Healthpeak Properties and Physicians Realty Trust are merging to create a $21bn (€20bn) US medical properties investment trust.
The two NYSE-listed real estate investment trusts (REITs) have agreed to combine their businesses by converting each Physicians Realty common share into 0.674 of a newly issued Healthpeak common share to create a combined REIT platform with a 52m sqft portfolio, including 40m sqft of outpatient medical properties.
Healthpeak owns, operates and develops healthcare properties, including senior housing, life-science laboratories and outpatient medical assets, and has an $8.75bn market capitalisation. Physicians Realty, which was valued at $2.6bn on NYSE, owns, operates and develops healthcare properties that are leased to physicians, hospitals and healthcare delivery systems.
After the transaction is completed, Healthpeak shareholders will own about 77%, and Physicians Realty shareholders will own about 23% of the combined company which will hold a portfolio concentrated in high-growth markets such as Dallas, Houston, Nashville, Phoenix and Denver.
The combined company will be led by Scott Brinker as president and CEO, Peter Scott as CFO, and John Thomas as vice-chair of the board who will have an active role in strategy, relationships and business development.
The board of directors of the combined company will be comprised of eight existing Healthpeak directors and five existing Physicians Realty directors, including John Thomas and former secretary of the US health and human services, and Wisconsin State Governor Tommy Thompson. The board will be led by Katherine Sandstrom, who is Healthpeak’s current board chair.
Brinker, president and CEO of Healthpeak Properties, said: “Physicians Realty Trust brings complementary strengths to Healthpeak, including its internal property management platform and established industry relationships.
“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, which we believe is a competitive advantage that should lead to more opportunities for growth and enhanced value creation for shareholders.”
Brinker said the merger is expected to be immediately “accretive to each company’s shareholders”.
Thomas, president and CEO of Physicians Realty Trust, said: “We are confident in our strategic vision to capitalise on our increased scale, complementary platforms and deep relationships to create immediate and future value for both shareholders and tenants.”
Sandstrom, chair of Healthpeak Properties, said: “Together, we will be well positioned to create significant value from our real estate, relationships and platform while benefitting from the secular growth in demand from the universal desire for improved health.”
Thompson, chair of Physicians Realty, said: “This transaction brings together the complementary portfolios and capabilities of two premier real estate companies and we are confident this combination provides all shareholders an unmatched opportunity to benefit from growth and upside in our combined portfolio and platform.”
To read the latest IPE Real Assets magazine click here.