582-square-foot Saint Vincent MOB in Erie, Pennsylvania
• 81,312-square-foot Riverside MOB in Hampton, Virginia
• 73,453-square-foot Bay City MOB in Bay City, Michigan
• 57,040-square-foot Beaumont Grosse Point MOB in Grosse Pointe, Michigan
• 36,045-square-foot Yulee MOB in Yulee, Florida

Each facility is part of a hospital campus or affiliated with a health system and 75 percent of the leased space has investment-grade health systems or their subsidiaries as tenants.

Grounds For New Relationships

Considered to be the largest single transaction in the company’s history, the Landmark portfolio acquisition was originally announced in October. The initial deal included 15 medical facilities with a total price tag of approximately $764.3 million. However, a 24,972-square-foot property in Deltona, Fla., was ultimately excluded from the sale as its tenant chose to exercise its Right of First Refusal.

The deal helped Physicians Realty Trust establish 10 new health system relationships, including the University of Florida Health, Beaumont Health, Hackensack Meridian Health, Baptist Health Systems, McLaren Health Care and Allegheny Health.

 

Source: Commercial Property Executive