Welltower Reportedly Sells Merrill Gardens Portfolio for About $700 Million

Recent local news reports suggest that Toledo, Ohio-based real estate investment trust Welltower (NYSE: WELL) has sold its stake in all 10 communities in its senior housing operating portfolio operated by Seattle-based Merrill Gardens.

Public records in Santa Clara County, California, show that Welltower recently sold a Merrill Gardens community located in San Jose and another located in the town of Gilroy, the Silicon Valley Business Journal reported last week. The price tag on those two properties reportedly was more than $111 million, with Merrill Gardens itself listed as the buyer.

A separate news report on Sept. 25 from the Daily Journal of Commerce reported that Merrill Gardens and partner AEW Capital Management were buying up Welltower’s stake in the entire 10-property portfolio.

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Those 10 communities are located across California, Nevada and Washington, according to Welltower’s Q2 2020 property list.

In Feb. 2020, Welltower announced that it had reached a definitive agreement to sell an assisted living portfolio of communities in those three states for $740 million, but the REIT at that time did not disclose the operator involved.

Last week’s local news articles suggest that Welltower has now succeeded in selling its interest in the Merrill Gardens portfolio after the initial deal was scuttled due to Covid-19, and “word on the street” is that the portfolio sold for a little more than $700 million, The SeniorCare Investor reported Monday.

Commercial real estate advisory firm Newmark Knight Frank represented Welltower on the sales side of the transaction, as well as AEW to procure debt financing from a life insurance company, the firm confirmed to SHN. However, NKF did not confirm any of the other details of the deal, such as the price or number of communities involved.

Merrill Gardens referred Senior Housing News to Welltower, and the REIT declined to comment for this article. AEW had not replied to a request for comment as of press time.

Amid an overall slowdown in senior housing M&A transactions in the midst of Covid-19, Welltower has already succeeded in getting some notable deals completed. Seven senior housing properties were sold to private equity firm Kayne Anderson Real Estate, which also acquired 27 medical office buildings. The gross sales price for all those properties was about $1 billion. Newmark Knight Frank’s Chad Lavender and Ryan Maconachy advised on those sales, with financing from Wells Fargo.

Merrill Gardens has a long history with Welltower, which previously was known as Health Care REIT. The two companies created the first RIDEA partnership in senior living in 2010.

More recently, Merrill Gardens acquired the operating company Blue Harbor Senior Living from Fortress Investment Group in November 2019. That deal roughly doubled Merrill Gardens’ size, to more than 50 communities. In conjunction with the transaction, former Blue Harbor CEO Tana Gall became president of Merrill Gardens, as her predecessor David Eskenazy exited.

Also in Nov. 2019, Merrill Gardens partnered with ReNew REIT to acquire a 26-property assisted living and memory care portfolio from New Senior Investment Group (NYSE: SNR). ReNew’s founder and CEO, George Chapman, was CEO of Health Care REIT between 1996 and 2014.

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