LTC Properties Inc. (NYSE:LTC) will acquire six properties from Juniper Communities, LLC for $94 million in a sale-leaseback transaction set to close before the end of the year.
Juniper, a privately held company based in New Jersey, will continue to operate the communities under a lease with an initial 15-year term with two five-year renewal options and annual rent escalations of 1.5% for the first two years, and 2.25% thereafter.
LTC Properties will also be providing a two-year, $5.1 million debt financing on another senior living community located in Pennsylvania. The loan will have a 7.0% interest rate annually increasing by 1.5% in the second year.
The timing of the deal to close before year-end has been critica.
“We saw this timing as crucial as tax rates may change substantially in 2013,” Lynne S. Katzmann, CEO and founder of Juniper, told SHN. “Related to this, Juniper Communities plans to close on several acquistions before year-end.”
The six-property portfolio includes three assisted living properties with a total of 202 units and three memory care communities with 136 units. The communities are located in New Jersey, Colorado, and Pennsylvania and have a current average occupancy rate of 97.2%. They have a combined average age of approximately 12 years, and all but one are located in the top 31 metropolitan statistical areas.
Juniper’s transaction with LTC is structured to provide Juniper a capital event for industry growth through the sale/leaseback and refinancing of real property assets, along with permitting Juniper to continue operating its communities.
“The industry is being pushed by the baby boomer generation to expand senior housing opportunities and to deliver services in new and improved ways, both environmentally and programmatically for their parents and themselves in the future,” said Katzmann. “With the additional capital, we plan to pursue other acquisitions to further company growth, and to develop and implement new programs and services that will better serve aging Americans.”
Juniper is currently in negotiations on five additional properties, she added.
LTC plans to finance the acquisition with funds drawn from its unsecured revolving line of credit and the assumption of approximately $6.8 million of HUD debt bearing a 3.75% interest rate and maturing in 2051.
The transactions are expected to close in two phases, one by the end of the year encompassing five properties and a combined purchase price of $82 million, and the other anticipated to occur in 2013.
Written by Alyssa Gerace