Welltower Goes Big in Senior Housing Deals

The healthcare real estate firm just secured two new partnerships, announced several new acquisitions in excess of $800 million and a recapitalization of a senior housing portfolio.

Welltower is making big moves in the senior housing sector. The healthcare REIT has entered into a new partnership, expanded two current partnerships and made several acquisitions in excess of $800 million in the senior housing space.

The company formed a new partnership with Balfour Senior Living, wherein Welltower will receive exclusivity on Balfour’s future acquisition and development pipeline and have the option to acquire up to a 34.9 percent interest in Balfour’s management company. In addition, Welltower acquired a six-property portfolio in the Denver and Boulder, Colo. metro areas for $308 million, in a partnership with Balfour.

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In an expansion of the company’s relationship with Sunrise Senior Living, Welltower has acquired five senior housing properties in Washington, D.C., San Francisco and San Diego that were recently developed and managed by Sunrise. Welltower’s total investment in the properties is $285 million. The asset’s development was 34 percent funded by Welltower through its joint venture and ownership of Sunrise.

Welltower is also expanding its current relationship with Discovery Senior Living through a joint venture $216 million off-market purchase of three infill senior housing campuses, located in the Dallas-Fort Worth and San Antonio metro areas. As part of the deal, Discovery will manage the portfolio and its existing portfolio with Welltower, which Welltower acquired in 2016. In addition, Welltower inked a $1 billion exclusive development agreement with Discovery.

In its most recent deal, Welltower has recapitalized the Benchmark Senior Living portfolio, which was previously owned by Benchmark in a partnership with Welltower, for a gross sale price of $1.8 billion. As part of the deal, Welltower has fully exited the portfolio and is entitled to an additional $50 million in proceeds. The portfolio totals 4,137 units across 48 assisted living properties in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The portfolio had $24 million of secured debt that was erased at the deal closing. As part of the recap, Benchmark will invest a significant amount of money into upgrading the resident experience at the communities.

Despite a strong overall demand for senior housing from millions of retiring Baby Boomers, a recent study found that senior housing occupancy has declined to its lowest level in eight years, with construction of the property type showing signs of a slowdown.

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