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GI Partners Launches Health-Care Investment Platform

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Private alternative investment firm GI Partners is establishing UDLR Healthcare, a venture which will focus on investing in medical outpatient buildings.

The platform is a partnership between GI Partners and a team of former executives from Healthcare Trust of America.

The focus of the new partnership will be on medical outpatient buildings located in key markets, near demographic growth centers, as well as adding value through capital improvement. An initial property investment is set to close this month.

Previous HTA CFO Robert Milligan will lead UDRL Healthcare and will serve as the platform’s CEO. He will be joined by former HTA executives Todd Sloan, Olivia Waalboer, Jeff Spiller and Austin Brooker.

Joyce Chow, Principal at GI Partners, said in prepared remarks that the decision to create the platform comes as a result of increasing demand for high-quality medical facilities. In July 2022, HTA merged with Healthcare Realty Trust Inc.

Founded in 2001, GI Partners raised more than $42 billion in capital since its inception and has a real estate strategy that focuses on specialized domains, including technology, sciences and health-care properties.

According to CommercialEdge, the company has a footprint of approximately 11.4 million square feet, with investment mostly focused on office building assets, life science buildings and a few medical office properties acquired before launching the UDLR Healthcare platform. Among those is the 140,913-square-foot uCity Square, a Class A medical office in Philadelphia, purchased in 2021 for $79.5 million.

Investment Opportunity In Health-Care Real Estate

What used to be an alternative asset class, MOB is now considered a mainstream investment sector. The asset is recession-proof and despite a lower transaction volume compared to the previous years, medical outpatient properties have a low vacancy rate with stable tenants.

In a recent MOB Outlook series, experts weighed in on the state of health-care investment. Owners are looking to broaden their portfolios and despite the influence of macroeconomic factors, there is a general confidence that the sector will continue to fare well in the upcoming year.

 

Source: CPE

Healthcare Realty Trust Looks To Sell $1.1B In Assets

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As part of its pending-yet-imminent merger with Healthcare Trust of America Inc., Healthcare Realty Trust Inc. is currently under contract with five counterparties to sell or joint venture 27 properties totaling $807 million.

For a subset of these properties valued at a total of $673 million, the counterparties have secured their investment committees’ approval or due diligence periods have expired. These transactions are expected to close within 10 days of the completion of the merger, which is expected on or around July 20. The rest of the properties under contract are scheduled to close by the middle of August.

As had been announced previously, the merger consideration includes a stock exchange ratio of 1:1 and a special cash dividend of $4.82 per share to HTA shareholders, totaling $1.1 billion.

HRT expects to fund the $1.1 billion dividend through the above-mentioned $807 million in asset sales and joint venture transactions, as well as 10 properties under letter-of-intent with three counterparties for $295 million, all at a blended cap rate of 4.8 percent.

HRT further announced that it “is also in active discussions with multiple counterparties regarding the sale of additional properties valued at more than $600 million at similar cap rates.”

The asset sales, HRT reported, “refine its portfolio by increasing the percentage of on-campus properties and improving the percentage of properties in top 100 MSAs….”

In a prepared statement, HRT President & CEO Todd Meredith said that with these transactions, the company has secured funding for the special cash dividend at an attractive cost of capital and that it expects to continue to positively shape the combined company’s portfolio and source accretive capital through more asset sales and joint venture investment.

An HRT spokesperson confirmed to Commercial Property Executive that the combined company will keep the Healthcare Realty name and continue to trade under its NYSE symbol (HR).

Finally, HRT stated that it expects to form a new joint venture with CBRE Investment Management. Initially, HRT plans to contribute four former HTA properties, while retaining a 20 percent interest in the joint venture and managing and leasing the properties.

In late 2020, HRT entered into a 50-50 joint venture agreement with TIAA to invest in medical office properties at the pace of about $200 million a year.

And in April of last year, HRT purchased a 57,600-square-foot medical office building in Laguna Hills, Calif., from Meridian for $31.3 million.

 

Source: Commercial Property Executive

Rival REITs To Combine Into $11B Medical Office Giant

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Healthcare Trust of America and Healthcare Realty Trust agreed to merge on Monday, Feb. 28th, into a combined pure-play medical office building REIT that will have a pro forma equity market capitalization of approximately $11.6B.

The merged company would be based in Nashville, with additional corporate offices in Scottsdale and Charleston.

The original version of this story is below:

Two major healthcare property owners are on the verge of a merger.

Healthcare Trust of America is well along in talks to merge with Healthcare Realty Trust, The Wall Street Journal reports, citing anonymous sources. A combination of the two in a cash-and-stock deal would create a $10B healthcare property entity.

Both REITs own and operate medical office buildings nationwide. Healthcare Trust of America owns about 25M SF of such properties, and Nashville-based Healthcare Realty Trust has about 18M SF.

Scottsdale, Arizona-based HTA has been under activist investor pressure to sell. In October, Elliott Investment Management sent an open letter to the company urging it to go on the market, arguing that the REIT has underperformed.

HTA stock ticked up on Friday about 1.5% after word of the possible merger broke. Over the last year, its stock has gained about 10%, but over the last five years, its stock has dropped roughly 5%.

“We are actively evaluating a number of alternatives, including, among others, a corporate sale or merger, joint ventures and partnerships or asset sales,” HTA Chairman Brad Blair said in November during the company’s Q3 2021 earnings call.

REIT mergers have been at record levels lately. Transactions between REITs totaled $108B through the first three quarters of 2021, setting an all-time annual record even before the fourth quarter was tabulated, according to JLL data. During 2020, the total was only $17B, well off the more recent high of $83B in 2018. The previous all-time REIT M&A record for a year was $103B in 2006.

 

Source: Bisnow