SNH REIT to Sell 9 Senior Living Properties, Lower Medicaid Exposure

Senior Housing Properties Trust (NYSE:SNH) is trying to sell nine senior living communities in an ongoing effort to limit the REIT’s exposure to Medicaid and Medicare reimbursement exposure. 

The portfolio that SNH is looking to divest has 708 units, and a majority of the combined revenues the communities generate come from government-funded programs, the REIT announced in its fourth quarter earnings report. The properties are “principally skilled nursing facilities,” Rick Doyle, treasurer and CFO, said during the earnings call. 

Comments made during that call indicate the nine properties are within Five Star Quality Care’s management portfolio.

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“Looking at the performance of our individual operators, Five Star’s 187 leased communities had combined occupancy of 84.3%,” said David Hegarty, president and COO of SNH. “If you exclude the nine senior living communities held for sale, Five Star’s aggregate occupancy would have increased to 50 basis points to 84.8%.” 

SNH is also marketing four medical office buildings (MOBs) for sale. The MOB portfolio consists of seven buildings with a total of 831,499 square feet. 

Both portfolios that SNH are marketing come after previous divestitures the REIT has made in recent months, including the January 2014 sale of an assisted living community in Texas for $2.4 million and the sale of two rehabilitation hospitals last December for $90 million. The majority of the hospitals’ revenue had come from Medicare. 

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However, Senior Housing Properties Trust has also acquired senior living communities recently, including two in Georgia for $19.1 million and another in Tennessee for $9.9 million, both last October, and one more in Wisconsin for about $12 million, all managed by SNH’s taxable REIT subsidiary Five Star Quality Care.

SNH president and chief operating officer said during the fourth quarter earnings call that they expect to sell the nine senior living properties and seven MOBs by mid2014.

Written by Alyssa Gerace

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