Welltower to Buy MOB Portfolios for $1.7B

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Welltower Inc. continues to make giant strides in the expansion of its holdings with an agreement to purchase a 1.5 million-square-foot medical office building portfolio from Hammes Partners and four separate deals to acquire outpatient medical facilities totaling 2 million square feet. The combined transactions carry a total price tag of $1.7 billion.

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Welltower’s agreement with Hammes calls for the REIT to buy the collection of 29 MOBs in a transaction valued at $787 million. The majority of the Class A assets are located in the metropolitan New York and Boston areas, with the remaining facilities sited in other dense population centers in Massachusetts, California, Texas and Maryland. The properties have an average occupancy level of 97 percent.

The four other transactions, currently under contract, have a combined investment volume of $885 million. These deals include 30 additional Class A outpatient medical properties and provide the opportunity for value creation via exclusive development rights. Upon completion of the Hammes deal and the four other transactions, Welltower will hold the title of the largest commercial owner of medical office real estate in the U.S., with a national portfolio nearing 30 million square feet.

Growth spurt

This year has proven a highly acquisitive period for Welltower. Year-to-date, the company has closed or announced $3.5 billion of outpatient medical property purchases encompassing more than 8 million square feet. Welltower’s headlining transactions in 2019 include the nearly $1.3 billion purchase of a 3.3 million-square-foot MOB portfolio from CNL Healthcare Properties Inc., which closed in May. And earlier this year, the REIT completed the acquisition of a 979,000-square-foot group of MOBs from Hammes for $400 million.

During the company’s second quarter 2019 earnings conference call on Aug. 1, Thomas DeRosa, chairman & CEO of Welltower Inc., said the company is seeking opportunities to deploy capital in assets that are sustainable for the long term. According to a report by JLL, despite economic uncertainty and political focus on changing health-care regulations, the MOB sector continues to perform well across nearly all U.S. markets.