Trend: Cash Incentives for Senior Housing Operators

NewImageNational Real Estate Investor is reporting that operating incentives in the form of cash are helping to align owners and operators of senior housing.

The article cites the announcement from Emeritus that it plans to take full ownership of 24 assisted living buildings it jointly owns with Blackstone Real Estate Advisors for $99 million.

Under the joint venture agreement, Emeritus earns an increasing share of investment returns as building operations improve and foreshadows a much bigger transaction involving Blackstone and Emeritus.


The partners, along with several other parties, purchased the bankrupt Sunwest portfolio of 134 assisted living buildings last August for $1.3 billion. The deal also includes operating incentives.

“The structure of the joint venture has been an incentive for us to improve operations,” says Rob Bateman, CFO at Seattle-based Emeritus. “It’s a win-win for all parties.”

Senior housing is well suited to incentives because the facilities serve as operating businesses, enabling a deft manager to significantly improve returns.


“It’s very wise to align the interests of the operator and the lead capital provider,” says Kathryn Sweeney, principal at Great Point Investors, a real estate investment management firm in Boston.

Read the rest at the link below.

Cash Incentives Help Drive $99 Million Buyout of Blackstone Portfolio