NHI to Acquire 25 Holiday Retirement Communities for $491 Million

National Health Investors (NYSE: NHI) announced today it has signed a definitive agreement to acquire 25 independent living communities from an affiliate of Holiday Retirement for $491 million.

The announcement comes a day after Newcastle Investment Corp. (NYSE: NCT) entered into an agreement to acquire a 52-property portfolio of senior housing communities from Holiday Retirement affiliates for approximately $1.01 billion.

NHI, a real estate investment trust, will acquire the facilities from certain subsidiaries of Holiday Acquisition Holdings LLC in the deal, expected to close by December 31, 2013. Holiday Retirement is owned by global investment management firm Fortress Investment Group (NSYE: FIG).

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The 25 facilities total 2,841 units and have a median age of 16 years. The average occupancy rate of the facilities for the nine months ended September 30, 2013 is 89%.

Following the deal’s closing, the 25 independent living communities will continue to be operated by affiliates of Holiday Retirement pursuant to a 17-year master lease signed by an affiliate of Holiday.

The lease equates to an initial cash yield of 6.5% on the purchase price with annual escalators of 4.5% in years two through four, and annual escalators thereafter of 3.5%, or a maximum of 3.7% if CPI is higher during the preceding year, NHI stated in a release.

“This investment is in line with our stated goals of partnering with strong operators, diversifying our portfolio, and financing growth in a conservative fashion. Holiday, a portfolio company of Fortress Investment Group, is an industry leading operator of independent living communities,” said NHI CEO and President Justin Hutchens.

The to-be acquired communities are located in Arkansas, California, Georgia, Idaho, Indiana, Louisiana, New Jersey, Ohio, Oklahoma, Oregon, South Carolina and Washington.

NHI is the most recent REIT to snap up Holiday properties, following the Newcastle announcement.

In late October, Chicago-based real estate investment trust Ventas (NYSE: VTR) announced it has acquired a 26-property portfolio of independent living communities from Holiday affiliates for a purchase price of $790 million.

The occupancy rate for the Ventas portfolio is 94%, while the portfolio for the Newcastle deal was 91% occupied.

Holiday currently operates 333 independent living communities across the U.S. Following the closing of the pending acquisitions by Ventas, Newcastle, and NHI, around 230 properties will remain in Holiday’s owned portfolio.

Written by Jason Oliva

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