Welltower is forming a strategic partnership with Affinity Living Communities, a developer and operator of age-restricted and age-targeted wellness housing, which includes a programmatic development agreement and the purchase of a new portfolio. Specifically, the REIT is under contract to acquire a portfolio of 25 purpose-built active adult communities for $969 million from Affinity.

The portfolio encompasses nearly 3,900 units that are largely concentrated in the Pacific Northwest. The acquisition will enable Welltower to scale the geographic reach of its wellness hHousing portfolio into markets that have a projected 5-year 55+ population growth that is more than 2.5 times higher than the US average. Post-closing, the portfolio will continue to be managed by Affinity.

The acquisition is expected to be funded through cash on hand and the assumption of $523 million of below-market rate debt with an average interest rate of 3.8% and a nine-year weighted average maturity. The implied purchase price of approximately $249,000 per unit, which doesn't allocate any value to the below-market debt, represents a significant discount to replacement cost for a portfolio with an average age of less than eight years. The transaction is expected to close in tranches over the next several months with timing dependent on property-level loan assumption approvals.