Senior Housing Investments & Acquisitions (7/16/13)

| July 16, 2013

NHI Acquires Assisted Living Community for $15.3 Million

National Health Investors (NYSE:NHI) announced on Monday the $15.3 million acquisition of an assisted living community in Marysville, Ohio that will be leased to Emeritus Senior Living (NYSE:ESC).

The Inn at Halcyon Village is a 76-unit assisted living and memory care community built in 2009. The lease with Emeritus has an initial 15-year term with an option to extend. Rent in the firs year of the lease will amount to $1.15 million with three percent annual fixed escalators beginning in the third year.

“We are pleased to expand our relationship with Emeritus Senior Living, the nation’s largest assisted living operator, with the addition of this very high-quality and stabilized assisted living community,” said Justin Hutchens, NHI’s CEO and president. Emeritus now leases nine communities from NHI.

NHI funded the purchase with borrowings on its revolving credit facility. —Alyssa Gerace

CNL Lifestyle Properties Acquires Senior Housing Community for $22 Million

CNL Lifestyle Properties, Inc. announced on July 2 the acquisition of The Stratford Continuing Care Retirement Community, a 221-unit, Class A senior housing community in Carmel, Ind. for $22 million. Maxwell Group Inc. will continue to manage the property.

“The Stratford is an outstanding addition to our portfolio and its location in one of the most affluent suburbs of Indianapolis provides us with a top asset in a very strong market,” said Kevin R. Maddron, senior managing director of CNL Financial Group. “We are pleased with the performance of the continuing care retirement community asset which we currently own. This acquisition allows us the opportunity to add another continuing care retirement community to the fund and cultivate a relationship with a strong operating partner.”

Built in 2009, The Stratford features a pool, fitness room, main and private dining rooms, a library, theater, billiard room, beauty salon, Internet cafe, and an underground parking garage. —AG

Assisted Living Concepts Gives Update on TPG Merger

Assisted Living Concepts, Inc. (NYSE: ALC) announced recently that Aid Holdings, LLC has obtained nearly all the state licenses for operating its assisted living communities in connection with the planned merger TPG Capital, L.P. Aid Holdings is an affiliate of private equity firm TPG.

ALC says the remaining state operating licenses will be obtained by Aid Holdings within the next few weeks, and that the closing of the merger agreement will occur shortly afterward.

Healthsense Acquires Monitoring and Analytics Provider WellAware

Healthsense, Inc. announced on July 1 the acquisition of WellAware Systems in a move it says will increase the capabilities of its technology-enabled services platform. The terms of the transaction were not disclosed.

“The opportunities enabled by this combination are a natural next step in the evolution of technology-enable care. It brings together two industry-leading companies that will have greater scale and expertise to best serve our customers,” said A.R. Weiler, President and CEO of Healthsense. “WellAware’s unique monitoring technologies complement our own platform and will ultimately benefit our customers by further enabling more informed and proactive care decisions that drive reduced intervention costs and help them provide superior care.”

Combined, the two companies currently serve more than 20,000 individuals. The acquisition strengthens Heatlhsense’s position in managed care and accountable care networks as the emergence of performance-based care and reimbursement models intensifies the focus on increasing the quality of care while cutting down on costs.

“Healthsense shares WellAware’s belief that remote monitoring will play an important role in managing the health and wellness of the growing senior population. In particular, it enhances the way technology can be utilized to help seniors safely live as independently as possible,” said Teresa DiMarco, CEO of WellAware. “The powerful combination of technology and people created through this merger enables us to provide caregivers with the timely information they need to intervene appropriately, thereby reducing hospitalizations and ER visits and improving the overall quality of life for seniors.” —AG

Cornerstone Core Properties REIT, Inc. Acquires Assisted Living Community for $8.6 Million. 

Cornerstone Core Properties REIT announced July 3 it has acquired a 66-unit assisted living community built in 2006 in Aledo, Illinois for $8.6 million. The community has an occupancy rate of 95% and has been triple net leased to an affiliate of Meridian Senior Living, the new operator of the community under a 15-year term.

“We are very pleased to add another property to our Meridian Senior Living portfolio,” said Kent Eikanas.

Meridian currently operates more than 100 facilities in 12 states, including one of the facilities Cornerstone Core Properties REIT closed on earlier this year as well as others in Illinois.

Since its launch in 2006, Cornerstone Core Properties REIT has acquired 20 properties for a total purchase price of $194.2 million. Since 2011, six of those properties have been sold. The current portfolio includes seven multi-tenant industrial properties and seven long-term triple net leased healthcare facilities.

Gracewell Healthcare Acquires Shelbourne Senior Living Community

UK-based Gracewell Healthcare recently acquired Shelbourne Senior Living, a campus that includes a 68-bed care home and 14 assisted living cottages located in Sway, Hampshire, reports CareHome.co.uk.

“This is a fantastic facility, set in beautiful countryside, offering the highest level of care to its residents,” said Tim Street, healthcare director at Gracewell. “Gracewell will continue to deliver highly personalized care to ensure this is a home where people can continue to create happy memories with their families.”

Care levels at Shelbourne of Sway include support cottages, assisted living, and memory care. —AG

Kindred Announces Sale of Eight “Non-Strategic” Nursing Centers for $49 Million

Kindred Healthcare (NYSE: KND) announced this week it will acquire two home health agencies based in Phoenix and Virginia, further expanding its reach into home health care.

The acquisitions come on the heels of Kindred’s sale of eight non-strategic nursing centers for $49 million to Kindred affiliates, the proceeds of which the company plans to reinvest into its Integrated Care Markets and to use toward home health and hospice acquisitions.

In addition, Kindred announced the purchase of the previously leased real estate of Kindred Hospital Bay Area-Tampa for approximately $25 million.

“We plan to continue our efforts to reduce our lease obligations (our most expensive debt) and selectively grow Kindred at Home as part of our Integrated Care Market strategy, which enables us to better Continue the Care for our patients and provide high-quality clinical outcomes throughout an entire post-acute episode,” said Paul Diaz, Kindred CEO.

The home health acquisitions include All Heart Home Health Agency and Hospice, Inc. (“All Heart”), a home health and hospice provider that operates two locations in Norfolk; and Arrowhead Home Health, Inc. and Arrowhead Hospice Centers, Inc. (“Arrowhead”), a home health and hospice provider that operates two locations in the greater Phoenix market.

Terms of the acquisitions were not disclosed.

Kindred has recently ramped up home health acquisitions, having recently acquired a Houston-based home health provider. —Elizabeth Ecker

Clearview Capital Closes $325 Million Fund, Senior Care Investments Planned

Clearview Capital announced the closing of a $325 million fund last week, Clearview Capital Fund III, LP, which closed in excess of its $275 million target.

“We are gratified by the enthusiastic response of the limited partner community and are very proud of the diverse group of high quality public pension,
endowment, foundation and fund of funds investors that committed to Fund III,” said Calvin Neider, co-Managing Partner of Clearview Capital. “We are very fortunate to have been able to complete the entire process in just over five months.”

The majority of the fund’s capital was provided by institutional investors, but other capital was contributed by many of Clearview Capital’s original wealthy family and individual backers, as well as many managers from Clearview’s current and prior portfolio companies.

Notable institutional investors include Adams Street Partners, Credit Suisse’s Customized Fund Group, Grove Street Advisors, Northwestern University, and RCP Advisors.

“We intend to remain laser-focused on the lower middle market, comprising companies with EBITDA generally less than $10 million, a strategy we have pursued very successfully since our inception 14 years ago,” said James G. Andersen, co-Managing Partner of Clearview Capital. “We believe it was our continued commitment to the lower middle market, where we are confident we can continue to generate exceptional returns, that allowed us to raise the Fund quickly and which forced us reluctantly to turn away many high quality institutional investors.”

Senior Care Centers of America, one of Clearview Capital’s portfolio companies, merged with Active Day in November 2011 to become the largest adult day health service provider in the U.S. A spokesperson for Clearview Capital told SHN that a portion of the $325 million fund is expected to go toward senior care investments. —AG

Clearview Capital Completes 11th Add-on Acquisition for Senior Care, Inc.

Active Day/Senior Care, Inc., a portfolio company of Clearview Capital, LLC, announced the June 20 completion of the acquisition of Guardian Programs Adult Medical Day Care of Glassboro, N.J.

The transaction is the eleventh add-on acquisition that Active Day/Senior Care has made since Clearview Capital’s initial investment in the company in 2005, and the company expects to make additional acquisitions in the future both within its current footprint and in new markets. —AG

REIT Acquires Four SNFs for $35.6 Million

American Healthcare Investors and Griffin Capital Corporation, the co-sponsors of Griffin-American Healthcare REIT II, Inc., announced in June the acquisition of four skilled nursing facilities in three transactions for a total purchase price of about $35.6 million.

One of the acquisitions was a two-property portfolio of skilled nursing facilities located in Milton and Watsontown, Pa., for $13 million. The two facilities total about 75,000 square feet and 263 licensed bed and were sold by Millennium Management, an unaffiliated third party represented by Mark Davis of Healthcare Transactions Group, Inc.

The portfolio is currently 100% master leased to Mid-Atlantic Health Care, LLC under a 15-year absolute net lease which has been cross-collateralized and cross-defaulted to the existing master lease between Griffin-American and Mid-Atlantic for the five-building skilled nursing portfolio they operate which was acquired by the REIT in 2011.

Another skilled nursing facility, this one about 42,000 square feet in Pittsfield, Mass., was acquired off-market for about approximately $16 million from Sheehan Health Group. The one-story, 115-bed facility was built in 1980 and underwent a comprehensive renovation in 1995, with additional capital improvements totaling $1.5 million performed in 2011 and 2012.

Pittsfield Skilled Nursing Facility is currently 100% master leased to Trinity Health Systems, LLC under a 15-year absolute net lease with annual 3% rent escalations. The lease has been cross-collateralized and cross-defaulted with the existing master lease between the REIT and Trinity for the seven building Massachusetts senior care portfolio which they operate that was acquired by Griffin-American in 2012.

The last acquisition was for Fairview Skilled Nursing Facility, a single-story, 43-unit center licensed to operate up to 102 beds. The approximately 25,000 square foot building is located near a medical center and was acquired for about $6.6 million from an entity affiliated with Regency Pacific. It is currently 100% master leased to Regency Pacific pursuant to a 13-year absolute net lease.

Like the other acquisitions, the Fairview facility’s lease has been cross-collateralized and cross-defaulted with the existing master lease between Griffin-American and Regency Pacific for the 13-building Pacific Northwest senior care portfolio they operate that was acquired by the REIT in 2012.

Regency Pacific was represented by Don Ambrose and Chris Urban of Ambrose Capital Group, Inc.

“We continue to source attractive acquisitions on behalf of Griffin-American Healthcare REIT II and its stockholders,” said Danny Prosky, a principal of American Healthcare Investors and president and COO of the REIT. “In a competitive market, we are proud to be among the most active buyers of healthcare real estate as we continue to build a diverse portfolio on behalf of stockholders.” —AG

NuScript RX Raises $8.5 Million in Equity Offering

NuScript RX, a Nashville-based pharmacy company that serves the long-term care industry, recently raised $8.5 million in an equity offering, according to a Securities and Exchange Commission filing.

Twelve investors contributed to the offering, which is not being made in connection with a merger, acquisition, or exchange offer, according to the filing. Rather, the money is slated for building the company’s infrastructure, reports the Nashville Business Journal citing Don Taylor, the company’s CEO.

“We have about 100 employees at this point, and it looks like we will double our business within the next 18 months,” Taylor told the Business Journal.

NuScript uses a mail-delivery system and owns and operates a central distribution center in Nashville which was recently doubled in size. Its next goal is to build inventory and equipment and expand staff. —AG

HealthLease Properties REIT Approved to Buy Senior Housing Portfolios

HealthLease Properties Real Estate Investment Trust (TSX:HLP.UN) announced on July 2 that its board of trustees approved the acquisition of two senior housing and care property portfolios.

One portfolio is located in Ohio, Virginia, and North Carolina with a total of 495 beds, while the other is located in Alberta, Canada, with 468 beds and 283 more under development. The aggregate purchase price for both portfolios, excluding mezzanine financings of the two properties under development, is about $200.6 million (CDN).

The U.S. portfolio has five skilled nursing facilities and one assisted living and memory care community and was acquired for $77.6 million (USD). Its acquisition is being financed in part by a term loan for $53.1 million (USD) from PNC Bank, with a 4-year term and a 4.64% interest rate.

The other portfolio has six assisted living and independent living communities and was acquired for $69.7 million (CDN). Its acquisition will be financed in part by the assumption of five loans in the amount of $45.2 million (CDN). The five loans have a weighted average maturity of 13.1 years and weighted average interest rate of 4.98%.

HealthLease also entered an agreement to provide mezzanine financing of $5.3 million (CDN) for two additional properties in the Canadian portfolio that are currently under development and to purchase those properties upon completion for an aggregate $53.3 million (CDN).

We are excited about these acquisitions to expand our presence in both Canada and the U.S.,” said Zeke Turner, Chairman and CEO of HealthLease. “This continues the growth momentum we set at our initial public offering and increases our portfolio diversity. We began with 15 properties when we went public just about a year ago; with this acquisition we have now grown to 45 properties, triple our initial size, while maintaining one of the youngest real estate portfolios in the industry.”

Saber Healthcare Group, LLC will manage the skilled nursing facilities in the U.S. portfolio under a triple-net lease. Meridian Senior Living will manage the sixth property, also under a triple-net lease. The Canadian portfolio will continue to be operated by Continuum Health Care Holdings Ltd. —AG

Marcus & Millichap Brokers Sale of Calif. SNF

A 99-bed skilled nursing facility dually licensed for Medicare and Medi-Cal (California’s Medicaid program) was recently sold in a transaction brokered by Rob Reis, vice president of investments at Marcus and Millichap and associate director of the firm’s National Seniors Housing Group. The facility is located in northern California and was approximately 92% occupied at time of sale, with a quality mix under 10%. No further information was released. —AG


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Category: Acquisitions, Finance, Management & Operators, Senior Care, Senior Housing, Senior Living, Skilled Nursing

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