Months after Toledo, OH-based Welltower’s nearly $5 billion all-cash bid to purchase Healthcare Realty, Healthcare Realty shareholders on Friday approved a merger with Scottsdale, AZ-based Healthcare Trust of America.
The merger will create a medical sector-focused real estate investment trust with an enterprise value of $17.6 billion, overseeing more than 700 medical office properties, the Phoenix Business Journal reported. The transaction is expected to close on or around Wednesday.
Approximately 79% of the outstanding shares of Healthcare Realty common stock voted in favor of the merger transaction with HTA, which represented 92% of the votes cast, Nashville, TN-based Healthcare Realty said in a statement Friday.
March 28, Healthcare Realty Trust announced that it had received an unsolicited, nonbinding proposal from a REIT to acquire all the company’s outstanding common stock for $31.75 per share. Welltower CEO Shankh Mitra later confirmed that his company was the bidder, Bloomberg reported.
Jonathan Litt, founder and chief investment officer of Land & Buildings, said previously that he opposed Healthcare Realty Trust’s acquisition of Healthcare Trust of America.
“We see little strategic rationale for Healthcare Realty’s acquisition of Healthcare Trust of America and find it puzzling that HR [Healthcare Realty] rejected Welltower’s all-cash offer to pursue a value-destructive transaction,” Jonathan Litt, founder and chief investment officer of Land & Buildings,” Litt said June 16.
Peter N. Foss, CEO of HTA, stated in a second quarter earnings report: “I am proud of all that our team has accomplished and thank them for their hard work and commitment to unlocking the value of our portfolio. As we work to complete our pending merger with Healthcare Realty Trust, we will continue executing our strategy to drive future earnings growth and shareholder value creation.”
According to Healthcare Realty, Citigroup Global Markets is serving as lead financial adviser, Scotiabank is serving as financial adviser, and Hunton Andrews Kurth is acting as legal adviser to Healthcare Realty. J.P. Morgan Securities is acting as exclusive financial adviser, and McDermott Will & Emery is acting as legal adviser to Healthcare Trust of America.
Medical office building investments represented 24% of Welltower’s overall portfolio in the first quarter of this year, according to a July 13 business update from the REIT. That’s up from 17% in the same quarter 10 years ago.
Also during that time, the senior housing operating portfolio has gone from representing 16% of the REIT’s overall portfolio to 41%, and the senior housing triple-net lease portfolio has gone from representing 28% of the overall portfolio to 21%. Long-term/post-acute care has gone from representing 30% of Welltower’s overall portfolio in 2012 to 5% in 2022.
