TOLEDO, OHIO — Welltower Inc. (NYSE: WELL) has agreed to acquire 25 active adult properties from Affinity Living Communities for $969 million. The off-market transaction is part of a long-term strategic partnership between the two companies, with plans for future development activity together.
The portfolio encompasses nearly 3,900 units predominately located in the Pacific Northwest. Welltower says the acquisition will enable the company to strategically scale the geographic reach of its active adult portfolio into markets with a five-year projected population growth in the 55-plus demographic that is more than 2.5 times higher than the U.S. average. Post-closing, Affinity will continue to manage the portfolio subject to a terminable management contract.
Welltower plans to fund the acquisition using cash on hand and the assumption of $523 million of below-market-rate debt with an average interest rate of 3.8 percent and a nine-year weighted average maturity. The purchase price of approximately $249,000 per unit represents a significant discount to replacement cost, according to Welltower. The average property age is eight years.
The transaction is expected to close in tranches over the next several months with timing dependent on property-level loan assumption approvals. The deal will expand Welltower’s in-place and under-development active adult portfolio to nearly 25,000 units.
“Our wellness housing portfolio helps address the significant and growing unmet demand for wellness-focused rental housing for seniors,” says Shankh Mitra, Welltower’s CEO. “These communities provide thoughtful amenities and targeted social programming for empty nesters and active adults at moderate price points.”
Affinity communities typically feature more than 30,000 square feet of amenity space, significantly more than the industry average, and provide a sense of community through extensive resident-led programming, according to Welltower. The purpose-built communities have an average monthly rent of $2,100 and an average length of stay of nearly four years, resulting in operating margins of nearly 60 percent and a lower capital expenditure burden.
Spokane, Wash.-based Affinity is a vertically integrated developer and operator of age-restricted and age-targeted wellness housing.
Welltower is a Toledo-based REIT and the largest owner of seniors housing in the United States with nearly 100,000 units. The company’s stock price opened at $90 per share Wednesday, Feb. 14, up from $75.75 per share one year ago.
— Jeff Shaw and Kristin Harlow