October was already on its way to setting records for M&A activity in the seniors housing and care industry before Welltower announced the most transaction dollar volume we have ever seen in a single day when it released its third quarter earnings. A couple of the largest portfolio acquisitions took place across the pond, but the REIT also announced that it was under contract or has closed an additional $4 billion of seniors housing acquisitions spanning nearly 40 transactions across over 150 communities and over 12,000 units in the United States.
Starting with the biggest transaction, Welltower is acquiring a real estate portfolio of Barchester-operated communities in the United Kingdom for £5.2 billion, or roughly $6.9 billion. As part of the transaction, Welltower formed an exclusive long-term partnership with Barchester, a top operator in the UK. The portfolio comprises 111 communities managed by Barchester via an aligned RIDEA contract, 152 triple-net leased communities, and 21 ongoing developments, which will also be managed in a RIDEA structure following development conversion.
The operating portfolio, comprising both stabilized and lease-up properties, has room for operational improvement, with current blended portfolio occupancy in the high 70s. The triple-net lease is structured with 3.5% annual escalators and a coverage-based rent reset every five years at Welltower’s election. Overall, the acquisition is underwritten to achieve an unlevered IRR in the low-double-digit range.
Additionally, the REIT purchased 100% of the HC-One-operated portfolio (consisting of around 280 care homes throughout the United Kingdom) for £1.2 billion, or around $1.6 billion. Welltower funded a portion of the purchase price through the repayment of a £660 million ($876.2 million) loan it originated at the height of the pandemic and Brexit uncertainties. The loan was originally structured with embedded warrants and an equity stake that allowed Welltower to play a lead role in the borrower’s recapitalization process, ultimately transforming a finite-maturity loan into a long-term ownership position. The UK investments were aided by working closely with the Office for Investment.
The US deals will total an additional $4 billion and include trophy seniors housing communities along the East Coast, including those within Boston and Westchester County, New York. The acquisitions also complete WELL’s New England portfolio repositioning that started with the pre-COVID disposition of $1.75 billion of seniors housing communities. Since then, Welltower’s presence in New England has been rebuilt with high-quality assets, including new developments.
Welltower is funding its substantial acquisition activity through a combination of divestments, the realization of value from its participating senior credit note to HC-One, additional loan repayments, and cash on hand. Much of the consideration will come from the sale of an 18 million square foot outpatient medical (OM) portfolio in a transaction valued at approximately $7.2 billion. Additionally, the REIT will exit the OM property management business through the transition of operational responsibilities to Remedy Medical Properties. The portfolio, with current occupancy of 94%, is expected to be sold in multiple tranches through mid-2026 with the sale of the first tranche completed in October 2025 with a gross sale price of $2 billion. Net aggregate proceeds to Welltower are anticipated to total approximately $6.0 billion following the reinvestment of a portion of the gross proceeds into a preferred equity position and a profits interest in the disposition portfolio. And Welltower’s retained portion of the OM portfolio will almost entirely consist of long-term triple-net leases without a property management component.
