Health care Trust of America to Obtain Duke Realty'' s Medical Workplace Portfolio for $2.75 Billion

Duke Realty's Baylor McKinney 2 MOB in McKinney, TX, is among those being sold to Healthcare Trust of America.
Duke Real estate’s Baylor McKinney 2 MOB in McKinney, TX, is amongst those being offered to Health care Trust of America. Healthcare Trust of America, Inc.(NYSE: HTA)is purchasing all the medical office buildings owned by Duke Real estate Corp. (NYSE: DRE) and its medical development pipeline for $2.75 billion in money. The price breaks down to approximately $450/square foot.

The transaction consists of $2.35 billion for 64 supported, operating medical workplace homes and $400 million for 14 properties under development or in the lease-up phase.

The consolidated portfolio consists of 78 residential or commercial properties total that contain 6.1 million square feet of gross leasable area that are 94% rented, including Duke’s proportional interest in 2 unconsolidated joint venture entities. The acquisition also includes two development land parcels totaling 17 acres.

The mix will increase HTA’s portfolio to 25 million square feet of medical office.

“This transaction solidifies HTA as the dominant owner and operator of medical office buildings located in crucial, gateway markets in the United States,” said Scott D. Peters, chairman and CEO of Scottsdale-based HTA.

Around 85% of the homes lie in HTA’s existing markets. HTA said the overlap need to lead to “substantial operating synergy chances” for home management, leasing and development.

The transaction is expected to close in numerous tranches in the second and 3rd quarter of 2017. The final size of the offer could differ as 31 of the properties are subject to rights of very first rejections or offer, which could reduce the size of the acquisition or delay the timing of the closing.

As part of the contract, Duke is needing that HTA accept seller funding of $330 million, through a senior protected first home loan, which will bear interest at 4% each year. This note will require 3 annual principal payments of $110 million start in 2018 and is not prepayable.

Healthcare Trust of America stated it will finance the rest of the purchase price by selling 39.5 million shares of its common stock.

Wells Fargo Securities and its subsidiary, Eastdil Guaranteed, are serving as unique monetary consultants to Healthcare Trust of America, and O’Melveny & & Myers LLP, San Francisco, is functioning as its legal counsel to the business in connection with the transaction.

Hogan Lovells US LLP is legal advisor to Duke Real estate in the sale.

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