Health Care REIT Plans to Close Q3 with $925M of Investments

Health Care REIT Inc. is in the midst of acquiring close to $1 billion worth of healthcare-related assets in the third quarter, following its busy second-quarter activity of MOB purchases.

Health Care REIT Inc. has been on a buying binge and it has no plans to stop. The company recently announced that it plans to complete the purchase of $925 million of healthcare-related assets during the third quarter.

The shopping spree is already well underway. HCR has either signed letters of intent or entered into other agreements to purchase seniors housing operating and triple-net lease properties totaling $854 million and shell out an additional $71 million on medical office properties. The price tags include the REIT’s assumption of an aggregate $134 million of debt.

HCR’s busy third quarter is following a second quarter of hefty activity. In May, HCR completed the purchase of Chartwell Seniors Housing REIT, adding 42 seniors housing and care communities in Canada at a cost of $509.5 million for its share of the portfolio. And that addition was just part of the shopping.

“I think we’ve been very consistent with our investments,” George L. Chapman, CEO of HCR, said during the company’s second quarter conference call this week. “We’ve made the point that over the last ten quarters or so, we’ve averaged over $1 billion a quarter. And I don’t think we expect that to continue forever, as a lot of large portfolios have come out, been taken out of the mix. But we have a very strong pipeline right now, and things are going quite well.”

Indeed, healthcare portfolios, large and small, are being gobbled up by REITs. In July, a California-based healthcare REIT acquired a group of ten MOBs totaling roughly 315,200 square feet in seven states. Also last month, American Realty Capital Healthcare Trust Inc. purchased the three-building, 226,000-square-foot Aurora Health Care portfolio in Wisconsin in a $63 million deal. Additionally, during the first quarter of the year Healthcare Trust of America picked up Steward Health’s collection of 13 MOBs in a $100 million sale-leaseback transaction. And the list goes on.

At the moment, MOBs appear to be a favorite in the healthcare real estate investment world. The top 15 companies queried by commercial real estate services firm CBRE Group Inc. in a recent survey have allocated a total of more than $4 billion to medical office acquisitions. The companies have their reasons. As CBRE notes in its report: “Investors are focusing on the trend of providers delivering more medical care in outpatient settings and ambulatory care centers in order to reduce in-patient hospital costs, which continue to drive the need for additional medical office space.”