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REIT Welltower Still Looking To Acquire Healthcare Realty Trust After $5B Bid Rejected

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Welltower remains interested in making a play for fellow real estate investment trust Healthcare Realty Trust after making an all-cash bid for it earlier this year.

Welltower, a REIT that owns senior housing, medical facilities and medical offices, made a $4.8B all-cash bid for Healthcare Realty Trust in February, The Wall Street Journal reported. The offer came soon after Healthcare Realty agreed to a merger with Healthcare Trust of America.

Welltower offered to pay the $163M termination fee that the Nashville-based Healthcare Realty would’ve had to pay for backing out of the $10B, mostly stock deal, but Healthcare Realty’s board decided it wasn’t a better offer than the merger and rejected it in March.

Welltower’s offer was for $31.75 a share, and it could make another offer, the WSJ reports. An acquisition would give Welltower a deeper medical office presence, an area it has already been growing in recent months.

In August, Welltower bought six medical office buildings in New York City via a joint venture with Aspect Health, paying $98M. It has also been picking up senior housing at a fast clip; last summer it spent $1.58B on a portfolio of 86 senior housing sites from Holiday Retirement. In November, it bought 14 senior housing properties managed by Watermark Retirement.

“Since pivoting to offense 13 months ago, Welltower is pleased to have executed on its value-driven investment thesis, largely through granular and off-market transactions completed at a significant discount to estimated replacement cost,” CEO Shankh Mitra said at the time, Senior Housing News reported.

Healthcare Realty’s shares jumped to $28.55 Monday, per the WSJ, an increase of 5.4%. Healthcare Trust’s fell by 1.6% to $29.96.

 

Source: Bisnow

Ventas to Acquire New Senior Investment Group In $2.3 Billion Deal

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Ventas will acquire New Senior Investment Group in an all-stock transaction, valued at approximately $2.3 billion, including $1.5 billion of new senior debt.

With the acquisition of New Senior’s 12,404 units, Ventas is getting a geographically diversified portfolio of 103 private-pay senior living communities, including 102 independent living communities. It spans 36 states in the United States.

New Senior shareholders will receive 0.1561 shares of newly issued Ventas stock per share of New Senior common stock. That comes out to approximately $9.10 per New Senior share, a 31% equity premium based on its 30-day trading average and a 10% premium on its total enterprise value.

Ventas anticipates that the transaction will be approximately $0.09 to $0.11 accretive to its normalized funds from operations per share on a full-year basis. It is also expected to represent roughly a 6% capitalization rate on expected New Senior 2022 Net Operating Income.

“The transaction provides Ventas shareholders with an attractive valuation and accretion, and further positions us to win the recovery,” said Debra A. Cafaro, Ventas Chairman and CEO, in a prepared statement. “It continues Ventas’s longstanding track record of capital allocation excellence, builds on our deep experience with the independent living product and leading operators Atria and Holiday, and is a testament to the continued dedication and expertise of our outstanding team.”

The Ventas-New Senior deal is the second significant seniors transaction in the past week. Last week, Welltower announced that it was acquiring a portfolio of 86 seniors housing properties owned by Holiday Retirement for $1.58 billion, or $152,000 per unit.

The portfolio includes 80 nearly identical independent living and six combinations of independent living and assisted living properties. Upon the closing date of this transaction, expected to be in the third quarter of 2021, Atria Senior Living will assume operations of the properties and retain Holiday’s in-place senior management and staff.

The price tag of $1.58 billion represents a 30% discount to the estimated replacement cost, according to Welltower. The REIT says the transaction is expected to be approximately $0.10 per diluted share accretive to its normalized funds from operations during the first twelve months post-closing.

These transactions are occurring as seniors housing is primed for recovery. The JLL Valuation Advisory says demand in the sector will soon be at its highest point ever. Helping magnify that demand will be supply shortages as construction delays from the pandemic hindered starts. As a percentage of existing supply, units under construction dropped from peak levels of 7.0% in Q4 2019 to 4.7% in Q1 2021. JLL says the need to serve the middle-income population will increase, resulting from the global impact of COVID-19.

“Investors remain bullish on seniors housing and care investments,” said JLL Managing Director Zach Bowyer, MAI, head of Alternatives Asset Sectors, Valuation Advisory. “We anticipate market fundamentals to steadily improve and the market to re-stabilize between two and four years, depending on the location.”

 

Source: GlobeSt

Welltower Recaps $550M Medical Office Portfolio Through Joint Venture With Wafra

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Welltower has recapitalized a medical office portfolio through a $550 million joint venture with global alternative investment platform Wafra.

Wafra now owns a 80% stake in the 24-asset portfolio, which is located in Texas, Florida, Minnesota, the Carolinas, Tennessee, California, Pennsylvania and Washington, among other states. The REIT is retaining a 20% interest in the portfolio, which is 97% affiliated with health systems. Welltower will also continue serving as asset manager and operator for the properties.

“The two companies may partner on other deals,” said Russell Valdez, Wafra’s chief investment officer. “We look forward to expanding our footprint together in these growing sectors with the shared goal of further collaboration on healthcare and other real estate opportunities.”

There is a case to be made that medical office assets will flourish as the pandemic passes. Cushman & Wakefield argues that the same drivers that fueled medical offices before the pandemic—namely demographics—will continue to support the sector’s growth. It also notes that healthcare spending is projected to increase by $1.9 trillion in the US alone between 2020 and 2027, per the Centers for Medicare and Medicaid Services.

 

Source: GlobeSt.