TOLEDO, Ohio, Oct. 5, 2020 /PRNewswire/ -- Welltower Inc. (NYSE: WELL), today announced that it has expanded its relationship with leading institutional real estate investors through the sale of three portfolios with a combined valuation of $1.3 billion.
In mid-September, the Company closed on the sale of a prominent Seniors Housing Operating portfolio for $702 million, representing a 5.1% cap rate on March TTM NOI (with average portfolio occupancy during that time of 96%) and 3.6% on August annualized NOI or, $466,000 per unit. The sales price reflects a decline of approximately 5% from levels at which the portfolio was expected to trade prior to the COVID-19 pandemic, as described in the Company's earnings release dated February 12, 2020. This transaction further underscores Welltower's exceptional execution capability against a very challenging market backdrop. The portfolio was held in a joint venture in which Welltower owned 80% and a third-party owner-operator owned 20% and managed the portfolio under a legacy RIDEA contract. The 11 properties, which are located in California, Washington and Nevada, carry an average age of 12 years and average monthly revenue per occupied room of approximately $5,200.
Separately, Welltower also announced a $402 million joint venture partnership with Invesco Real Estate, a global real estate investment manager, building on the existing partnership between the two organizations. The joint venture comprises a portfolio of 20 outpatient medical buildings previously wholly-owned by Welltower, which spans 1.0 million square feet across five states. The average age of the properties is 16 years, with roughly half of the portfolio affiliated with health systems. Through the partnership, Welltower will retain a 15% economic interest in the portfolio along with leasing and property management responsibilities. In addition to the joint venture portfolio, rights of first refusal ("ROFR") were exercised for two additional properties at a sales price of $25 million. The transactions will close in two tranches, with the first tranche consisting of 13 properties having closed in late-September for $260 million and the remaining seven properties along with the two ROFR properties expected to close in the fourth quarter of 2020 for $167 million.
Additionally, the Company is also under contract to sell a Seniors Housing Operating portfolio for $200 million, representing a 4.9% cap rate on March TTM NOI (with average portfolio occupancy during that time of 88%) or, $395,000 per unit. The six-property portfolio, located in Massachusetts, has an average age of 19 years and comprises 507 units. The portfolio was previously held in a RIDEA structure in which Welltower owned 95% and the third-party seller-operator owned a 5% interest. Following the sale, Welltower will maintain a 20% interest in the portfolio with the remaining 80% owned by a fund co-managed by Taurus Investment Holdings and Northbridge Asset Management. The properties will continue to be managed by Northbridge Senior Housing. The general partners of the fund will have the option to purchase Welltower's 20% interest over the next 12 months at a fixed price based on the sale price of the portfolio.
"We are delighted to announce the expansion of our relationship with preeminent real estate investors with the acumen to underwrite quality healthcare assets looking through the cycle," said Shankh Mitra, Welltower's Chief Executive Officer and Chief Investment Officer. He added, "As we've demonstrated through a series of transactions in recent months, 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. We look forward to completing additional transactions in the near-term to further bolster our already outstanding liquidity position. Additionally, we remain extremely active in deploying capital on a wide-range of deep-value opportunities. We believe that these opportunities offer Welltower the ability to deliver once-in-a-generation value creation to our shareholders."
Forward-Looking Statements and Risk Factors
This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "pro forma," "estimate" or similar expressions that do not relate solely to historical matters, Welltower is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause Welltower's actual results to differ materially from Welltower's expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the duration and scope of the COVID-19 pandemic; the impact of the COVID-19 pandemic on occupancy rates and on the operations of Welltower and its operators/tenants; actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting Welltower's properties and the operations of Welltower and its operators/tenants; the effects of health and safety measures adopted by Welltower and its operators/tenants related to the COVID-19 pandemic; increased operational costs as a result of health and safety measures related to COVID-19; the impact of the COVID-19 pandemic on the business and financial condition of operators/tenants and their ability to make payments to Welltower; disruptions to Welltower's property acquisition and disposition activity due to economic uncertainty caused by COVID-19; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators'/tenants' difficulty in cost effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and seniors housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; Welltower's ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when anticipated; natural disasters and other acts of God affecting Welltower's properties; Welltower's ability to re-lease space at similar rates as vacancies occur; Welltower's ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affecting Welltower's properties; changes in rules or practices governing Welltower's financial reporting; the movement of U.S. and foreign currency exchange rates; Welltower's ability to maintain Welltower's qualification as a REIT; key management personnel recruitment and retention; the impact of our senior leadership transition; and other risks described in Welltower's reports filed from time to time with the SEC. Finally, Welltower undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.
Welltower Inc. (NYSE: WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people's wellness and overall health care experience. Welltower™, a real estate investment trust (REIT), owns interests in properties concentrated in major, high growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing, post-acute communities and outpatient medical properties. For more information, visit www.welltower.com.
SOURCE Welltower Inc.