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Welltower Closes $1.15B Seniors Housing Portfolio Buyout


Healthcare REIT, Welltower Inc. HCN has completed the acquisition of Vintage Senior Living portfolio for $1.15 billion. The move aligns with the company’s expansion strategy for its seniors housing portfolio in top metro markets in the west coast with high-barriers to entry.

Acquisition Details

Specifically, the acquisition adds 19 properties to Welltower’s strong asset base, ranging from independent living, assisted living to memory care units. These are concentrated in Southern and Northern California, including the Los Angeles and San Francisco metro markets.

Welltower is shifting the management of these communities to its three reputed operating partners. As a result, 11 communities will be operated by Senior Resource Group (SRG). These properties constitute 1,705 units and are mainly independent living and assisted living assets.

Seven communities will be operated by Sunrise Senior Living. They constitute 806 units, comprising independent living, assisted living and memory care options. The remaining asset, including 79 units, will be converted to memory care property. This property shall be operated by Silverado Senior Living.

As such, including this acquisition, the company would have around $1.3 billion of investments with SRG, $5.2 billion of investments with Sunrise Senior Living and $0.4 billion of investments with Silverado.



To Conclude

The latest buyout elevates the company’s position as a leading owner of premier seniors housing properties in the U.S. This acquisition, together with transactions announced through Jun 2016, brings the company’s senior housing investments completed year-to-date to more than $1.5 billion.

Rise in elderly population is expected to take place at a significantly higher rate than the overall population in the next eight to ten years. Moreover, this elderly age cohort is an important component of health care utilization. Therefore, demand for senior housing assets is likely to continue in the upcoming years. Amid this, the company’s strategic investment in seniors housing assets is anticipated to contribute significantly to Welltower’s top-line growth.

Zacks Rank and Share Price

Welltower currently has a Zacks Rank #3 (Hold). The shares were up 1.11% in Thursday’s trading and finally closed at $69.89.

Stocks to Consider

Investors interested in the REIT industry can also consider stocks like Arbor Realty Trust Inc. ABR, Crown Castle International Corp. CCI and InfraREIT, Inc. HIFR. All of them sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arbor Realty Trust has exceeded estimates in three out of the trailing four quarters with an average surprise of 32.33% while Crown Castle has witnessed an upward revision of 2 cents over the past two months, in its 2016 estimate, to $4.45. On the other hand, InfraREIT has a long-term expected growth rate of 10% against the industry average of 5.9%.

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