Milwaukee-based
Physicians Realty Trust plans to combine its business with Denver-based
Healthpeak Properties, an integrated real estate investment trust that owns, operates, and develops real estate for health care discovery and delivery.
The two companies described the all-stock deal as a “merger of equals” that values the combined company at $21 billion. Each share of Physicians Realty Trust stock will be converted into 0.674 of a newly issued Healthpeak share.
Physicians Realty owns 278 properties including 16 million square feet of outpatient medical space. Healthpeak owns a total of 475 properties, including 24 million square feet of outpatient medical and 12 million square feet of lab space.
On a pro forma basis, Healthpeak shareholders will own around 77% of the combined company and Physicians Realty Trust shareholders will own 23%.
The combined company will operate as Healthpeak Properties Inc. and will trade under the stock ticker "DOC," which is currently used by Physicians Realty Trust. The company will be based in Denver but will maintain Physicians Realty Trust's office in Milwaukee. Physicians Realty Trust is currently headquartered in The Renaissance Building, which it owns and is located at 309 N. Water St. in the Historic Third Ward.
“We intend to retain and grow our existing office in Milwaukee and maintain all regional and property management offices. It is critically important that we are close to our real estate and to our health care partners — our regional offices and team members are fundamental to our strategy,”
John T. Thomas, president and CEO of Physicians Realty Trust, wrote in an email to employees.
As of December 31, 2022, the company had a total of 101 full time employees.
The two companies do anticipate at least $40 million in annual synergies from their combination, including reduced compensation by eliminating redundancies and lower corporate overhead from having to support one public company instead of two.
Asked about how synergies might impact the Milwaukee presence, Thomas said in an email to BizTimes that the company would continue to own its building in Milwaukee and have a significant presence.
"We expect the team located in Milwaukee to grow, over time, as we work with our new partners," Thomas wrote.
Thomas will become vice chair of the combined company’s board and “will have an active role in strategy, relationships, and business development.”
Scott Brinker, president and CEO of Healthpeak, will remain in that role with the new company.
“This combination joins two leading platforms, bringing them to the next level to create a company uniquely focused on health care discovery and delivery, a large and attractive playing field with strong secular growth,” Brinker said. “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 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’s board will include eight existing Healthpeak directors and five Physicians Realty Trust directors, including Thomas and
Tommy Thompson, the former governor of Wisconsin and former U.S. Health and Human Services secretary. Thompson is currently chair of the Physicians Realty Trust board.
"This transaction brings together the complementary portfolios and capabilities of two premier real estate companies and we are confident this combination provides all shareholders an unmatched opportunity to benefit from growth and upside in our combined portfolio and platform,” Thompson said.
Katherine Sandstrom, chair of Healthpeak, will lead the board of the combined company.
