REIT Acquisitions Heat Up: Hospitals, Office Towers And Hotels Take Center Stage
REIT earnings season is now in full swing, with most investors and analysts highly focused on quarterly results and updated guidance.
While it would be easy to overlook block and tackle real estate transactions, here are three newsworthy acquisitions announced so far this week.
Health Care REIT News
Medical Properties Trust, Inc. (NYSE: MPW) announced after the closing bell on Monday that a $900 million acquisition of private hospital operator Capella Healthcare's operations and real estate.
Based on revenues, Capella is one of the top ten for-profit acute hospital companies in the United States and represents a strategic acquisition for Medical Properties.
Medical Properties is allocating $600 million for Capella's seven hospital facilities and $300 million toward the operating entities expected to be owned jointly by Medical Properties and Capella's management team.
This follows on the heels of the Ventas, Inc. (NYSE: VTR) recent ~$1.4 billion acquisition of Ardent Healthcare, part of Ventas' strategic pivot away from skilled nursing facilities to focus on acute hospitals.
Medical Properties shares were lower by 2.5 percent at the end of the trading session on Tuesday, closing at $13.45 per share.
Baltimore's Transamerica Tower
On Tuesday, Corporate Office Properties Trust (NYSE: OFC) announced the $121 million acquisition of 37-story 100 Light Place, a 550,000 square foot office tower being sold by Lexington Realty Trust (NYSE: LXP).
Included in the sale is the adjacent 10-story, 560 space parking garage located at 30 Light St.
This acquisition represents a strategic shift from Corporate Office Properties' main focus of owning highly secure facilities, primarily leased to government defense contractors, which the company refers to as its Strategic Tenant Niche (STN).
The building is 94 percent leased to 12 tenants with the top three tenants representing 66 percent of the base rent.
Corporate Office Properties' Q2 Earnings Highlights
Corporate Office Properties also announced Q2 earnings results on Tuesday and shares closed down ~2.4 percent on the day.
Given the back-to-back timing of both announcements by Corporate Office Properties, it is difficult to gauge why the shares retreated on a day when the broader market rallied.
Boutique Luxury Hotel 'Triple Play'
On Tuesday after the bell, Xenia Hotels & Resorts Inc (NYSE: XHR) announced the acquisition of three boutique luxury properties for an aggregate purchase price of $245 million.
The 84-room RiverPlace Hotel is located in downtown, Portland, Oregon, directly adjacent to the Tom McCall Waterfront Park.
The 97-room Canary Hotel is located in a prime location in downtown Santa Barbara, California. Notably, this hotel is the tallest and only full-service hotel in the downtown area.
The 230-room Hotel Palomar is located within the heart of downtown Philadelphia's Center City District near Rittenhouse Square.
Key Acquisition Metrics
According to the Xenia announcement, "The three hotels have exhibited consistently strong operating results, as illustrated by the portfolio's average RevPAR of $224.59, comprised of average occupancy of 85.4 percent and an average daily rate of $262.93, during the trailing 12 months ending June 30, 2015. Additionally, the portfolio has generated RevPAR growth of 10.1 percent year to date through June 30, 2015."
All three hotels will continue to be managed by Kimpton Hotels & Restaurants.
Xenia owns 49 hotels, comprising 13,054 rooms, across 20 states and the District of Columbia and has a majority interest in two hotels under development.
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