Senior Housing Properties Trust (NYSE:SNH) recently announced its agreement to acquire $167 million worth of properties that are majority leased to medical office users and other tenants in medical-related businesses, from CommonWealth REIT (NYSE:CWH).
The 13 properties, scattered in eight states across the nation, have an aggregate 1.3 million square feet, and are currently 95% occupied on a combined basis, with weighted average remaining lease terms of approximately five years.
The combined purchase prices for the portfolio represents a weighted estimated average capitalization rate of approximately 9.2% per year, based on annual property level net operating income during the remaining lease terms.
The purchases are expected to be completed in 2011, with SNH planning to acquire the properties without any mortgage debts by using available cash and drawings from its $750 million unsecured revolving bank credit facility.
Taking into account SNH’s other recent $478 million, nine-property portfolio acquisition from Vi Classic Residence, its sources of rents will be diversified through 371 properties in 38 states, consisting mainly of senior living communities and medical offices.
SNH’s right of first refusal to purchase certain properties from CWH will terminate after the conclusion of this 13-property transaction, as it will have purchased most of the properties subject to this right, which stemmed from SNH’s former status as a 100% subsidiary of CWH before spinning out in 1999.
Written by Alyssa Gerace