By Keith Loria, Contributing Editor
Chicago—Ventas Inc. has completed its acquisition of the life science and medical real estate assets of Wexford Science & Technology LLC from affiliates of Blackstone Real Estate Partners VIII LP for $1.5 billion, further solidifying Ventas’s position as the leading capital provider at the intersection of healthcare and real estate.
“This transaction allows Ventas to enter the compelling life science business with Wexford, the nation’s leading university-focused life science and medical developer,” John Cobb, Ventas’ CIO & EVP, told Commercial Property Executive. “With Wexford, we have a unique opportunity to capitalize on increasing healthcare-driven research and development spurred and supported by top tier research universities.”
The Wexford portfolio of 4.5 million square feet includes 100 percent private pay assets and is leased by excellent credit tenants, including top research universities, academic medical centers and research companies. The portfolio includes 23 operating properties, which are 97 percent leased and represent a projected 2017 cash yield of 6.8 percent.
“This transaction reinforces our position as the premier provider of capital at the intersection of healthcare and real estate,” Debra Cafaro, Ventas’ chairman & CEO, told CPE. “The life science and medical market is a growing industry benefiting from the megatrend of longevity, the aging U.S. population and growing biopharma drug development opportunities spurred by the needs of an aging population. We believe the growth opportunity is significant, and look forward to working with Wexford to help leading universities, academic medical centers and research companies fulfill their core missions.”
Also in the deal, Ventas acquired two development assets pre-leased to Duke University and Wake Forest University that are expected to produce a stabilized unlevered yield of approximately 7.5 percent, and acquired nine development sites principally contiguous to existing assets, two of which present near term development opportunities.
Wexford will continue to manage the portfolio. Ventas also entered into a long-term management and pipeline agreement with Wexford, whereby Ventas will have exclusive rights to jointly develop future projects with Wexford, which will be independently owned and operated by its experienced, existing management team.
“This exciting transaction builds upon our track record of delivering reliable growth and income to shareholders by adding a new high-quality business line of life science and medical real estate to Ventas’s diverse portfolio,” Cafaro said. “Similar to what Ventas has successfully achieved in medical office and seniors housing, we’ve partnered with the leader in the industry. The deal adds Wexford’s terrific development platform focused exclusively on partnering with institutional quality tenants, including universities, academic medical centers and research companies.”
Ventas funded the transaction with $736 million in equity raised in July 2016, cash on hand and draws on its revolving credit facility. The impact of the transaction is already reflected in the company’s 2016 normalized FFO per share guidance range of $4.05 to $4.13 issued in its July 29, 2016 press release.
“This portfolio is new and top quality,” Cobb said. “Through our long-term management and pipeline agreement, Ventas will have the exclusive rights to jointly develop future projects with Wexford and we are currently evaluating two exciting new development projects right now that could add to and enhance our existing portfolio.”