Welltower has sold three healthcare real estate portfolios with a combined valuation of $1.3 billion.
In mid-September, the REIT closed on the sale of one senior housing 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.
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, for 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 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.
In the third transaction, the REIT is 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.