NASHVILLE, Tenn., July 08, 2022 (GLOBE NEWSWIRE) — Healthcare Realty Trust Incorporated (NYSE: HR) (“Healthcare Realty” or the “Company”) today provided an update regarding its strategic combination with Healthcare Trust of America, Inc. (NYSE: HTA) (“HTA”). As previously announced, the transaction consideration includes a stock exchange ratio of 1:1 and a special cash dividend of $4.82 per share to HTA shareholders which totals $1.1 billion.
The Company expects to fund the $1.1 billion special cash dividend to HTA shareholders through a combination of asset sales and joint venture transactions at a blended cap rate of 4.8%. Proceeds are expected to be derived from properties under contract for $807 million and properties under letter-of-intent (“LOI”) for $295 million. The Company is also in active discussions with multiple counterparties regarding the sale of additional properties valued at more than $600 million at similar cap rates.
The Company is currently under contract with five counterparties to sell or joint venture 27 properties totaling $807 million. For a subset of these properties totaling $673 million, the counterparties have secured investment committee approval or due diligence periods have expired, and the transactions are expected to close within ten days of the completion of the merger, which is expected to occur on or around July 20, 2022. The balance of properties under contract are scheduled to close by the middle of August.
In addition, the Company is under LOI with three counterparties to sell 10 properties for a total of $295 million. The Company is finalizing purchase agreements with the LOI counterparties and expects these transactions to close by the middle of August.
The properties under contract and LOI are subject to customary closing conditions and the closing of the merger. The special cash dividend will be funded initially through borrowings under HTA’s previously announced $1.1 billion term loan facility. Borrowings under this facility are expected to be fully repaid by the middle of August with proceeds from the assets sale and joint ventures.
The asset sales refine the combined company’s portfolio by increasing the percentage of on-campus properties, improving the percentage of properties in top 100 MSAs, and further aligning with the Company’s cluster strategy. The asset sale properties are 88.4% occupied, consistent with the overall portfolio.
“We have made significant progress towards the completion of our strategic combination with HTA,” said Todd Meredith President and Chief Executive Officer, Healthcare Realty. “With these transactions, we have secured funding for the special cash dividend at an attractive cost of capital. We expect to continue to positively shape the combined company’s portfolio and source accretive capital through more asset sales and joint venture investment.”
As part of the transactions under contract discussed above, the Company expects to form a new joint venture with CBRE Investment Management (“CBRE IM”). The proposed joint venture with CBRE IM is expected to strengthen the combined company’s ability to increase investment volume by diversifying access to capital. Initially, the combined company is expected to contribute four HTA properties and retain a 20% interest in the joint venture. The combined company will be the managing member and manage the day-to-day operations and leasing of the properties.
The Healthcare Realty Board of Directors urges shareholders to vote “FOR” Healthcare Realty’s combination with HTA at its upcoming special meeting of Healthcare Realty shareholders on July 15, 2022 and reminds shareholders that every vote is important.
As previously announced, independent proxy advisory firms Institutional Shareholder Services (“ISS”) and Glass Lewis have both recommended that Healthcare Realty shareholders vote “FOR” the transaction with HTA at Healthcare Realty’s upcoming special meeting of shareholders on July 15, 2022, in line with the Board’s unanimous recommendation. The transaction is expected to close on or around July 20, 2022, subject to customary closing conditions, including the approval of both Healthcare Realty and Healthcare Trust of America shareholders.
Citigroup Global Markets Inc. is serving as lead financial advisor, Scotiabank is serving as financial advisor, and Hunton Andrews Kurth LLP is acting as legal advisor to Healthcare Realty. J.P. Morgan Securities LLC is acting as exclusive financial advisor and McDermott Will & Emery LLP is acting as legal advisor to Healthcare Trust of America.
Healthcare Realty Proxy Information
If you have any questions, need assistance in completing the proxy card, or need additional copies of the proxy materials, please call the firm assisting Healthcare Realty with the solicitation of proxies:
INNISFREE M&A INCORPORATED
TOLL-FREE at (800) 422-8620
About Healthcare Realty Trust Incorporated
Healthcare Realty Trust Incorporated (NYSE: HR) is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, 2022, the Company was invested in 263 real estate properties in 23 states totaling 17.9 million square feet and had an enterprise value of approximately $6.1 billion, defined as equity market capitalization plus the principal amount of debt less cash. The Company provided leasing and property management services to 14.8 million square feet nationwide.
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