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Welltower has made a cash offer for Healthcare Realty Trust


well tower Inc.,

GOOD 0.63%

the large healthcare-focused real estate investment trust, made a nearly $5 billion cash offer for Healthcare Realty Trust Inc.

HOUR 7.57%

shortly after the smaller REIT agreed to merge with a rival earlier this year, according to people familiar with the matter.

Welltower remains interested after its offer was rejected and plans to tell Healthcare Realty as much this week, the people said.

Healthcare Realty and Healthcare Trust of America Inc.

ETS -4.51%

agreed on Feb. 28 to combine in a roughly $10 billion mostly equity deal. A month later, Welltower offered $31.75 per share for Healthcare Realty, or about $4.8 billion, the people said. Welltower, based in Toledo, Ohio, with a market value of approximately $41 billion, has a portfolio of senior housing, rehabilitation centers and medical practices. Buying Nashville, Tennessee-based Healthcare Realty would expand its presence in medical office buildings, its specialty.

In a regulatory filing released Monday that detailed how the existing deal was reached, Healthcare Trust noted the presence of other suitors for Healthcare Realty, including one it called “Party F”, and detailed its offer. .

The non-binding offer was subject to due diligence which Welltower was prepared to perform quickly, depending on the people and the record. It would be funded with Welltower’s money and a fully committed bridge loan, and Welltower also offered to pay the $163 million termination fee Healthcare Realty owes for leaving Healthcare Trust..

Healthcare Realty’s board of directors concluded that the offer was not superior to its agreement with Healthcare Trust and rejected it on March 30, according to the filing.

Shares of Healthcare Realty rose 7.6% to $30.71 on Tuesday after The Wall Street Journal reported interest from Welltower, while shares of Healthcare Trust closed down 4.5% at $28.61. It comes after stocks moved in those same directions after Monday’s filing, suggesting investors are losing faith in the existing deal. Welltower’s shares were little changed.

Healthcare Trust shareholders are to get one share of Healthcare Realty and $4.82 cash per share under the current deal. When the deal was announced, the companies said they valued Healthcare Trust at around $35.08 per share.

It requires approval from holders of two-thirds of Healthcare Realty shares in a vote scheduled for July. Healthcare Realty is expected to report first quarter results on Thursday, while Welltower will report next week.

The existing deal was the culmination of a month-long sale process for Healthcare Trust, which had been urged by activist investor Elliott Management Corp. to explore a sale.

Monday’s filing noted that Party F, now known as Welltower, was among those who explored a deal for Healthcare Trust late last year but decided not to pursue it. He remained involved as a potential source of capital or asset manager for another suitor, according to the filing.

Write to Cara Lombardo at cara.lombardo@wsj.com

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Appeared in the May 4, 2022 print edition as “Welltower Made Cash Offer for A REIT”.

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