Welltower Inc. revealed new off-market investment volume of $1 billion at a blended cap rate of 6.4% comprised of 11 separate seniors housing and medical office transactions. This investment activity is in addition to the previously revealed $80 million Johns Hopkins transaction and $400 million 23 asset MOB portfolio acquisition, totaling $1.5 billion in transactions announced since third quarter 2018.
The seniors housing acquisitions consist of $725 million in transaction volume at a blended cap rate of 6.6% across four separate transactions. Three of these transactions build on relationships with existing Welltower operating partners. The Medical Office acquisitions consist of $280 million in transaction volume at a blended cap rate of 5.9%. This granular activity includes one large, trophy Outpatient Medical complex with 286k rentable square feet highlighted below, according to a prepared statement.Welltower is under contract to acquire a 75% ownership interest in two state-of-the-art “Class A+” medical office buildings under development in Charlotte, North Carolina to be delivered in Q2 and Q3 of 2020. Both buildings are 100% master-leased to Atrium Health (Moody’s: Aa3) for 15 years. This project is part of a 5.5-acre multi-phase health care anchored mixed-use development located next to Atrium Health’s flagship Carolinas Medical Center campus. Once completed, these assets will house integrated specialty clinical practices for Atrium Health including the Sanger Heart and Vascular Institute.
As part of this transaction, Welltower will form a joint venture with the highly reputable Southeast developer, Pappas Properties. The joint venture is exploring additional opportunities to grow in the region together and can further densify this project with up to 180k additional square feet.
“We are delighted to have selected Welltower as our partner to develop two state-of-the-art medical office buildings, poised to deliver next generation care,” said Peter A. Pappas, founder and CEO of Pappas Properties. “Welltower’s immersive health care strategy, and their industry leading data analytics platform make for the perfect partner. These properties will serve as an anchor for our growing relationship.”
“Sourcing and executing on organic and cutting-edge investments are the hallmark of Welltower’s differentiated strategy,” said Shankh Mitra, Chief Investment Officer of Welltower. “We continue to strategically expand with our existing partners and find new high-quality partners with whom we announced over one and a half billion dollars in off-market transactions since third quarter 2018. We are very excited to start a new relationship with one of the most respected developers and health systems in the region, establishing a foundation for expansive future growth.”