Welltower Inc. (NYSE: WELL) is acquiring a 25-community active adult portfolio with larger plans to create a programmatic development agreement with Affinity Living Communities.
The portfolio consists of 3,900 units, mostly concentrated in the Pacific Northwest, according to a press release on the transaction. Affinity will continue to manage the portfolio when it changes hands.
The transaction will expand Welltower’s “wellness housing portfolio,” which includes about 25,000 units overall, according to the Toledo, Ohio-based real estate investment trust (REIT).
“Our wellness housing portfolio helps address the significant and growing unmet demand for wellness focused rental housing for seniors,” Welltower CEO Shankh Mitra said in the release. “These communities provide thoughtful amenities and targeted social programming for empty nesters and active adults at moderate price points.”
Welltower is acquiring the portfolio for about $249,000 per unit – “a significant discount to replacement cost for a highly amenitized portfolio with an average age of less than eight years,” the REIT noted.
The portfolio has an average age of less than eight years. The communities have a near-60% operating margin and “lower capital expenditure burden.”
The REIT is funding the transaction with cash on hand and $523 million of “below-market rate debt” carrying an average interest rate of 3.8% and average maturity of nine years.
The transaction will mark a milestone in Affinity’s history, according to President Darin Davidson, who said he was “incredibly proud of what we have built.”
“In Welltower, we found a partner with shared values and forward thinking,” Davidson said. “The Welltower partnership will enable us to enhance and extend our ability to execute our mission of creating thriving communities in which our engaged residents live full and happy lives.”
The transaction is anticipated to close over the next several months.
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