Healthpeak Properties, Physicians Realty Trust Agree to $21B Merger

by Jeff Shaw

DENVER AND MILWAUKEE — Two healthcare REITs, Denver-based Healthpeak Properties (NYSE: PEAK) and Milwaukee-based Physicians Realty Trust (NYSE: DOC), have agreed to enter into an all-stock merger agreement that is valued at roughly $21 billion.

Under the terms of the agreement, each share of Physicians Realty Trust common stock will be converted into 0.674 of a share of newly issued Healthpeak common stock. The combined entity will feature a portfolio of roughly 52 million square feet of healthcare assets. On a pro-forma basis, Healthpeak and Physicians Realty Trust shareholders will own approximately 77 percent and 23 percent of the combined company, respectively. The deal is expected to close during the first half of next year.

Of the combined 52 million square feet, about 40 million would consist of outpatient healthcare facilities in major gateway markets like Nashville, Atlanta, Dallas, Houston, Phoenix and Denver. Healthpeak CEO Scott Brinker will lead the newly formed company in conjunction with a board of directors comprised of eight existing Healthpeak directors and five existing Physicians Realty Trust directors, including current CEO John Thomas.

In detailing the reasons behind the merger, executives from both companies noted that Healthpeak Properties and Physicians Realty Trust have overlapping footprints in more than 30 markets. Combining the platforms and portfolios “broadens and deepens relationships with top health systems and creates outsized internal and external growth opportunities,” according to the press release announcing the deal.

“With a broader footprint in strategically important markets and a high-quality portfolio, we will be able to better serve the real estate needs of leading health system, physician and biopharma tenants,” says Brinker. “We believe that this represents a competitive advantage that should lead to more opportunities for growth and enhanced value creation for shareholders.”

“Together, we will be able to leverage the power of both our platforms and people to support the growth of our health system partners and help shape the future of healthcare delivery,” adds Thomas. “We are confident in our strategic vision to capitalize on our increased scale, complementary platforms and deep relationships to create immediate and future value for both shareholders and tenants.”

Healthpeak’s team of financial advisors on the merger includes Barclays, Morgan Stanley, J.P. Morgan, Mizuho Securities USA, RBC Capital Markets and Wells Fargo. Latham & Watkins LLP is Healthpeak’s legal advisor. Physicians Realty Trust has employed Bank of America, KeyBanc Capital and BMO Capital Markets as its financial advisors and retained Baker McKenzie as its legal advisor.

Founded in 1985, Healthpeak Properties owned full or partial interests in more than 600 commercial properties as of late 2019, including seniors housing, healthcare and life sciences properties. The company has since divested of many of its seniors housing assets. Physicians Realty Trust owns approximately 275 healthcare facilities of varying sizes across roughly 30 states.

Healthpeak’s stock price opened at $16.61 per share on Monday, Oct. 30, down from $23.67 per share a year ago. Shares of Physicians Realty Trust common stock were trading at $11.22 per share at this morning’s opening bell, down from $15.09 per share at this time last year.

— Taylor Williams

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