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Welltower Sells Senior Housing Portfolio For $1.8B, Latest In String Of Major Deals

Welltower Inc. has sold its interest in a portfolio of 48 senior housing properties in New England to a private institutional investor for $1.8B. 

Discovery Village at Dominion
Discovery Village at Dominion, San Antonio

The 4,137-unit senior housing portfolio consists of assisted living properties in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, and had $24M of secured debt that was extinguished at closing.

Welltower previously owned the properties in a joint venture with Waltham, Massachusetts-based Benchmark Senior Living, which operated them and which will retain its interest. Benchmark will continue to operate the facilities under the new ownership structure.

"The recapitalization of our Benchmark portfolio speaks to the strong institutional demand by high-quality buyers for seniors housing assets," Welltower Chief Investment Officer Shankh Mitra said in a statement.

Ahead of the disposition, Welltower has been an energetic buyer this year, kicking off 2019 with a deal to buy 55 medical office and outpatient facilities from CNL Healthcare Properties for $1.25B. The deal was one of the largest medical office building trades in recent years.

At the end of July, the Toledo, Ohio-based Welltower also inked some new deals with senior housing operators besides Benchmark. The company formed a JV with Discovery Senior Living to acquire three properties in Texas for $216M. The properties, which were developed by South Bay, are in the Dallas-Fort Worth and San Antonio markets.

San Antonio is a hot market for senior housing. In the second quarter of this year, the market experienced the largest annual occupancy increase in the U.S., rising from 78.5% to 82.9%, according to the Nation Investment Center for Seniors Housing & Care. 

Welltower signed a $1B development agreement with Discovery under which the partners are mulling two new projects. In addition, Welltower is under contract to fund three newly opened assets within Discovery's core footprint in Florida for $92.7M. These three buildings achieved certificates of occupancy in Q2 2019.

Welltower has struck a new REIT Investment Diversification and Empowerment Act relationship with Denver-based Balfour Senior Living. The RIDEA Act allows REITs to participate in the actual net operating income, as long as there is a third-party manager.

Welltower acquired Balfour’s six-property portfolio for $293M, and has an option to acquire a 34.9% interest in the operating company. The REIT also has exclusivity on Balfour’s future acquisitions and developments pipeline, Senior Housing News reports.

Yet another new JV for Welltower is with Buffalo, New York-based Clover Management. For $343M, Welltower-Clover JV acquired 32 communities across the Northeast and Midwest, including four under development.