Two billion-dollar health care real estate investment trusts are poised to combine into a medical office behemoth.
Healthcare Trust of America is in advanced talks to merge with Healthcare Realty Trust, the Wall Street Journal reported. People familiar with the matter told the Journal the cash-and-stock deal could be finalized in the next few days, but the talks could still fall apart.
Terms of the potential transaction weren’t clear.
Healthcare Trust of America had about a $6.6 billion market value as of Feb. 24, while Healthcare Realty Trust had a $4.6 billion value. The Journal reported a combined company could be valued at more than $10 billion.
Both trusts own and operate medical offices across the nation. Healthcare Trust of America has more than 25 million square feet in its portfolio; Healthcare Realty Trust has about 18 million square feet.
Healthcare Trust of America, based in Scottsdale, Arizona, has been exploring a sale for months amid shareholder-activist pressure, the Journal reported. The trust was founded in 2006 and went public in 2012, but had mixed results on the stock market, including a plunge at the beginning of the pandemic. Former CEO Scott Peters resigned in August without explanation.
In September, the REIT purchased the 1905 Medical Center in Boca Raton for $50 million. The REIT was previously part of a consortium that sold a 459-bed hospital property, three office buildings and a medical office mall in Lauderdale Lakes to Medical Properties Trust for $171 million.
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Healthcare Realty Trust is based in Nashville. According to the Journal, the trust’s fourth-quarter earnings included a 5.3 percent increase in normalized funds from operations year-over-year.
San Clemente-based CareTrust REIT began exploring a sale in late 2021 as it dealt with pandemic-driven challenges. The trust has a market capitalization of about $2.1 billion and owns 224 properties across 27 states, including health care properties, nursing homes and senior housing.
Investors have flocked to medical offices since the onset of the pandemic. The Journal reported in April doctors and medical tenants remained more up-to-date on rent payments than other office tenants, leading major players to invest in the sector.
[WSJ] — Holden Walter-Warner