NorthStar Realty Finance Corp. (NYSE:NRF) recently acquired an assisted living portfolio located in Minnesota for $51 million at a 9.5% cap rate.
The 11-property portfolio has 292 beds and was 95% occupied as of March 2013. The communities were built between 2000 and 2012 and were sold by someone who is retiring and divesting his senior housing assets.
Meridian Senior Living will now operate the communities.
“From an operating perspective, nothing will change, because many of the key employees who have been managing the communities have transitioned over to the new operator, Meridian,” says Doug Bath, NorthStar’s chief investment officer. However, he says the portfolio may gain some operating efficiencies due to Meridian being a larger management company than the previous one.
The cap rate, based on trailing net operating income, made for a “pretty decent” acquisition price, Bath continued, coupled with a “very healthy” lease coverage ratio of over 1.3x based on trailing NOI. “It makes for a very safe investment from our perspective,” he says.
NorthStar, an internally-managed REIT with more than $8.7 billion in assets under management, owns approximately 80 senior housing properties and is a lender for an additional 20 senior housing properties.
Written by Alyssa Gerace