Immediately Accretive Transaction that
Positions Combined Company for Offense
Scott Brinker to Serve as President and Chief
Executive Officer of Combined Company; John Thomas to Serve as Vice
Chair of the Board
Companies to Host Conference Call Today at 8:30
a.m. ET
Healthpeak Properties, Inc. (NYSE: PEAK) (“Healthpeak” or
“PEAK”) and Physicians Realty Trust (NYSE: DOC) (“Physicians Realty
Trust” or “DOC”) today announced they have entered into a
definitive agreement to combine in an all-stock merger of equals
valued at approximately $21 billion. Under the terms of the
agreement, each Physicians Realty Trust common share will be
converted into 0.674 of a newly issued Healthpeak common share.
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The combined company will be the leading real estate platform
dedicated to healthcare discovery and delivery with a 52 million
square foot portfolio, including 40 million square feet of
outpatient medical properties concentrated in high-growth markets
such as Dallas, Houston, Nashville, Phoenix, and Denver. The
combined company also will benefit from both companies’ extensive
relationships with the nation’s leading health systems.
“This combination joins two leading platforms, bringing them to
the next level to create a company uniquely focused on healthcare
discovery and delivery, a large and attractive playing field with
strong secular growth,” said Scott Brinker, President and Chief
Executive Officer of Healthpeak. “Physicians Realty Trust brings
complementary strengths to Healthpeak, including its internal
property management platform and established industry
relationships. With a broader footprint in strategically important
markets and a high-quality portfolio, we will be able to better
serve the real estate needs of leading health system, physician,
and biopharma tenants, which we believe is a competitive advantage
that should lead to more opportunities for growth and enhanced
value creation for shareholders. We expect the transaction to be
immediately accretive to each company’s shareholders, augment our
strong balance sheet, and position the combined company for
offense.”
John T. Thomas, President and Chief Executive Officer of
Physicians Realty Trust, added, “The Physicians Realty Trust team
is excited to join with Healthpeak and continue our growth,
success, and sustainable value creation as a combined company with
increased scale and diversification, including Healthpeak’s
best-in-class lab portfolio. I’ve known Scott for many years and
believe that together, we will be able to leverage the power of
both our platforms and people to support the growth of our health
system partners and help shape the future of health care delivery.
We are confident in our strategic vision to capitalize on our
increased scale, complementary platforms, and deep relationships to
create immediate and future value for both shareholders and
tenants.”
The merger is expected to generate run-rate synergies of at
least $40 million by the end of year one and up to $60 million by
the end of year two. Given the synergy profile, the transaction is
expected to be accretive to run-rate AFFO per share and FFO per
share (subject to final merger accounting adjustments) for both
Healthpeak and Physicians Realty Trust shareholders.
KEY BENEFITS OF THE MERGER
The merger of Healthpeak and Physicians Realty Trust is expected
to create meaningful strategic, operational, and financial
benefits, including:
- Transformative Scale: Creates a differentiated company
that benefits from the secular growth in healthcare discovery and
delivery with a 52 million square foot portfolio including one of
the largest outpatient medical portfolios comprising 40 million
square feet, concentrated in high-growth markets and affiliated
with leading hospitals and health systems
- Complementary Expertise: Expands industry-leading
relationships across health system, biopharma, and physician
tenants; leverages the competitive strengths and complementary
capabilities of both platforms to drive growth from implementing
best-practices in property management, leasing, asset management,
and technology to establish the leading integrated healthcare
discovery and delivery platform
- Broader and Deeper Relationships with Increased
Diversification: Overlapping real estate footprint in more than
30 markets increases the combined platform’s competitive advantage,
broadens and deepens relationships with top health systems creating
outsized internal and external growth opportunities; combined
diversified tenant roster is comprised of the world’s leading
health system, biopharma, and physician tenants; top 10 tenants
represent 21% of combined annualized base rent with 7 out of the
top 10 investment-grade rated
- Accretive Financial Impact: Expected to be accretive to
both Physicians Realty Trust’s and Healthpeak’s standalone AFFO and
FFO (subject to final merger accounting adjustments) and augments
Healthpeak’s strong balance sheet with pro forma leverage in the
low 5x net debt to EBITDAre range; expected to generate run-rate
synergies of at least $40 million by the end of year one and up to
$60 million by the end of year two, with the potential for
additional incremental revenue growth and cost savings from
implementing best practices across both platforms; a more efficient
G&A cost structure and increased liquidity is expected to
improve the cost of capital for the combined company and increases
accretion from external growth
LEADERSHIP AND ORGANIZATION
The combined company will be led by Scott Brinker as President
and Chief Executive Officer, Peter Scott as Chief Financial
Officer, and John Thomas as Vice Chair of the Board who will have
an active role in strategy, relationships, and business
development.
The board of directors of the combined company will be comprised
of eight existing Healthpeak directors and five existing Physicians
Realty Trust directors, including John Thomas and former Secretary
of the U.S. Health and Human Services, Governor Tommy G. Thompson.
The highly qualified and diverse board will be led by Katherine
Sandstrom, who is Healthpeak’s current Board Chair.
“This strategic combination of leading platforms offers both
near-term and future benefits for both companies,” said Katherine
Sandstrom, Chair of Healthpeak. “Together, we will be
well-positioned to create significant value from our real estate,
relationships, and platform while benefitting from the secular
growth in demand from the universal desire for improved
health.”
Governor Tommy Thompson, Chair of Physicians Realty Trust added,
"This transaction brings together the complementary portfolios and
capabilities of two premier real estate companies and we are
confident this combination provides all shareholders an unmatched
opportunity to benefit from growth and upside in our combined
portfolio and platform.”
Upon completion of the merger, the combined company will operate
with the Healthpeak Properties, Inc. name and is expected to trade
under the ticker symbol “DOC” on the New York Stock Exchange. The
headquarters of the combined company will be in Denver and it will
maintain other existing offices.
TRANSACTION DETAILS
Under the terms of the agreement, each Physicians Realty Trust
common share will be converted into 0.674 of a newly issued
Healthpeak common share. Pro forma for the transaction, Healthpeak
and Physicians Realty Trust shareholders will own approximately 77%
and 23% of the combined company, respectively.
The all-stock merger is intended to be a tax-free transaction
and is expected to close in the first half of 2024, subject to
customary closing conditions, including the approval of both
Healthpeak and Physicians Realty Trust shareholders. The respective
boards of directors for Healthpeak and Physicians Realty Trust have
unanimously approved the transaction.
DIVIDEND
Following the closing of the merger, the combined company is
expected to pay an annualized dividend of $1.20 per share,
consistent with Healthpeak’s current dividend level and
representing a pro forma AFFO payout ratio of 80% or below.
DEBT FINANCING
Healthpeak expects to assume Physicians Realty Trust’s existing
senior unsecured notes and term loan and to enter into a new
five-year, $500 million term loan at a rate of SOFR plus 85 basis
points. Proceeds from the term loan will be used for general
corporate purposes including repayment of borrowings under
Healthpeak’s commercial paper program.
Pro forma net debt to EBITDAre is expected to be in the low 5x
range.
ADVISORS
Barclays and Morgan Stanley & Co. LLC are serving as lead
financial advisors, J.P. Morgan, Mizuho Securities USA LLC, RBC
Capital Markets, and Wells Fargo are serving as additional
financial advisors, and Latham & Watkins LLP is acting as legal
advisor to Healthpeak.
BofA Securities and KeyBanc Capital Markets Inc. are serving as
lead financial advisors, BMO Capital Markets Corp. is serving as
financial advisor, and Baker McKenzie is acting as legal advisor to
Physicians Realty Trust. BofA Securities provided a fairness
opinion to Physicians Realty Trust in connection with the proposed
transaction.
Barclays, BofA Securities, KeyBanc Capital Markets Inc., Morgan
Stanley Senior Funding, Inc., J.P. Morgan, Mizuho Bank, Ltd., RBC
Capital Markets, and Wells Fargo provided term loan commitments to
Healthpeak.
PRESENTATION AND CONFERENCE CALL
Healthpeak and Physicians Realty Trust will host a
joint-conference call and webcast on October 30, 2023, at 8:30 a.m.
Eastern Time to discuss the transaction.
The conference call can be accessed in the following ways:
- Healthpeak’s website:
https://ir.healthpeak.com/news-events/default.aspx
- Physicians Realty Trust’s website:
https://investors.docreit.com
- Webcast: https://events.q4inc.com/attendee/248022751. Joining
via webcast is recommended for those who will not be asking
questions.
- Telephone: The participant dial-in number is (888) 330-2513 or
(240) 789-2726 (international). The conference ID number is
58822.
An archive of the webcast will be available and a telephonic
replay can be accessed through November 6, 2023, by dialing (800)
770-2030 or (647) 362-9199 (international) and entering conference
ID number 58822.
A presentation providing additional details about the
transaction will be posted on the respective companies’ websites
under the Investor Relations sections.
ABOUT HEALTHPEAK PROPERTIES
Healthpeak Properties, Inc. is a fully integrated real estate
investment trust (REIT) and S&P 500 company. Healthpeak owns,
operates, and develops high-quality real estate for healthcare
discovery and delivery. For more information regarding Healthpeak,
visit www.healthpeak.com.
ABOUT PHYSICIANS REALTY TRUST
Physicians Realty Trust is a self-managed health care real
estate company organized to acquire, selectively develop, own, and
manage health care properties that are leased to physicians,
hospitals and health care delivery systems. Physicians Realty Trust
invests in real estate that is integral to providing high quality
health care. Physicians Realty Trust is a Maryland real estate
investment trust and has elected to be taxed as a REIT for U.S.
federal income tax purposes. Physicians Realty Trust conducts its
business through an UPREIT structure in which its properties are
owned by an operating partnership, directly or through limited
partnerships, limited liability companies or other
subsidiaries.
FORWARD-LOOKING STATEMENTS
This communication may include “forward-looking statements,”
including but not limited to those regarding the proposed
transactions between Healthpeak and Physicians Realty Trust within
the meaning of the Private Securities Litigation Reform Act. All
statements other than statements of historical fact are
“forward-looking statements” for purposes of federal and state
securities laws. These forward-looking statements, which are based
on current expectations, estimates and projections about the
industry and markets in which Healthpeak and Physicians Realty
Trust operate and beliefs of and assumptions made by Healthpeak
management and Physicians Realty Trust management, involve
uncertainties that could significantly affect the financial or
operating results of Healthpeak, Physicians Realty Trust or the
combined company. Words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,”
“projects,” “forecasts,” “will,” “may,” “potential,” “can,”
“could,” “should,” “pro forma,” and variations of such words and
similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, but are not
limited to, statements about the benefits of the proposed
transactions involving Healthpeak and Physicians Realty Trust,
including future financial and operating results, plans,
objectives, expectations and intentions. All statements that
address operating performance, events or developments that
Healthpeak and Physicians Realty Trust expects or anticipates will
occur in the future — including statements relating to creating
value for shareholders, benefits of the proposed transactions to
clients, tenants, employees, shareholders and other constituents of
the combined company, integrating the companies, cost savings and
the expected timetable for completing the proposed transactions —
are forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Although Healthpeak and
Physicians Realty Trust believe the expectations reflected in any
forward-looking statements are based on reasonable assumptions,
Healthpeak and Physicians Realty Trust can give no assurance that
its expectations will be attained and, therefore, actual outcomes
and results may differ materially from what is expressed or
forecasted in such forward-looking statements. For example, these
forward-looking statements could be affected by factors including,
without limitation, risks associated with the ability to consummate
the proposed merger and the timing of the closing of the proposed
merger; securing the necessary shareholder approvals and
satisfaction of other closing conditions to consummate the proposed
merger; the occurrence of any event, change or other circumstance
that could give rise to the termination of the merger agreement
relating to the proposed transactions; the ability to secure
favorable interest rates on any borrowings incurred in connection
with the proposed transactions; the impact of indebtedness incurred
in connection with the proposed transactions; the ability to
successfully integrate portfolios, business operations, including
properties, tenants, property managers and employees; the ability
to realize anticipated benefits and synergies of the proposed
transactions as rapidly or to the extent anticipated by financial
analysts or investors; potential liability for a failure to meet
regulatory or tax-related requirements, including the maintenance
of REIT status; material changes in the dividend rates on
securities or the ability to pay dividends on common shares or
other securities; potential changes to tax legislation; changes in
demand for developed properties; adverse changes in the financial
condition of joint venture partner(s) or major tenants; risks
associated with the acquisition, development, expansion, leasing
and management of properties; risks associated with the geographic
concentration of Healthpeak or Physicians Realty Trust; risks
associated with the industry concentration of tenants; the
potential impact of announcement of the proposed transactions or
consummation of the proposed transactions on business
relationships, including with clients, tenants, property managers,
customers, employees and competitors; risks related to diverting
the attention of Healthpeak’s and Physicians Realty Trust’s
management from ongoing business operations; unfavorable outcomes
of any legal proceedings that have been or may be instituted
against Healthpeak or Physicians Realty Trust; costs related to
uninsured losses, condemnation, or environmental issues, including
risks of natural disasters; the ability to retain key personnel;
costs, fees, expenses and charges related to the proposed
transactions and the actual terms of the financings that may be
obtained in connection with the proposed transactions; changes in
local, national and international financial markets, insurance
rates and interest rates; general adverse economic and local real
estate conditions; risks related to the market value of shares of
Healthpeak common stock to be issued in the transaction; the
inability of major tenants to continue paying their rent
obligations due to bankruptcy, insolvency or a general downturn in
their business; foreign currency exchange rates; increases in
operating costs and real estate taxes; changes in dividend policy
or ability to pay dividends for Healthpeak or Physicians Realty
Trust common shares; impairment charges; unanticipated changes in
Healthpeak’s or Physicians Realty Trust’s intention or ability to
prepay certain debt prior to maturity and/or hold certain
securities until maturity; pandemics or other health crises, such
as coronavirus (COVID-19); and those additional risks and factors
discussed in reports filed with the Securities and Exchange
Commission (“SEC”) by Healthpeak and Physicians Realty Trust.
Moreover, other risks and uncertainties of which Healthpeak or
Physicians Realty Trust are not currently aware may also affect
each of the companies’ forward-looking statements and may cause
actual results and the timing of events to differ materially from
those anticipated. The forward-looking statements made in this
communication are made only as of the date hereof or as of the
dates indicated in the forward-looking statements, even if they are
subsequently made available by Healthpeak or Physicians Realty
Trust on their respective websites or otherwise. Neither Healthpeak
nor Physicians Realty Trust undertakes any obligation to update or
supplement any forward-looking statements to reflect actual
results, new information, future events, changes in its
expectations or other circumstances that exist after the date as of
which the forward-looking statements were made.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction, Healthpeak and
Physicians Realty Trust will file with the SEC a registration
statement on Form S-4 containing a joint proxy statement/prospectus
and other documents regarding the proposed transaction. The joint
proxy statement/prospectus will contain important information about
the proposed transaction and related matters.
SHAREHOLDERS ARE URGED AND ADVISED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS
THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY
IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT HEALTHPEAK, PHYSICIANS REALTY TRUST AND
THE PROPOSED TRANSACTION.
Investors and security holders of Healthpeak and Physicians
Realty Trust will be able to obtain free copies of the registration
statement, the joint proxy statement/prospectus and other relevant
documents filed by Healthpeak and Physicians Realty Trust with the
SEC through the website maintained by the SEC at www.sec.gov.
Copies of the documents filed by Healthpeak with the SEC are also
available on Healthpeak’s website at www.healthpeak.com, and copies
of the documents filed by Physicians Realty Trust with the SEC are
available on Physicians Realty Trust’s website at
www.docreit.com.
PARTICIPANTS IN THE SOLICITATION
Healthpeak, Physicians Realty Trust and their respective
directors, trustees and executive officers may be deemed to be
participants in the solicitation of proxies from Healthpeak’s and
Physicians Realty Trust’s shareholders in respect of the proposed
transaction. Information regarding Healthpeak’s directors and
executive officers can be found in Healthpeak’s definitive proxy
statement filed with the SEC on March 17, 2023. Information
regarding Physicians Realty Trust’s trustees and executive officers
can be found in Physicians Realty Trust’s definitive proxy
statement filed with the SEC on March 23, 2023.
Additional information regarding the interests of such potential
participants will be included in the joint proxy
statement/prospectus and other relevant documents filed with the
SEC in connection with the proposed transaction if and when they
become available. These documents are available on the SEC’s
website and from Healthpeak and Physicians Realty Trust, as
applicable, using the sources indicated above.
NO OFFER OR SOLICITATION
This communication is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, any securities or the solicitation of any vote in any
jurisdiction pursuant to the proposed transaction or otherwise, nor
shall there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
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Healthpeak Contact
Andrew Johns, CFA Senior Vice President – Investor Relations
720-428-5400
Physicians Realty Trust Contact
John T. Thomas President & Chief Executive Officer
214-549-6611 jtt@docreit.com
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