Sabra Health Care REIT, Inc. (NASDAQ:SBRA) has committed to a forward purchase program to acquire newly-constructed senior housing properties that will be developed by First Phoenix Group, LLC.
Through the pipeline agreement, Sabra will eventually purchase and also provide certain interim construction funding for up to 10 assisted living and memory care facilities through at least 2014.
Under the agreement, First Phoenix will identify and develop the properties, and then affiliates of Sabra will purchase them upon stabilization and enter a 50%/50% RIDEA-compliant joint venture partnership. First Phoenix will operate the facilities, while Sabra will own 100% of the real estate and lease it to the joint venture partnership under a triple-net lease structure with an initial annual yield on cash rent of 8%.
First Phoenix currently operates one facility under the Stoney River Assisted Living brand, in Marshfield, Wisc. Sabra is expected to acquire this community in 2012 and it will be operated by the joint venture partnership.
Along with the pipeline agreement, Sabra entered into a $1 million pre-development loan agreement with First Phoenix to fund the acquisition of land and certain other costs associated with the first development project under the forward purchase program, a 72-unit assisted living/memory care facility located in Ramsey, Minn.
Sabra will fund the loan over the course of the pre-development activities. The loan has a fixed interest rate of 9% a year, and repayment is expected to occur in connection with the acquisition of the stabilized property by Sabra, or earlier in certain circumstances.
“We have spent considerable time with the First Phoenix team over the last several months and are enthusiastic about the relationship. We believe that the care they deliver and the environment they create is unique both operationally and from a physical plant perspective and will therefore be very appealing to the new generation of seniors in need of senior housing,” said Rick Matros, CEO and chairman of Sabra, in a statement regarding the agreement. “For Sabra, this is an important step as we begin to expand our asset base, and we are particularly pleased to bring new and distinct assets into our portfolio.”
Written by Alyssa Gerace