Healthpeak Properties and Physicians Realty Trust have agreed to an all-stock merger in a deal that the two REITs have valued at approximately $21 billion.
Each Physicians Realty share will be converted into 0.674 of a newly issued Healthpeak common share, making the purchase price about $2.64 billion based on Physicians’ closing price Friday, according to Bloomberg.
The combined company will create a healthcare behemoth that has a 52 million square foot portfolio, including 40 million square feet of outpatient medical properties that are concentrated in Dallas, Houston, Nashville, Phoenix, and Denver.
The two companies have overlapping real estate in more than 30 markets, which they say will give them a greater competitive advantage while also deepening the relationships with health systems. Their combined tenant roster consists of health systems, biopharma, and physician practices.
The combined company will be led by Healthpeak’s CEO Scott Brinker as president and CEO. John Thomas, the CEO of Physicians Realty Trust, will be Vice Chair of the Board.
The board of directors of the combined company will be composed of eight existing Healthpeak directors and five existing Physicians Realty Trust directors. The board will be led by Katherine Sandstrom, who is Healthpeak’s current Board Chair.
When the deal is complete, the combined company will be called Healthpeak Properties, Inc. and will trade under the ticker symbol “DOC” on the New York Stock Exchange. The headquarters of the combined company will be in Denver and it will maintain other existing offices.
The merger is expected to generate run-rate synergies of at least $40 million by the end of year one and up to $60 million by the end of year two. The transaction is expected to be accretive to run-rate AFFO per share and FFO per share for shareholders at both REITs.