Healthcare REITs Merge in $18B Deal
This transaction will create one of the largest pure play medical office REITs in the market.
Healthcare Realty Trust and Healthcare Trust of America have agreed to enter into a strategic business combination in a deal valued at $18 billion.
This transaction will create one of the largest pure play medical office REITs in the market, with 727 properties totaling 44 million square feet—nearly double the square footage of the next largest MOB portfolio. The company will own the largest portfolio of on or adjacent to hospital campus properties comprising 28.2 million square feet. Also, 94% of the portfolio’s square feet will be in the top 100 MSAs.
Across the entire portfolio, the company will have 147 clusters, each comprising two to eleven properties within two miles of each other and averaging approximately 195,000 square feet per cluster.
The company will be led by the Healthcare Realty management team, with Todd Meredith as president and CEO and Kris Douglas as EVP and CFO. Upon completion of the transaction, the new REIT will continue to operate with the Healthcare Realty name and trade on the NYSE under the ticker symbol HR.
The board will consist of nine existing directors of Healthcare Realty, three members of the Healthcare Trust of America Board, and one new member to be mutually agreed upon by the existing HR and HTA directors and appointed prior to closing of the transaction. Knox Singleton, chairman of the Healthcare Realty Board, will be chairman of the company and Brad Blair, chairman of the Healthcare Trust of America Board, will be appointed Vice Chairman.
The new company’s headquarters will be based in Nashville, with additional corporate offices in Scottsdale and Charleston.
“We are pleased to announce this strategic transaction, which unites two highly complementary medical office portfolios and represents a rare opportunity to create a sector-leading REIT in terms of both size and quality,” Meredith said in prepared remarks.
The company will have unmatched market scale in concentrated clusters, meaningful corporate and operational synergies, and a larger development pipeline,” he said.
The two companies note that the new REIT will have a development pipeline in excess of $2 billion, concentrated in markets such as Seattle, Houston, Denver, Dallas and Raleigh.