Healthcare Realty Trust Incorporated (NYSE:HR) (“Healthcare Realty”
or “HR”) and Healthcare Trust of America, Inc. (NYSE: HTA)
(“Healthcare Trust of America” or “HTA”) today announced that they
have agreed to enter into a strategic business combination. HTA
shareholders will receive a total implied value of $35.08 per share
comprised of a special cash dividend of $4.82 per share and a
transaction exchange ratio of 1:1 based on HR’s unaffected price of
$30.26 on February 24, 2022. This transaction brings together two
of the largest owners of medical office buildings, creating the
preeminent, pure-play medical office building REIT and positions
the combined company (the “Company”) to create long-term
shareholder value. The Company will have a pro forma equity market
capitalization of approximately $11.6 billion and a total
enterprise value of $17.6 billion based on the implied values at
market close on February 24, 2022.
Leadership and Organization
The Company will be led by the Healthcare Realty management
team, with Todd Meredith as President and Chief Executive Officer
and Kris Douglas as Executive Vice President and Chief Financial
Officer. Upon completion of the transaction, the new Company will
continue to operate with the Healthcare Realty name and trade on
the NYSE under the ticker symbol HR.
The Company will have a highly qualified, diverse Board of
Directors comprised of nine existing directors of Healthcare
Realty, three members of the Healthcare Trust of America Board, and
one new member to be mutually agreed upon by the existing HR and
HTA directors and appointed prior to closing of the transaction.
Knox Singleton, Chairman of the Healthcare Realty Board, will be
Chairman of the Company and Brad Blair, Chairman of the Healthcare
Trust of America Board, will be appointed Vice Chairman.
Upon completion of the transaction, the Company’s headquarters
will be based in Nashville, with additional corporate offices in
Scottsdale and Charleston. The Company will implement a detailed
integration process to ensure continuity for tenants, employees and
all stakeholders.
“We are pleased to announce this strategic transaction, which
unites two highly complementary medical office portfolios and
represents a rare opportunity to create a sector-leading REIT in
terms of both size and quality. We believe all shareholders will
benefit from the Company’s expanded national footprint from HR’s
Seattle portfolio to HTA’s Boston portfolio. The Company will have
unmatched market scale in concentrated clusters, meaningful
corporate and operational synergies, and a larger development
pipeline. We believe this transaction will be accretive through
near term synergies with additional value from operational upside.
It will also strengthen the combined balance sheet, enhance
liquidity and improve access to capital. This combination provides
a significant value creation opportunity for shareholders,” stated
Todd Meredith, President and Chief Executive Officer, Healthcare
Realty.
“This transformative transaction joins two premier real estate
companies with a combined value that we believe is much greater
than the sum of its parts, with the operational and financial scale
necessary to compete and drive sustainable value creation. HTA
shareholders will realize an attractive premium via a special cash
dividend while being able to fully participate in the future growth
prospects of a powerful, sector leading MOB REIT, led by a
seasoned, well-respected management team. This transaction is the
culmination of a thorough strategic review process and we are
pleased with the result for our shareholders, employees and
tenants. We are confident this is the best path forward for HTA,”
stated Brad Blair, Chairman of the Board, Healthcare Trust of
America.
Key Benefits
The combination of Healthcare Realty and Healthcare Trust of
America is expected to result in significant strategic, operational
and financial benefits to shareholders, including:
- Creates Preeminent, High Quality MOB REIT:
With 727 properties totaling 44 million square feet, the Company
will be the largest pure-play MOB REIT, with nearly double the
square footage of the next largest MOB portfolio. The Company will
own the largest portfolio of on or adjacent to hospital campus
properties comprising 28.2 million square feet. 94% of the
portfolio’s square feet will be in top 100 MSAs.
- Achieves Critical Scale with Enhanced
Clusters: The Company will own over 1 million square feet
in 14 distinct markets, representing over 50% of the portfolio’s
square feet. Nearly 80% of the portfolio’s square footage will be
located in markets with over 500,000 square feet. Meaningful scale
in markets drives operational efficiencies for tenants and
incremental leasing and investment volumes. Across the entire
portfolio, the Company will have 147 clusters, each comprised of
two to eleven properties within two miles of each other and
averaging approximately 195,000 square feet per cluster.
- Broadens Relationships and Portfolio
Diversification: The portfolio will include properties
associated with 57 of the Top 100 health systems in the U.S. on or
adjacent to 231 hospital campuses. The top 10 tenants in the
portfolio will represent 22.6% of the portfolio’s square feet with
no single tenant representing more than 5.2%.
- Expands Development Pipeline: The Company will
have an embedded development pipeline in excess of $2 billion,
concentrated in high growth markets such as Seattle, Houston,
Denver, Dallas and Raleigh.
- Material Cost Synergies: The Company expects
to realize annual run rate cost synergies of $33 – 36 million
within 12 months of closing from the elimination of duplicative
corporate and public company costs.
- Accretive with Operational Upside: The
transaction is expected to be accretive to Healthcare Realty’s per
share results assuming full realization of synergies. Longer term,
the Company expects to benefit from enhanced leasing volumes to
drive occupancy and rent growth across the portfolio as well as
property level cost savings.
- Greater Access to Capital and Balance Sheet
Strength: The Company intends to maintain a flexible,
investment grade-rated balance sheet with a well staggered debt
maturity profile. With enhanced size and scale, the Company expects
to benefit from greater liquidity, higher index weightings and
reduced borrowing costs over time.
Transaction Structure
At closing, each share of HR common stock will be exchanged for
one share of HTA common stock, at a fixed ratio. In addition, a
special cash dividend of $4.82 per share will be distributed to HTA
shareholders. Taken together and based on HR’s share price at the
close of markets on February 24, 2022, HTA shareholders will
realize an implied value of $35.08 per HTA share, representing an
18.2% premium to HTA’s share price at the close of markets on
February 24, 2022. This combination is structured as a reverse
merger whereby Healthcare Trust of America will be the corporate
successor and the Company’s name will continue as Healthcare Realty
Trust Incorporated. Pro forma for the transaction HR and HTA
shareholders will own 39% and 61% of the Company, respectively.
The special cash dividend of approximately $1.1 billion will be
financed through joint venture transactions and asset sales.
JPMorgan Chase Bank, N.A. has provided a commitment letter to
Healthcare Trust of America for a $1.7 billion debt financing for
the transaction upon the terms and conditions set forth in the
letter.
The transaction is expected to close in the third quarter of
2022, subject to customary closing conditions, including the
approval of both Healthcare Realty and Healthcare Trust of America
shareholders. The transaction was unanimously approved by the Board
of Directors of HR and the Board of Directors of HTA.
Advisors
Citigroup Global Markets Inc. is serving as lead financial
advisor, Scotiabank is serving as financial advisor, and Hunton
Andrews Kurth LLP is acting as legal advisor to Healthcare Realty.
J.P. Morgan Securities LLC is acting as exclusive financial advisor
and McDermott Will & Emery LLP is acting as legal advisor to
Healthcare Trust of America.
Conference Call
Healthcare Realty will host a conference call on February 28,
2022, at 8:30 AM E.T. to discuss the transaction. The conference
call-in number is 877.507.5522 (Domestic) or 412.317.6077
(International), or interested parties can join the live webcast of
the conference call by accessing the Investor Relations section of
each company’s website at www.healthcarerealty.com or
www.htareit.com. An audio archive of the webcast will be available
on each website.
About Healthcare Realty
Healthcare Realty Trust Incorporated (NYSE: HR) is a real estate
investment trust that integrates owning, managing, financing and
developing income-producing real estate properties associated
primarily with the delivery of outpatient healthcare services
throughout the United States. As of December 31, 2021, the Company
was invested in 258 real estate properties in 23 states totaling
17.9 million square feet and had an enterprise value of
approximately $6.6 billion, defined as equity market capitalization
plus the principal amount of debt less cash. The Company provided
leasing and property management services to 14.3 million square
feet nationwide.
About Healthcare Trust of America
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest
dedicated owner and operator of medical office buildings in the
United States, with assets comprising approximately 25.8 million
square feet of GLA, with $7.7 billion invested primarily in medical
office buildings as of September 30, 2021. HTA provides real estate
infrastructure for the integrated delivery of healthcare services
in highly-desirable locations. Investments are targeted to build
critical mass in 20 to 25 leading gateway markets that generally
have leading university and medical institutions, which translates
to superior demographics, high-quality graduates, intellectual
talent and job growth. The strategic markets HTA invests in support
a strong, long-term demand for quality medical office space. HTA
utilizes an integrated asset management platform consisting of
on-site leasing, property management, engineering and building
services, and development capabilities to create complete, state of
the art facilities in each market. HTA believes this drives
efficiencies, strong tenant and health system relationships, and
strategic partnerships that result in high levels of tenant
retention, rental growth and long- term value creation.
Headquartered in Scottsdale, Arizona, HTA has developed a national
brand with dedicated relationships at the local level.
Forward Looking Statements
This communication contains certain
“forward-looking” statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Exchange Act. HR and HTA intend such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and include this statement
for purposes of complying with the safe harbor provisions. Words
such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” “will,” “should,” “may,” “projects,” “could,”
“estimates” or variations of such words and other similar
expressions are intended to identify such forward-looking
statements, which generally are not historical in nature, but not
all forward-looking statements include such identifying words.
Forward-looking statements regarding HR and HTA, include, but are
not limited to, statements related to the proposed transaction, and
the anticipated timing, benefits and financial and operational
impact thereof; the expected financing for the transaction; other
statements of management’s beliefs, intentions or goals; and other
statements that are not historical facts. These forward-looking
statements are based on each of the companies’ current plans,
objectives, estimates, expectations and intentions and inherently
involve significant risks and uncertainties. Actual results and the
timing of events could differ materially from those anticipated in
such forward-looking statements as a result of these risks and
uncertainties, which include, without limitation, risks and
uncertainties associated with: HR’s and HTA’s ability to complete
the proposed transaction on the proposed terms or on the
anticipated timeline, or at all, including risks and uncertainties
related to securing the necessary shareholder approvals and
satisfaction of other closing conditions to consummate the proposed
transaction; the occurrence of any event, change or other
circumstance that could give rise to the termination of the
definitive transaction agreement relating to the proposed
transaction; risks related to diverting the attention of HTA and HR
management from ongoing business operations; failure to realize the
expected benefits of the proposed transaction; significant
transaction costs and/or unknown or inestimable liabilities; the
risk of shareholder litigation in connection with the proposed
transaction, including resulting expense or delay; the risk that
HR’s and HTA’s respective businesses will not be integrated
successfully or that such integration may be more difficult,
time-consuming or costly than expected; the ability to obtain the
expected financing to consummate the proposed transaction; risks
related to future opportunities and plans for the combined company,
including the uncertainty of expected future financial performance
and results of the combined company following completion of the
proposed transaction; effects relating to the announcement of the
proposed transaction or any further announcements or the
consummation of the proposed transaction on the market price of
HR’s or HTA’s common stock; the possibility that, if the Company
does not achieve the perceived benefits of the proposed transaction
as rapidly or to the extent anticipated by financial analysts or
investors, the market price of the Company’s common stock could
decline; general adverse economic and local real estate conditions;
the inability of significant tenants to continue paying their rent
obligations due to bankruptcy, insolvency or a general downturn in
their business; increases in interest rates; increases in operating
expenses and real estate taxes; changes in the dividend policy for
the Company’s common stock or its ability to pay dividends;
impairment charges; pandemics or other health crises, such as
COVID-19; and other risks and uncertainties affecting HR and HTA,
including those described from time to time under the caption “Risk
Factors” and elsewhere in HR’s and HTA’s Securities and Exchange
Commission (“SEC”) filings and reports, including HR’s Annual
Report on Form 10-K for the year ended December 31, 2021, HTA’s
Annual Report on Form 10-K for the year ended December 31, 2020,
and future filings and reports by either company. Moreover, other
risks and uncertainties of which HR or HTA are not currently aware
may also affect each of 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 HR or HTA on their
respective websites or otherwise. Neither HR nor HTA undertakes 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, except
as required by law.
Important Additional Information and
Where to Find It
This communication relates to the proposed
transaction pursuant to the terms of the Agreement and Plan of
Merger, dated February 28, 2022, by and among HR, HTA, Healthcare
Trust of America Holdings, LP, and HR Acquisition 2, LLC. In
connection with the proposed transaction, HTA expects to file with
the SEC a registration statement on Form S-4 that will include a
joint proxy statement of HR and HTA and that also will constitute a
prospectus of HTA. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED JOINT PROXY
STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH
THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, IF AND WHEN
THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT HR, HTA AND THE PROPOSED TRANSACTION. Investors
and security holders may obtain copies of these documents free of
charge through the website maintained by the SEC at www.sec.gov or
from HR at its website, www.healthcarerealty.com, or from HTA at
its website, www.htareit.com. Documents filed with the SEC by HR
will be available free of charge by accessing HR’s website at
www.healthcarerealty.com under the heading Investor Relations or,
alternatively, by directing a request to HR at
communications@healthcarerealty.com or 3310 West End Avenue, Suite
700, Nashville, Tennessee 37203, telephone: 615.269.8175, and
documents filed with the SEC by HTA will be available free of
charge by accessing HTA’s website at www.htareit.com under the
heading Investor Relations or, alternatively, by directing a
request to HTA at info@htareit.com or 16435 North Scottsdale Road,
Suite 320, Scottsdale, Arizona 85254, telephone 480.998.3478.
Participants in the
Solicitation
HR and HTA and certain of their respective
directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation
of proxies from the common shareholders of HR and HTA in respect of
the proposed transaction under the rules of the SEC. Information
about HR’s directors and executive officers is available in HR’s
proxy statement dated March 24, 2021, for its 2021 annual meeting
of shareholders. Information about HTA’s directors and executive
officers is available in HTA’s proxy statement dated April 30,
2021, for its 2021 annual meeting of shareholders. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed
with the SEC regarding the proposed transaction if and when they
become available. Investors should read the joint proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions. You may obtain free
copies of these documents from HR or HTA using the sources
indicated above.
No Offer or Solicitation
This communication shall not constitute an offer
to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act.
HR Contacts Financial Contact:Kris DouglasChief Financial
Officer P: 615.269.8175
Investor Contact:Kara SmithInvestor Relations Manager P:
615.269.8175
HTA Contacts Financial Contact:Robert A. Milligan Chief
Financial Officer P:480.998.3478
Media Contact:Andrew Siegel / Amy FengJoele Frank, Wilkinson
Brimmer Katcher P: 212.355.4449
Healthcare Trust of Amer... (NYSE:HTA)
Historical Stock Chart
From May 2024 to Jun 2024
Healthcare Trust of Amer... (NYSE:HTA)
Historical Stock Chart
From Jun 2023 to Jun 2024