Welltower in press releases issued Sunday and Monday announced a series of moves to reorganize the company, build new luxury senior living communities and expand an existing senior living operator partnership via a $548 million deal.
A separate press release issued by National Health Investors announced that the two real estate investment trusts had agreed on terms to end a lawsuit involving Holiday Retirement properties.
Monday, Toledo, OH-based Welltower announced that it intends to reorganize as an umbrella partnership real estate investment trust, or UPREIT. In the reorganization, a new holding company will become the publicly traded parent company and will inherit the Welltower Inc. name. The current REIT will exist as a wholly owned subsidiary of the UPREIT, initially called Welltower OP Inc. Welltower OP also plans to convert to a Delaware limited liability company, pending shareholder approval at the May 9 annual shareholder meeting.
Welltower said that the reorganization, expected to take effect April 1, will align its corporate structure with other REITs and provide a more efficient way to acquire properties in a tax-deferred way. The UPREIT structure allows property owners to contribute property to an existing operating partnership in exchange for partnership interest.
After the LLC conversion, Welltower OP LLC will function as the operating partnership in the UPREIT structure. Partnership interests in the LLC would entitle holders to receive the same distributions as Welltower OP common stockholders and be entitled to exchange the partnership interests for cash or common stock.
“We are pleased to avail ourselves of this corporate structure, better aligning us with the REIT industry, which will enhance our ability to compete in the acquisition of real estate assets,” Welltower CEO and Chief Investment Officer Shank Mitra said in a statement. “Additionally, we believe that the conversion will further expand our already robust external growth pipeline, as OP units potentially offer a unique tool for sellers seeking tax deferral and advanced tax planning.”
The company said the reorganization will not affect its financial position or result in any changes to its business operations.
StoryPoint Senior Living
News of the reorganization followed the issuance of three other press releases by Welltower on Sunday.
In one, the REIT announced that it plans to expand its partnership with Brighton, MI-based senior living operator StoryPoint Senior Living by purchasing three distinct senior living portfolios for $548 million. The portfolios total 2,787 units across 33 communities throughout Michigan, Ohio and Tennessee.
StoryPoint CEO Dan Hughes called the past four years a challenging journey but said that the operator’s successful partnership with Welltower comes down to “alignment and trust.”
Mitra said the transactions represent a “further evolution” of its relationship with StoryPoint. With the announced transactions, StoryPoint will operate 74 communities for Welltower and allow the REIT to expand its local footprint in the affected markets.
Welltower joint venture
Also on Sunday, Welltower announced an expansion of its Coterie luxury brand under its joint venture with Related Companies and Atria Senior Living.
The joint venture will develop two senior living communities, in Santa Clara and Cupertino, CA. The communities will be the third and fourth locations for the Coterie luxury brand of senior living. Coterie Cathedral Hill opened recently in San Francisco, and Coterie Hudson Yards will open later this year.
The Santa Clara community will be adjacent to a 9.2 million-square-foot, mixed-use urban development by Related Companies. The project will include traditional office and medical office buildings, hotels, multifamily housing and retail. The senior living portion is expected to break ground later this year, with completion projected by 2024.
Construction on the Cupertino community is expected to begin by the end of the year, with completion in 2024. The community will include an outdoor community park.
Additional details of the announcements can be found in a business update that Welltower issued Monday.
In other news, NHI announced Monday that it expects to drop its lawsuit against Welltower in April. The two will operate under a memorandum of understanding until the settlement is finalized.
