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UPDATE, FEB. 28, 11 A.M. ET: Healthcare Trust of America and Healthcare Realty Trust agreed to merge Monday morning 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.
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