A subsidiary of an Florida-based investment group has made its first senior living purchases with the acquisition of two memory care communities in Florida, with an agreement to buy a third community that’s currently under construction and plans for a development pipeline of several more.
Validus Senior Living was formed as a subsidiary of private real estate investment firm Validus Group in early 2013. The acquisition of the memory care communities marks Validus Senior Living’s entrance into senior living community ownership, said Steven Benjamin, the company’s CEO and former CEO of Horizon Bay, which was the ninth-largest senior living operator before being acquired by Brookdale Senior Living (NYSE:BKD) in 2011.
While the group declined to disclose the purchase price, Benjamin confirmed a Tampa Bay Business Journal article reporting a $17.8 million mortgage with Keybank National Association that was recorded on Sept. 11.
The two communities are Ivy Ridge Living, a 58-bed property in St. Petersburg, and Hidden Lakes Living, a 78-bed property in Bradenton. The communities were purchased from developer and owner Mark Bouldin at what Benjamin called a premium, considering they are still in lease-up and are only about 40-45% and 35% occupied, respectively.
Both communities opened within the past couple years and feature leading-edge memory care services utilizing advanced design and safety and care technologies, along with the latest in evidence-based design concepts. The third community is located in Sarasota, with development expected to be completed in December 2013.
“[Completing this transaction] allows Validus Senior Living to stay consistent with our growth plan, while acquiring quality real estate that is well in our position to meet the needs of today’s seniors with related memory care challenges,” said Benjamin in a statement. “This agreement is part of our strategic growth plan to expand our memory care assisted living offerings throughout the southeast and beyond.”
A fourth building being developed by Bouldin is ready to break ground in Florida, Benjamin told SHN, which Validus plans to acquire along with several more, all located in Florida.
“We bought the buildings at [not a traditional cap rate] and paid him a premium,” he says. “The third [community] in Sarasota will be the same model, and we paid a premium beyond the cost of development. We’ll probably do 8-10 more with him.”
Bouldin specializes in memory care and has other developments throughout the state, targeting underserved market areas of Florida.
“I am excited about working with Validus Senior Living, both because of their extensive management experience and our relationship allows me to more rapidly expand the footprint of my specialized brand of memory care facilities,” he said. “Together, Validus Senior Living and I will provide exceptional purpose-built facilities for memory care residents whose care was previously limited to nursing homes or other places not specially built to treat and care for people with dementia.”
While Benjamin has an extensive background in senior living, Validus Senior Living is starting a new footprint, he noted, and is looking to do “a little bit of everything,” from ground-up development to looking for cash-flow opportunities and even some third-party management contracts, with a primary focus on ownership.
Ideally, the investment group is aiming for a portfolio that’s comprised of about 60% independent living and 40% assisted living and/or memory care.
While the recent acquisitions and purchase agreements have been for memory care properties, Validus Senior Living also recently secured an agreement for a 350-unit hotel in Fort Myers, Fla. that is getting converted into independent living and has a couple letters of intent out on other potential acquisitions.
Benjamin couldn’t share how much capital his group is looking to deploy through the end of the year and throughout 2014, saying only that Validus Senior Living is “well-capitalized.”
“We hope to acquire or develop one project each quarter,” he says.
Written by Alyssa Gerace