Healthpeak Properties and Physicians Realty to combine in $21 billion all-stock merger of equals

Healthpeak Properties Inc. and Physicians Realty Trust said Monday they are combining in an all-stock merger of equals valued at about $21 billion.

Under the terms of the deal, each of Milwaukee-based Physicians Realty’s

shares will be converted into 0.674 of a newly issued share by Denver-based Healthpeak

The deal will create a real estate platform “dedicated to healthcare discovery and delivery with a 52 million square foot portfolio, including 40 million square feet of outpatient medical properties concentrated in high-growth markets such as Dallas, Houston, Nashville, Phoenix, and Denver,” the companies said in a joint statement.

Scott Briner, the CEO of Healthpeak, will become CEO of the combined company, while John Thomas, head of Physicians Realty, will be vice chair of the board.

“This combination joins two leading platforms, bringing them to the next level to create a company uniquely focused on healthcare discovery and delivery, a large and attractive playing field with strong secular growth,” Brinker said.

The deal is expected to boost run-rate adjusted funds from operations, or AFFO, for both companies. It’s expected to generate run-rate synergies of at least $40 million by the end of year one and up to $60 million by the end of year two.

The deal is expected to close in the first half of 2024, after which time it will trade as Healthpeak Properties and list as “DOC” on the New York Stock Exchange.

The combined company will pay an annualized dividend of $1.20 a share, which is consistent with Healtpeak’s current dividend level and equal to a pro forma AFFO payout ratio of 80% or below.

Healthpeak will assume Phsycials Realty’s outstanding senior unsecured notes and term loan and will enter a new five-year, $500 million term loan at a rate of SOFR plus 85 basis points. Proceeds from the loan will be used for general corporate purposes and the repayment of borrowings from a commercial paper program.

Healthpeak’s stock was down 1.3% premarket, while Physicians Realty was up 1.2%.

See also: Spirit Realty’s stock rallies on $9 billion buyout by Realty Income Corp.

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