The combined company will start operating from Denver under the new name, Healthpeak Properties, with Healthpeak shareholders owning around 77% and Physicians Realty shareholders having the remaining 23% ownership


Healthpeak and Physicians Realty to merge in $21bn deal. (Credit: Adhy Savala on Unsplash)

US-based real estate investment trusts Healthpeak Properties and Physicians Realty Trust have agreed to combine their operations in an all-stock merger of equals valued at around $21bn.

The transaction will create a combined healthcare properties operator that would manage clinics, hospitals, and surgery centres.

Under the terms of the agreement, Physicians Realty shareholders will receive 0.674 of Healthpeak’s newly issued common shares, for each Physicians Realty common share held.

The boards of directors of both Healthpeak and Physicians Realty Trust have unanimously approved the merger, which is intended to be a tax-free transaction.

The deal is expected to be completed in the first half of 2024, subject to customary closing conditions, including the approval of shareholders of both parties.

Upon closing of the transaction, the combined company will start operating from Denver under the new name, Healthpeak Properties, with its shares trading on the New York Stock Exchange.

Healthpeak shareholders will have around 77% ownership of the combined company, while Physicians Realty shareholders will have the remaining 23% stake.

Healthpeak president and CEO Scott Brinker said: “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.

“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 a 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.”

The combined company will have a 52 million ft2 portfolio, including 40 million ft2 of outpatient medical properties in markets such as Dallas, Houston, Nashville, Phoenix, and Denver.

It will also benefit from both companies’ deep relationships with the nation’s top health systems.

The combined entity will be led by Scott Brinker as president and CEO, Peter Scott as CFO, and John Thomas as vice chair of the board.

Its board of directors will include eight existing Healthpeak directors and five existing Physicians Realty directors, led by Healthpeak’s current Board Chair Katherine Sandstrom.

Furthermore, the merger is expected to generate run-rate synergies of at least $40m by the end of the first year and up to $60m by the end of the second year.

Barclays and Morgan Stanley & Co. served as lead financial advisors, J.P. Morgan, Mizuho Securities USA, RBC Capital Markets, and Wells Fargo as additional financial advisors, and Latham & Watkins as legal advisor to Healthpeak, on this transaction.

BofA Securities and KeyBanc Capital Markets served as lead financial advisors, BMO Capital Markets as financial advisor, and Baker McKenzie as legal advisor to Physicians Realty Trust.

Physicians Realty Trust president and CEO John Thomas said: “The Physicians Realty Trust team is excited to join 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 healthcare delivery.

“We are confident in our strategic vision to capitalise on our increased scale, complementary platforms, and deep relationships to create immediate and future value for both shareholders and tenants.”