TOLEDO, OHIO — Welltower Inc. (NYSE: WELL) has sold three separate portfolios totaling $1.3 billion in value. The portfolios comprise 11 seniors housing facilities in the Western United States, six seniors housing communities in Massachusetts and 20 outpatient medical facilities across five states.
Separately, Welltower also announced on Monday a strategic personnel change in the C-suite as the Toledo-based REIT promoted Shankh Mitra from chief operating officer to CEO effective immediately. Tom DeRosa is stepping down from his role as CEO after six years. Mitra will also retain his chief investment officer title.
Details of seniors housing sales
The sales price of the Western portfolio totaled $702 million, or $466,000 per unit. The unnamed properties are situated in California, Washington and Nevada and have an average age of 12 years. Welltower’s previous ownership stake in the portfolio was 80 percent. The buyer was not disclosed.
The sales price of the Massachusetts portfolio totaled $200 million, or $395,000 per unit. The unnamed properties have an average age of 19 years. Welltower is reducing its ownership stake from 95 percent to 20 percent.
The remaining 80 percent of the portfolio will be owned by a fund co-managed by Taurus Investment Holdings and Northbridge Asset Management. Burlington, Mass.-based Northbridge Senior Housing will continue to manage the properties. The general partners of the fund will have the option to purchase Welltower’s interest over the next 12 months at a fixed price based on the sale price of the portfolio.
Chad Lavender and Ryan Maconachy of Newmark Knight Frank brokered both sales and arranged acquisition financing.
Large-scale disposition of outpatient facilities
The sales price for the outpatient facility portfolio totaled $402 million, representing a valuation of $400 per square foot. Welltower is selling its 85 percent stake in the portfolio to Atlanta-based Invesco Real Estate, but the REIT will retain property and asset management responsibilities.
The 1 million-square-foot portfolio has an average property age of 16 years with a weighted average lease term of seven years. The portfolio is spread across five undisclosed states. The deal is a “follow-on” of the previously announced $850 million joint venture with Invesco that represented 35 outpatient medical facilities spanning 2.6 million square feet.
Healthcare system-oriented properties comprise 45 percent of the outpatient portfolio, according to Welltower. The company is pivoting its business model into more health systems and outpatient medical facilities overall as the two combined to represent 32 percent of Welltower’s in-place net operating income (NOI) as of second-quarter 2020. In second-quarter 2018, the two property sectors totaled 17 percent of the company’s NOI, with health systems not accounting for any portion.
“Our ability to execute large-scale dispositions at compelling prices during an unprecedented period is a testament to the desirability of Welltower’s high-quality assets, the strength of our partnerships and our execution capabilities,” says Mitra about the three portfolio dispositions. “We look forward to completing additional transactions in the near-term to further bolster our already outstanding liquidity position.”
Welltower by the numbers
According to a business update posted yesterday, the portfolio deals advance Welltower’s near-term available liquidity via cash balances and an undrawn revolving credit facility to $5.3 billion, a $1 billion increase from Aug. 31 when its liquidity hovered around $4.3 billion.
Welltower has ownership interests in seniors housing properties and outpatient medical facilities, as well as post-acute care communities and healthcare system-occupied real estate. As of Oct. 5, Welltower has ownership interest in 1,300 seniors housing communities and 23 million square feet of outpatient medical properties.
Welltower’s stock price closed on Monday, Oct. 5 at $57.87 per share, down nearly 37 percent from $91.54 a year ago.
— John Nelson