Welltower Shakes Up Portfolio, Commits to Nearly $2.75B in Transactions

Welltower purchased Balfour at Riverfront in Denver.

TOLEDO, OHIO — Welltower Inc. (NYSE: WELL) has expanded its senior living portfolio to the tune of 15 properties worth $949 million across the country. Simultaneously, the healthcare REIT giant exited its partnership with seniors housing operator Benchmark Senior Living, selling its 48-property portfolio to an undisclosed buyer for $1.8 billion.

The 48 properties that Benchmark operates total 4,137 units and are located in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. As part of the recapitalization, Benchmark will invest in improvements at the properties. Benchmark will continue to manage the portfolio under a new management agreement with the new capital partner.

Ted Flagg of the JLL Capital Markets team represented Welltower in the Benchmark transaction.

With the new acquisitions, Welltower expanded its footprint by entering into or expanding partner agreements with senior living operators Balfour Senior Living, Sunrise Senior Living and Discovery Senior Living. The three partnerships yielded 14 properties in Maryland, Colorado, California and Texas.

Welltower acquired six properties from Balfour, including Balfour’s flagship Balfour at Riverfront in Denver and the recently opened Lavender Farms, for $308 million. The other four properties are situated in the Denver and Boulder metro areas. Additionally, Welltower has the option to purchase a 34.9 percent interest in Balfour’s operations. Balfour will continue to manage all six properties.

From Sunrise, Welltower acquired five properties in the metros of Washington, D.C., San Diego and San Francisco, for $285 million. Sunrise will continue to operate the communities under an incentive-based management contract. Welltower previously funded 34 percent of the construction costs to develop the three properties, which were completed in 2017 and 2018.

In Texas, Welltower partnered with Discovery to buy three South Bay-developed senior living properties, one of which is still under construction with anticipated delivery by the end of 2019. The purchase price for the three properties was $216 million, though when Phase II of Alliance Town Center is complete, the portfolio will be worth $237 million. The three assets are located in the Dallas-Fort Worth and San Antonio metro areas. As part of the transaction, Welltower signed a $1 billion exclusive development agreement with Discovery, under which Welltower and Discovery are currently reviewing two new projects.

Reaching outside its senior living portfolio, Welltower also agreed to purchase a 43-acre, six-building, 270,000-square-foot medical office campus in Berkeley Heights, N.J., for $140 million. The campus is master-leased to Summit Medical Group (SMG). The sale is expected to close in the third quarter of this year. As part of the transaction, Toledo, Ohio-based Welltower signed SMG to a new 20-year, absolute net lease.

“Once again, Welltower was able to elevate the quality of our healthcare real estate portfolio by recycling out of legacy assets and operators in order to capitalize a next-generation healthcare real estate platform that will deliver sustainable growth for years to come,” says Thomas DeRosa, chairman and CEO of Welltower.

Welltower’s stock price closed Wednesday at $83.10 per share, up 32 percent from $62.96 one year ago.

— Alex Tostado

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