TOLEDO, OHIO AND ORLANDO, FLA. — One of the giants of the healthcare REIT sector, Welltower Inc. (NYSE: WELL), has agreed to acquire 55 medical office and outpatient facilities from CNL Healthcare Properties for $1.25 billion. The megadeal is expected to close in the first half of this year.
The Class A portfolio, which spans 16 states, is 94 percent occupied. Additionally, 92 percent of the facilities are affiliated with leading healthcare systems. The newly acquired portfolio is expected to overlap significantly with Welltower’s existing outpatient medical footprint.
“Welltower was able to act quickly and definitively when the opportunity presented itself, leveraging our proprietary data science platform and deep local presence through our real estate services platform to come to an agreement with CNL as a high quality and reputable sponsor,” says Shankh Mitra, chief investment officer for Toledo-based Welltower.
The acquisition includes 3.3 million square feet of rentable space in major metropolitan markets, including San Diego, Miami, Atlanta, Los Angeles and Cincinnati. In an investor presentation detailing the transaction, Welltower said it expects the initial cash yield to be 5.7 percent with a weighted average annual rent increase of 2.4 percent.
Orlando-based CNL plans to use the proceeds from the sale to repay debt, pay closing costs and other related expenses.
“The sale of our Class A medical office assets to Welltower underscores both the high quality of these properties and our focused work to drive investment performance and value for our investors,” says Stephen Mauldin, president and CEO of CNL.
“Welltower’s deep knowledge of the sector, the CNL platform’s positive experience in past dealings with Welltower — along with its reputation of certainty in delivering on commitments — will realize significant value for our shareholders in today’s volatile capital market environment,” adds Mauldin.
CNL originally marketed 63 properties through its financial advisers. CNL, a public, non-traded REIT, still owns and manages 87 seniors housing-centric properties in 31 states.
Welltower is an S&P 500 company that invests with leading seniors housing operators, post-acute providers and health systems. The REIT’s portfolio included 1,517 healthcare properties serving approximately 321,000 residents as of Sept. 30, 2018.
Welltower’s market cap is currently in excess of $25.2 billion. The company’s stock price closed at $67.29 per share Wednesday, up from $64.14 per share one year ago.
— Alex Tostado