Healthpeak Properties Closes Merger with Physicians Realty Trust
- Merger with Physicians Realty Trust completed, forming a combined company under the name 'Healthpeak Properties, Inc.'
- Expected merger-related synergies of $40 million in 2024, with potential for more by year-end 2025.
- New $750 million 5-year unsecured term loan secured for general corporate purposes and repayment of debts.
- Expansion of Healthpeak Board of Directors from 8 to 13 directors with the addition of five new directors.
- Interest rate of the new term loan fixed at approximately 4.5% for the full 5-year term.
- None.
Insights
The merger of Healthpeak Properties with Physicians Realty Trust consolidates their market presence in the healthcare real estate sector. The anticipated synergies of $40 million in 2024, with the potential for an additional $20 million by the end of 2025, suggest a strategic move towards operational efficiency and cost savings. This consolidation is likely to enhance the earnings and strengthen the balance sheet of the combined entity, which could appeal to investors seeking stable, income-generating assets.
Furthermore, the internalization of property management in key markets could lead to improved margins due to reduced reliance on third-party service providers. The expansion of Healthpeak's Board of Directors is expected to bring diversified experience and governance, which could positively influence strategic decisions and oversight. The use of the new $750 million term loan to repay existing debt illustrates a proactive approach to capital management and may be viewed favorably by credit rating agencies.
Healthpeak's choice to begin trading under the ticker symbol 'DOC' post-merger reflects a branding strategy that aligns with its core focus on healthcare properties. This could enhance the company's visibility and recognition within the investment community. The healthcare real estate market is generally seen as recession-resistant due to the non-cyclical nature of healthcare demand, which may provide a defensive characteristic to the company's portfolio amid economic uncertainty.
As the integration process is reportedly ahead of schedule, this indicates effective management execution, which is critical in realizing the forecasted synergies. The market will closely monitor the actualization of these synergies as they are a key driver of the merger's value proposition. The fixed interest rate of approximately 4.5% for the new term loan is a prudent move in the current rising interest rate environment, potentially locking in lower borrowing costs over the next five years.
The involvement of multiple reputable financial and legal advisors, including Barclays, Morgan Stanley and Latham & Watkins, in the merger process, suggests a high level of due diligence and regulatory compliance. This multi-advisor strategy may mitigate risks associated with the transaction and ensures that the merger adheres to the complex legal and financial frameworks governing such deals.
The expansion of Healthpeak's Board of Directors to include members from Physicians Realty Trust's board is a strategic move that may facilitate smoother integration and governance post-merger. This transition is likely to be scrutinized for its adherence to corporate governance best practices and the potential impact on shareholder value.
“We are pleased to announce the completion of our merger with Physicians Realty Trust,” said Scott Brinker, President and Chief Executive Officer of Healthpeak. “We believe this transaction augments our earnings, balance sheet, and platform. Our integration efforts are progressing ahead of schedule with property management internalized in four markets to date, with an additional five markets scheduled by the end of the second quarter. We expect to generate merger-related synergies of
In connection with the completion of the merger, the Healthpeak Board of Directors expanded from 8 to 13 directors with the addition of five new directors that previously served on the board of trustees of Physicians Realty Trust: John Thomas, who will serve as Vice Chair of the Healthpeak Board, as well as Ava Lias-Booker, Pamela Kessler, Governor Tommy Thompson, and Richard Weiss.
Additionally, on March 1, 2024, Healthpeak entered into a new
ADVISORS
Barclays and Morgan Stanley & Co. LLC served as lead financial advisors, J.P. Morgan Securities LLC, Mizuho Securities
BofA Securities and KeyBanc Capital Markets Inc. acted as lead financial advisors, BMO Capital Markets Corp. served as financial advisor, and Baker McKenzie acted as legal advisor to Physicians Realty Trust.
ABOUT HEALTHPEAK PROPERTIES
Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns, operates, and develops high-quality real estate for healthcare discovery and delivery. For more information regarding Healthpeak, visit www.healthpeak.com.
FORWARD-LOOKING STATEMENTS
This communication may include “forward-looking statements,” including but not limited to those regarding the transactions between Healthpeak and Physicians Realty Trust, within the meaning of the Private Securities Litigation Reform Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which Healthpeak operates and beliefs of and assumptions made by Healthpeak management, involve uncertainties that could significantly affect the financial or operating results of Healthpeak, Physicians Realty Trust or the combined company. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” “projects,” “forecasts,” “will,” “may,” “potential,” “can,” “could,” “should,” “pro forma,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the anticipated benefits of the transactions involving Healthpeak and Physicians Realty Trust, including future acquisitions, dispositions, financing activity, financial and operating results, plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that Healthpeak expects or anticipates will occur in the future — including statements relating to creating value for stockholders, benefits of the transactions to clients, tenants, employees, stockholders, and other constituents of the combined company, integrating the companies, and cost savings — are also forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although Healthpeak believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, Healthpeak can give no assurance that its expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. For example, these forward-looking statements could be affected by factors including, without limitation, risks associated with the impact of indebtedness incurred in connection with the transactions; the ability to successfully integrate portfolios and business operations, including properties, tenants, property managers and employees; the ability to realize anticipated benefits and synergies of the transactions as rapidly or to the extent anticipated by financial analysts or investors; potential liability for a failure to meet regulatory or tax-related requirements, including the maintenance of REIT status; material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; potential changes to tax legislation; changes in demand for developed properties; adverse changes in the financial condition of joint venture partner(s) or major tenants; risks associated with the acquisition, development, expansion, leasing and management of properties; risks associated with the geographic concentration of Healthpeak; risks associated with the industry concentration of tenants; the potential impact of announcement of the transactions on business relationships, including with clients, tenants, property managers, customers, employees and competitors; risks related to diverting the attention of Healthpeak’s management from ongoing business operations; unfavorable outcomes of any legal proceedings that have been or may be instituted against Healthpeak or Physicians Realty Trust; costs related to uninsured losses, condemnation, or environmental issues, including risks of natural disasters; the ability to retain key personnel; costs, fees, expenses and charges related to the transactions; changes in local, national and international financial markets, insurance rates and interest rates; general adverse economic and local real estate conditions; risks related to the market value of shares of Healthpeak common stock issued in the transaction; the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; foreign currency exchange rates; increases in operating costs and real estate taxes; changes in dividend policy or ability to pay dividends for Healthpeak common stock; impairment charges; unanticipated changes in Healthpeak’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity; pandemics or other health crises, such as coronavirus (COVID-19); and those additional risks and factors discussed in reports filed with the SEC by Healthpeak and Physicians Realty Trust. Moreover, other risks and uncertainties of which Healthpeak is not currently aware may also affect the companies’ forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by Healthpeak on its website or otherwise. Healthpeak does not undertake any obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240229062129/en/
Andrew Johns, CFA
Senior Vice President – Investor Relations
720-428-5400
Source: Healthpeak Properties, Inc.
FAQ
What is the ticker symbol for Healthpeak Properties, Inc. after the merger?
What are the expected merger-related synergies for Healthpeak Properties, Inc. in 2024?
How many new directors were added to the Healthpeak Board of Directors after the merger?
What is the interest rate fixed at for the new $750 million unsecured term loan?
