Some of the top healthcare-focused real estate investment trusts are spending big bucks on senior housing development, if presentations made during Tuesday’s Stifel Nicolaus conference are any indication.
Sabra Healthcare REIT (NASDAQ:SBRA), Ventas (NYSE:VTR), LTC Properties, Inc. (NYSE:LTC) and Aviv REIT (NYSE:AVIV) all presented during the 2014 Stifel Nicolaus Senior Housing and Healthcare Real Estate Conference held in Miami on January 28.
The REITs outlined recent and ongoing development pipelines, including a mix of new construction, expansions, and renovations or repositionings.
Sabra is investing an estimated $100 million of preferred equity into a pipeline agreement with Meridian Realty Advisors for up to 10 new senior housing, memory care and skilled nursing facilities, up to 10 properties. The agreement has an investment return of 15% and an option to purchase facilities upon completion of construction and stabilization.
So far, the REIT has closed on four properties in Meridian’s portfolio and has closed preferred equity investments for the construction of two more properties, a skilled nursing facility and memory care community, planned for Austin, Texas.
In October 2013, Sabra made a $17.1 million commitment for construction mortgage loan funding for two memory care facilities in Henrico and Williamsburg, Virginia through a relationship with New Dawn Holding Company. The investment has a 10% rate of return with purchase options for both communities after stabilization.
LTC Properties has two projects that are expected to open in the third and fourth quarters of 2014, a 77-unit assisted living and memory care community in Wichita, Kansas representing a $10.6 million investment commitment, and an 81-unit assisted living and memory care community in Frisco, Texas, representing a $5.8 million investment commitment.
The REIT has several other expansion and renovation projects, with total investment commitment of nearly $90.8 million, including three projects expected to open in the first quarter of 2015. One is a 143-bed skilled nursing facility in Coldspring, Ky. The other two are memory care communities in Littleton, Colo. (60 units) and Aurora Colo. (48 units).
Ventas currently has $150 million of projects underway and around $200 million in the near-term pipeline, expecting yields between 7-12%, according to its presentation.
Projects include a ground-up senior housing development, Atria Woodbriar Place in Cape Cod, Mass., along with a comprehensive repositioning of another Atria community in Novato, Calif., and two strategic redevelopments of Sunrise of Old Tappan in New Jersey and Brookdale Hallmark in Chicago, Ill.
Aviv REIT has invested $122 million since 2009 for reinvestment and new construction, according to its presentation, which mainly focused on acquisition opportunities in the highly-fragmented skilled nursing sector.
The REIT takes a “programmatic approach” to reinvestment including market screening to optimize allocation of capital; standardized “finish packages,” and interior and exterior enhancements ranging from the addition of therapy gyms and specialty units to improved lighting, signage, and architectural features.
Written by Alyssa Gerace