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.
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