Welltower Expands Medical Office Holdings Through Five Transactions Totaling $1.7B, Including Hammes Acquisition
TOLEDO, OHIO — Welltower Inc. (NYSE: WELL), a Toledo-based seniors housing and healthcare REIT, is continuing to expand its medical office holdings. The company announced five transactions totaling approximately $1.7 billion, including a $787 million portfolio acquisition of 29 Class A medical office buildings from Hammes Partners, a medical office investment firm based in Milwaukee.
The 1.5 million-square-foot portfolio is concentrated in the New York City and Boston suburbs and includes properties in California, Texas and Maryland. The portfolio was 97 percent occupied at the time of sale and is affiliated with Baylor Scott & White, Providence St. Joseph, Trinity Health, Medstar and other not-for-profit health systems and multi-specialty physician groups.
The portfolio has an average age of 10 years, a weighted average lease term of 12 years and 2.2 percent average annual rent increases. The Hammes transaction is scheduled to close in the fourth quarter of 2019.
Separately, Welltower announced four separate outpatient medical transactions that are currently under contract for approximately $885 million. Details on these four deals were not disclosed.
“These transactions establish Welltower as the largest commercial owner of medical office real estate in the country, with a platform approaching 30 million square feet,” says Thomas DeRosa, chairman and CEO of Welltower.
With these announcements, Welltower has closed or announced over $3.5 billion of outpatient medical acquisitions this year. These acquisitions include 450 properties spanning more than 8 million square feet.
In a separate deal, Welltower and Invesco Real Estate have entered into a joint venture partnership whereby Welltower is selling an 85 percent stake in a portfolio of 35 medical office buildings for $850 million.
Spanning 2.6 million square feet, the portfolio is 100 percent affiliated with health systems and has an average weighted lease term of five years. The average age of the portfolio is 19 years.
Welltower owns interests in seniors housing, post-acute and outpatient medical properties concentrated in major markets in the United States, Canada and the United Kingdom. The REIT’s portfolio includes approximately 1,300 seniors housing communities and 22 million square feet of outpatient facilities.
Welltower’s stock price closed on Monday, Nov. 11 at $82.29 per share, up from $69.87 a year ago, a more than 16 percent increase. The company’s current equity market cap is 33.35 billion, the highest among healthcare REITs.
Hammes Partners is a private investment division of Hammes Co., a Milwaukee-based developer of healthcare real estate. Hammes Co. has delivered more than 600 healthcare facilities, including medical office buildings, acute-care hospitals, outpatient centers, specialty clinics, children’s hospitals, research laboratories and freestanding emergency departments.
Invesco Real Estate is an independent investment management firm with 8,000 employees working in 25 countries. The Atlanta-based firm managed nearly $1.2 trillion in assets as of Oct. 31, 2019.
— John Nelson