CHICAGO—Add research universities and academic medical centers to the range of Ventas Inc. The Chicago-based healthcare REIT said Tuesday afternoon that it had agreed to acquire substantially all 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 in cash.
The transaction, which is expected to close in the fourth quarter, marks Ventas' entry into the university-affiliated life science real estate business. It will be funded partly by a stock offering of nine million shares, for which Ventas announced pricing on Tuesday evening.
Included in the deal will be 23 operating properties totaling 4.1 million square feet and a pair of development assets totaling 400,000 square feet and affiliated with Duke University and Wake Forest University. Tenants for the operating properties, which are currently 97% leased, include Yale University, the University of Pennsylvania Health System, Washington University in St. Louis and Alexion Pharmaceuticals Inc.
As part of the acquisition, Ventas will enter into a long-term management and pipeline agreement with Wexford, in which 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 existing management team.
Debra Cafaro, the REIT's chairman and CEO, says the Wexford deal provides Ventas with “a unique opportunity to capitalize on increasing healthcare-driven research and development spurred and supported by top tier research universities. 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.” The institutional life science and medical market is benefitting from the increasing longevity of the aging US population and biopharma drug development growth opportunities.
Additionally, says EVP and CIO John Cobb, “Through the acquisition of Wexford's assets, we are adding new high-quality properties with long lease terms and highly rated, institutional quality tenants, driving reliable, growing cash flows for Ventas. We are pleased to partner with the outstanding Wexford team. With several projects in the near-term pipeline, we look forward to pursuing additional growth opportunities together.”
Wexford came under Blackstone ownership as part of the asset management giant's $8-billion acquisition of BioMed Realty Trust, which closed this past January. BioMed paid $670 million to acquire Wexford in June 2013, operating it as a subsidiary.
At that time, the Wexford portfolio ran to 10 projects totaling 2.5 million square feet, including those in the pipeline. The current Wexford portfolio encompasses 25 highly rated 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—on favorable triple-net lease structures with a weighted average lease term of 10 years and 2% annual rent escalators. The two development properties are expected to open next year, leading to additional near-term growth.
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. For Blackstone, Eastdil Secured is acting as financial advisor to Blackstone, while Simpson Thacher & Bartlett LLP is acting as its legal counsel.
CHICAGO—Add research universities and academic medical centers to the range of Ventas Inc. The Chicago-based healthcare REIT said Tuesday afternoon that it had agreed to acquire substantially all 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 in cash.
The transaction, which is expected to close in the fourth quarter, marks Ventas' entry into the university-affiliated life science real estate business. It will be funded partly by a stock offering of nine million shares, for which Ventas announced pricing on Tuesday evening.
Included in the deal will be 23 operating properties totaling 4.1 million square feet and a pair of development assets totaling 400,000 square feet and affiliated with Duke University and Wake Forest University. Tenants for the operating properties, which are currently 97% leased, include Yale University, the University of Pennsylvania Health System, Washington University in St. Louis and
As part of the acquisition, Ventas will enter into a long-term management and pipeline agreement with Wexford, in which 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 existing management team.
Debra Cafaro, the REIT's chairman and CEO, says the Wexford deal provides Ventas with “a unique opportunity to capitalize on increasing healthcare-driven research and development spurred and supported by top tier research universities. 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.” The institutional life science and medical market is benefitting from the increasing longevity of the aging US population and biopharma drug development growth opportunities.
Additionally, says EVP and CIO John Cobb, “Through the acquisition of Wexford's assets, we are adding new high-quality properties with long lease terms and highly rated, institutional quality tenants, driving reliable, growing cash flows for Ventas. We are pleased to partner with the outstanding Wexford team. With several projects in the near-term pipeline, we look forward to pursuing additional growth opportunities together.”
Wexford came under Blackstone ownership as part of the asset management giant's $8-billion acquisition of BioMed Realty Trust, which closed this past January. BioMed paid $670 million to acquire Wexford in June 2013, operating it as a subsidiary.
At that time, the Wexford portfolio ran to 10 projects totaling 2.5 million square feet, including those in the pipeline. The current Wexford portfolio encompasses 25 highly rated 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—on favorable triple-net lease structures with a weighted average lease term of 10 years and 2% annual rent escalators. The two development properties are expected to open next year, leading to additional near-term growth.
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