Chicago-based real estate investment trust Aviv REIT announced today it has acquired four senior housing properties in Ohio and Indiana for $44.9 million.
The first three properties are located on a campus in Ohio, which includes an assisted living facility, a post-acute and long-term care skilled nursing facility (SNF) and a long-term acute care hospital (LTACH), plus the right to build a new long-term acute care hospitals.
The assisted living facility is triple-net leased to existing operator Maplewood Senior Living, while the SNF ad LTACH are triple-net leased to new Aviv operator Cardinal Care Management. The fourth property in the acquisition, a specialty hospital in Indiana, is triple-net leased to existing Aviv operator Physician’s Hospital.
The Maplewood lease has an initial cash yield of 8%, which increases to 9% in year two, with 2% fixed annual escalators thereafter and an initial lease term of 10 years. With this acquisition, Maplewood is now an operator of seven ALFs in Connecticut and Ohio, all of which are leased from Aviv. The company is Aviv’s fifth largest operator, with 7% of the Aviv’s total rent.
The Cardinal lease for the SNF and LTACH has an initial cash yield of 9.8%, with 2% fixed annual escalators beginning in year three and an initial lease term of 10 years. Cardinal is now an operator of two properties in Ohio as a result of the Aviv acquisition.
The Physician’s lease for the specialty hospital has an initial cash yield of 10%, annual escalators based on CPI and an initial lease term of 10 years. Aviv began its relationship with Physician’s Hospital in 2012. Physician’s is now an operator of three specialty hospitals in Indiana, all of which are Aviv leased.
Together, these investments have a blended initial cash yield of 9.4%.
Looking forward, Aviv expects to pursue additional growth opportunities with its operators.
“As we expected, we have continued to close acquisitions throughout the fourth quarter and we still expect to close additional acquisition before the end of the year,” said Craig M. Bernfield, chairman and CEO of Aviv. “The substantial majority of our acquisitions this year have been SNFs, but we continue to make strategic investments in other complimentary healthcare properties such as the Maplewood, Cardinal and Physician’s acquisitions.”
With these acquisitions, Aviv has completed $204 million of investments in 2013 alone, according to Bernfield.
“These transactions further diversify the portfolio and continue our focus of working with growth-oriented operators,” he said. “We continue to see a strong pipeline of high-quality opportunities at attractive valuations and lease yields, with new and existing operator relationships. Our relationship-oriented strategy has provided us with consistent growth opportunities over a long period of time and we look forward to continuing this track record of disciplined growth.”
Currently, Aviv owns 278 properties that are triple-net leased to 38 operators in 29 states.
Written by Jason Oliva