Welltower, Wafra Form $550M Medical Office JV

The joint venture comprises 24 properties, most of them affiliated with health systems.
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Wafra Inc. and Welltower Inc. are teaming up on a $550 million joint venture comprising 24 medical office properties across the U.S. It is the first investment of what is expected to be future partnerships between health-care REIT Welltower and vehicles managed by Wafra, a global alternative investment platform that manages assets and commitments of approximately $28 billion.

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The portfolio was previously wholly owned by Welltower, which will retain a 20 percent interest in the properties and continue serving as asset manager and operator. The portfolio spans several states including Texas, Florida, Minnesota, North Carolina, South Carolina, Tennessee and California. The properties are 97 percent affiliated with health systems. Further details about the assets were not disclosed.

Calling Welltower a premier owner-operator and leader in medical office and health-care real estate, Russell Valdez, Wafra’s chief investment officer, said in a prepared statement the New York-based investment platform expects to build on Welltower’s track record to create “compelling opportunities” for shared success. Valdez said Wafra was looking forward to expanding their footprint in the growing sector and expected to collaborate on future health-care and real estate opportunities with Welltower.

Shankh Mitra, Welltower CEO & CIO, said in prepared remarks the breadth of Wafra’s geographic reach and proven investing acumen would combine with Welltower’s capabilities to provide a solid foundation for delivering enhanced value to their investors.

Earlier Invesco JV

The Wafra announcement comes about two months after Welltower said it had entered into a $402 million joint venture with Invesco Real Estate, a global real estate investment manager, on a portfolio of 20 outpatient medical office buildings previously wholly owned by Welltower. That portfolio spanned five states, with about 1 million square feet of space. Welltower maintained a 15 percent economic interest in the portfolio, half of which is affiliated with health systems. The first tranche of 13 properties closed in September, with the remainder of the assets closing within the fourth quarter. The second tranche includes two additional properties being sold through rights of first refusal for $25 million. That joint venture expands an earlier $850 million joint venture partnership between Welltower and Invesco dating back to November 2019 and involving a portfolio of 35 medical office buildings spanning 2.6 million square feet. Welltower maintained a 15 percent economic interest in that portfolio as well.

Also in November 2019, Welltower expanded its holdings with an agreement to purchase a 1.5 million-square-foot medical office portfolio from Hammes Partners and four separate deals to acquire outpatient medical facilities totaling 2 million square feet for $1.7 billion. Under the Hammes deal, Welltower acquired 29 Class A medical office buildings in metro New York and Boston in a transaction valued at $787 million. The other four deals for a total of $885 million added 30 Class A outpatient facilities to Welltower’s overall portfolio.