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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

Physicians Realty Trust Announces Agreement To Purchase Medical Office Portfolio For $764 Million

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Physicians Realty Trust, a self-managed healthcare real estate company, announced today that the Company, through its operating partnership, Physicians Realty L.P., a Delaware limited partnership, has executed a Master Transaction Agreement for the acquisition of 15 Class-A medical office buildings located in eight states, comprising approximately 1,460,000 square feet, for an aggregate purchase price of approximately $764.3 million, subject to closing prorations and other adjustments.

The Pending Acquisitions

The portfolio is approximately 95% leased with a weighted average remaining lease term of approximately 7.4 years. Each of the 15 buildings are either located on a health system campus or are affiliated with a health system, and approximately 74% of aggregate leased space is attributable to investment grade health systems or their subsidiaries. Upon closing, the first year unlevered cash yield of the portfolio is expected to be 4.9%. The Company expects that the transaction will be completed in the fourth quarter of 2021.

At closing, the Company anticipates funding the purchase of the Pending Acquisitions through the issuance of units of the Operating Partnership, the assumption of indebtedness on certain properties, the satisfaction of existing mezzanine loans outstanding, and proceeds from its unsecured line of credit.

The Master Transaction Agreement contains customary representations, warranties and covenants of the parties. The Pending Acquisitions are also subject to the satisfaction of certain conditions to closing, including the waiver of health system purchase rights with respect to certain properties. There can be no assurance that any or all of the conditions to closing will be satisfied or, if satisfied, that the Operating Partnership will complete the Pending Acquisitions, or effectuate the closing in a timely manner or at all.

About Physicians Realty Trust

Physicians Realty Trust is a self-managed healthcare real estate company organized to acquire, selectively develop, own and manage healthcare properties that are leased to physicians, hospitals and healthcare delivery systems. The Company invests in real estate that is integral to providing high quality healthcare. The Company conducts its business through an UPREIT structure in which its properties are owned by Physicians Realty L.P., a Delaware limited partnership (the “Operating Partnership”), directly or through limited partnerships, limited liability companies or other subsidiaries. The Company is the sole general partner of the Operating Partnership and, as of June 30, 2021, owned approximately 97.6% of the partnership interests in the Operating Partnership (“OP Units”).

Investors are encouraged to visit the Investor Relations portion of the Company’s website (www.docreit.com) for additional information, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, press releases, supplemental information packages and investor presentations.

 

Source: HREI