Healing Realty Trust raises $25M Series A
Healing Realty Trust (HRT), a REIT primarily focused on mental health care medical offices, raised a $25 million Series A, president Cody Shandraw tells Claire exclusively.
Why it matters: An aging population and a move toward outpatient care are driving demand for medical office spaces and growth for health care REITs specifically.
Zoom in: Undisclosed family office investors led the round that will finance the acquisition of three facilities in Connecticut, Ohio and Texas.
- After closing on those deals, the funding leaves HRT a runway of about 17 months, Shandraw says — though the company has "another eight buildings" it's currently doing diligence on.
What's next: "I'm guessing probably by the end of this year, we'll launch a Series B financing," Shandraw adds.
- HRT is eyeing an IPO in 4Q25 or 1Q26, Shandraw tells Axios.
- The company is working with Piper Sandler and law firm Hunton Andrews Kurth, both of which could advise on the eventual listing, he adds.
- Its closest comparable is Community Healthcare Trust, which currently has a market cap of about $650 million.
How it works: HRT acquires smaller medical office buildings in secondary and tertiary markets for as much as $20 million.
- "You're never going to see us owning a building in ... Manhattan or Atlanta or Los Angeles or Miami," Shandraw says.
- The company leverages demographic data about locations — including average income, median age, per-capita income, medical vacancy rates and proximity to VA-run clinics that might serve as referral sources — to map its footprint.
- Tenants span across psychiatry and transcranial magnetic stimulation providers, ketamine providers, dialysis clinics, learning disability treatment centers and addiction treatment providers.
State of play: In the last year, as players work to diversify portfolios, health care REITs have seen deal activity pick up.
- Healthpeak Properties and Physicians Realty Trust closed a $21 billion all-stock merger in March.
- Sila Realty Trust bought five health care properties leased by Tenet Healthcare for $85.5 million in March.
- American Healthcare REIT, which is focused on senior living properties, raised $672 million in a February IPO, at the bottom of its marketed range.
The other side: Health-focused REITs took a headline hit when Medical Properties Trust's largest tenant, Steward Health Care, filed for Chapter 11 bankruptcy in the spring.
- MPT acquired Steward's real estate assets from Cerberus Capital Management in 2016, in a $1.25 billion sale-leaseback transaction that gave MPT a $50 million stake in Steward.
- Steward said this week it secured $225 million in funding to stay open through its bankruptcy.
Threat level: Newly introduced legislation from Massachusetts Sens. Elizabeth Warren and Ed Markey around corporate influence in health care specifically targets REITs.
- The bill would prohibit payments from federal health programs to entities selling assets or using assets for a loan collateral made to a REIT.
- It would also repeal a tax rule letting taxable REIT subsidiaries influence operations of health care entities, as well as remove the 20% pass-through deduction for REIT investors.
