Toledo, OH-based Welltower announced several sales Monday from the firm’s seniors housing portfolio totaling $902 million.
In mid-September, the real estate investment trust closed on the sale of an 11-asset senior housing portfolio for $702 million to Merrill Gardens. The portfolio was held in a joint venture in which Welltower owned 80% and Merrill 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.
Welltower also is under contract to sell a six-property senior housing operating portfolio in Massachusetts, for $200 million. The portfolio, with an average age of 19 years and comprising 507 units, previously was 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. The fund’s general partners 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.
In addition, as a result of Genesis Healthcare noting substantial doubt as to their ability to continue as a going concern in the second quarter, Welltower joined Omega Healthcare Investors and Sabra Health Care REIT in revising its method of revenue recognition to a cash-basis accounting method from a straight-line accounting method, starting with the third quarter. The elimination of straight-line recognition will have an approximately $2.2 million impact on normalized funds from operations in that quarter. The REIT noted, however, that Genesis is current on all financial obligations to Welltower through September.
“We are delighted to announce the expansion of our relationship with preeminent real estate investors with the acumen to underwrite quality healthcare assets looking through the cycle. As we’ve demonstrated through a series of transactions in recent months, our ability to execute large-scale dispositions at compelling prices during an unprecedented period is a testament to the desirability of Welltower’s high-quality assets, the strength of our partnerships, and our execution capabilities,” said Shankh Mitra, who took over as Welltower’s CEO on Monday and also serves as the firm’s chief investment officer. “We look forward to completing additional transactions in the near-term to further bolster our already outstanding liquidity position. Additionally, we remain extremely active in deploying capital on a wide-range of deep-value opportunities. We believe that these opportunities offer Welltower the ability to deliver once-in-a-generation value creation to our shareholders.”