Chicago-based real estate investment trust Ventas Inc. (NYSE: VTR) agreed to acquire the life science and medical real estate assets of Wexford Science & Technology LLC from New York-based private equity firm Blackstone (NYSE: BX) Real Estate Partners III fund, for $1.5 billion in cash.
The acquisition will add a related business line to Ventas’s diverse portfolio with 25 class-A assets that are leased by leading universities, academic medical centers and research companies, including Yale University, the University of Pennsylvania Health System, Washington University in St. Louis, Wake Forest University and Alexion Pharmaceuticals.
The deal is subject to customary closing conditions and is expected to close in the fourth quarter of 2016.
The Wexford sale comes within days after Blackstone Real Estate Partners VIII agreed to acquire seven West Coast office properties for $1.162 billion in cash from Houston-based Hines Real Estate Investment Trust, after which Hines REIT is being liquidated.
“This acquisition and alliance with Wexford are a natural fit for Ventas, and reinforce our position as the premier provider of capital at the intersection of healthcare and real estate. We are excited to add these world class institutions and advantaged real estate to our portfolio,” said Ventas chairman and CEO Debra A. Cafaro.
The portfolio includes 23 operating properties that contain 4.1 million square feet, are 97 percent leased and derive 73 percent of revenue from excellent credit tenants, including 11 universities with an average credit rating of Aa2, investment grade companies and public companies with an equity market capitalization exceeding $1 billion. It includes two development assets encompassing approximately 400,000 square feet, that are nearly 60 percent pre-leased and affiliated with Duke University and Wake Forest University. Ventas is also acquiring nine development sites principally contiguous to existing assets.
Baltimore-based Wexford is a leading real estate development company focused exclusively on partnering with universities, academic medical centers and research companies. As part of the acquisition, Ventas will enter into a long-term management and pipeline agreement with Wexford, whereby Ventas will own the existing real estate portfolio, Ventas will have exclusive rights to jointly develop future projects with Wexford, and Wexford will continue to manage the portfolio. Wexford will be independently owned and operated by its experienced, existing management team.
“Universities are reliable, consistent drivers of economic activity, resulting in high, sustainable portfolio occupancies,” said Jim Berens, president of Wexford. “We are delighted to have Ventas, the leader in healthcare real estate, as our strategic capital partner to continue growing a portfolio where there is cutting-edge, institutional-quality life science research to meet the needs of a growing and aging population.”
J.P. Morgan Securities LLC is acting as financial advisor to Ventas, and Kirkland & Ellis LLP is acting as its legal counsel in connection with the transaction. Eastdil Secured group of Wells Fargo Securities LLC is acting as financial advisor to Blackstone, and Simpson Thacher & Bartlett LLP is acting as its legal counsel.
Ventas Inc., an S&P 500 company, is the second-largest healthcare REIT by market value in the US. Its diverse portfolio of approximately 1,300 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, skilled nursing facilities, specialty hospitals and general acute care hospitals. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.
Blackstone is a global leader in real estate investing. The firm’s real estate business was founded in 1991 and has $92 billion in investor capital under management. The firm’s real estate portfolio includes hotel, office, retail, industrial and residential properties in the US, Europe, Asia and Latin America. Major investments include Hilton Worldwide, Invitation Homes (single family homes), Logicor (pan-European logistics), SCP (Chinese shopping malls), and prime office buildings in the world’s major cities.
Blackstone real estate also operates one of the leading real estate finance platforms, including management of the publicly traded Blackstone Mortgage Trust (BXMT).