Senior Housing Investments & Acquisitions: REIT Acquires Community for $83.5M

Sabra Acquires Senior Housing Campus for $24M, Makes Development Investment

Sabra Health Care REIT, Inc. (NASDAQ:SBRA) recently acquired a senior housing campus in Fort Wayne, Indiana for $23.8 million and announced a preferred equity investment of $1.7 million for the completion of a memory care community in Colorado Springs, Colo.

The newly acquired campus, Park Place, has 140 total units comprised of 24 independent living units, 76 assisted living units, and 40 memory care units. It opened in 2011 and is 100% occupied.  

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Park Place has an FHA-insured mortgage with an outstanding principal balance of $14.1 million and an annual interest rate of 4.84%. At closing, $1.1 million of the purchase price went toward repaying Sabra for an interim loan to affiliates of the Leo Brown Group, the community’s operator. Sabra assumed the remainder of the HUD mortgage for a cash investment of $8.6 million.

Affiliates of the Leo Brown Group entered a 15-year triple net master lease with Sabra at the time of the acquisition. The lease has two renewal options of five years each. 

Sabra also recently provided the nearly $2 million of preferred equity funding to affiliates of New Dawn Holding Company for the completion of a 48-bed memory care community. The investment provides for an annual 12% preferred return in addition to a right of first offer and “last look” upon the sale of the facility. This represents the third development investment Sabra has entered into with New Dawn. 

“We have been working to consummate a transaction with the Leo Brown Group for some time and are pleased to close this one. They are a fantastic team to work with,” said Rick Matros, Sabra CEO and chairman, in a statement. “We are also working on a larger relationship and hope to announce a senior housing development project with them as well. The Leo Brown Group would be Sabra’s fifth development partner as we continue executing our strategy to bring new purpose built products into our portfolio.”

Sabra also expects more projects with New Dawn in the future. 

Capitol Seniors Housing Acquires Community for $21.25M

Washington, D.C.-based private equity group Capitol Seniors Housing recently acquired an assisted living and memory care community in East Cobb, Ga. for $21.25 million and a 7.1% cap rate. 

The 90-unit Arbor Terrace at East Cobb was built in 2000 and has 20 memory care units. It is managed by The Arbor Company. 

Michigan Senior Care Community Sells for $14.6 Million

A senior living community in Michigan recently sold for $14.6 million by a CPA seller represented by Evans Senior Investments.

The assisted living and memory care community was built in 2001 with 80 units and is currently about 88% occupied. Rents range from $4,100 to $6,000 a month and the community operated at a 24% EBITDA margin.

“While we are not sure whether the new owner will be able to improve on what the CPA seller could do, there does seem to be some upside potential,” commented Evans Senior Investments. 

Despite its Michigan address, the community is considered to be in the Toledo, Ohio market area. 

IPA Sells Beaver County Nursing Home for $33.5 Million

Institutional Property Advisors (IPA), a division of Marcus & Millichap, recently arranged the sale of Friendship Ridge, a 605-bed nursing home in Beaver, Pa. for $33.5 million.

Friendship Ridge is located in a Pittsburgh suburb and was sold by Beaver County, Pa. to a private consortium of owners and investors based in New Jersey and New York. IPA senior director Joshua Jandris, IPA executive director Mark Myers, IPA associate Charles Hilding, and Matthew Gorman, a vice president of investments in Marcus & Millichap’s Philadelphia office, represented the seller. 

“The new ownership group has more than 50 years’ experience in long-term care and is eager to begin operating in Pennsylvania with Friendship Ridge as its initial investment,” Jandris said in a statement. “The state’s strong reimbursement system is especially attractive for investors from New Jersey and New York where the introduction of managed Medicare is creating uncertainty.”

Friendship Ridge has been in operation since 1959. Located on 25 acres of land, additional acreage is available for expansion. 

“The opportunity to acquire a large concentration of beds in a major Pennsylvania metropolitan area generated significant interest in the property,” said Myers. “The asset’s large size means that incremental revenue increases and expense management strategies can greatly impact the bottom line.”

Ensign Acquires Skilled Nursing Facility in Arizona

The Ensign Group, Inc. (Nasdaq:ENSG) recently acquired Casas Adobes Post-Acute Rehabilitation Center, a 230-bed skilled nursing facility in Tucson, Ariz., effective May 1. The acquisition was made with cash for an undisclosed purchase price. 

“We are excited to add a second operation this year to our 15 existing operations in Arizona,” said Christopher Christensen, Ensign’s President and Chief Executive Officer, referring to Ensign’s March acquisition of Horizon Post-Acute and Rehabilitation Center, a 196-bed skilled nursing facility in Glendale, Arizona. “Together with Ensign’s existing operations in the Tucson market, this new addition strengthens our local cluster and will magnify our ability to provide top quality care to the patients and families we serve.”

Casas Adobes had an occupancy rate of approximately 43% at acquisition and is expected to be mildly accretive to earnings in 2014. The real estate assets Ensign acquired in this acquisition and in the Horizon Post-Acute acquisition will remain with Ensign after the completion of the previously-disclosed plan to separate Ensign’s real estate business from its healthcare operations.

This acquisition brings Ensign’s growing portfolio to 121 healthcare facilities, eight hospice companies, ten home health agencies and eleven urgent care clinics across 11 states. Ensign is actively seeking additional opportunities to acquire real estate or lease both well-performing and struggling skilled nursing, assisted living, and other healthcare-related business.

Ensign Acquires 2 Calif. Senior Care Communities

The Ensign Group, Inc. recently announced the acquisition of two senior care facilities in California, effective May 3.

California Mission Inn is a 143-unit assisted living community in Rosemead, Calif. Mission Care Center is a 59-bed skilled nursing facility that has been operated by an Ensign subsidiary as a leased facility since 2005.

“We are committed to continuing the great work we’ve done at Mission Care Center and are confident that, with the addition of California Mission Inn, this senior care campus will be positioned to provide a full-service offering to address the specific needs and preferences of each resident,” said Christopher Christensen, Ensign’s President and Chief Executive Officer, in a statement.

The transaction marks Ensign’s third real estate acquisition since announcing plans to separate most of the company’s real estate from its operating business.

“We hope that these recent acquisitions will add clarity to Ensign’s strategy following the spin-off, which is to continue to acquire and retain the real estate assets for both well-performing and struggling skilled nursing facilities across the United States,” he said.

Ensign’s senior housing subsidiary Bridgestone expects operations in California Mission Inn, which had an occupancy rate of approximately 72% at acquisition, to be mildly accretive to earnings in 2014.

The skilled nursing, assisted living, and home health owner/operator made the purchases with cash and will retain ownership of the real estate acquired in this transaction and the other acquisitions it has completed or plans to complete in 2014.

Ensign Acquires Utah Senior Care Facility 

The Ensign Group, Inc. recently acquired Mt. Ogden Health & Rehabilitation Center, a 108-bed skilled nursing facility in Ogden, Utah, effective May 7.

An Ensign subsidiary has been operating the facility since July 2006 under a sublease arrangement with the ground lessee. The underlying ground lease has a remaining term of 40 years with the ability to extend the term further. 

“This is our fourth addition to Ensign’s real estate portfolio since Ensign announced its plans to separate substantially all of the real estate from its operating business,” said Christopher Christensen, president and CEO of Ensign, in a statement.

Ensign purchased the facility with cash and will retain ownership of the real estate it acquired in this transaction and the other acquisitions it has recently completed or plans to complete in 2014.

REIT Buys Senior Housing Community for $83.5 MIllion  

 A publicly-traded REIT recently acquired a senior housing community in Alpharetta, Ga. for $83.5 million.

Allen McMurtry, executive managing director at commercial real estate services provider Cassidy Turley, represented the seller in the disposition of the Somerby of Alpharetta. The community has 282 total units comprised of 16 independent living villas, 187 independent living apartments, 56 assisted living units, and 23 memory care units.

The Somerby of Alpharetta was built in 2007-2008 and maintains occupancy in the mid-90% range, according to Cassidy Turley. 

Located in Alpharetta, GA, the community includes 282 units comprised of 16 Independent Living villas, 187 Independent Living apartments, 56 Assisted Living units and 23 Memory Care units. The community was built in 2007-2008 and maintains occupancy in the mid-90% range. 

Aviv Acquires 8 Senior Care Facilities for $71 Million

Aviv REIT, Inc. (NYSE: AVIV) announced the acquisition of eight post-acute and long-term care skilled nursing facilities in California and Texas in three separate transactions for $70.7 million. The acquisitions are follow-on investments with existing operator relationships and the opportunities were brought exclusively to Aviv by the operators. Triple-net leases for the newly acquired facilities have a blended initial cash yield of 9.7%, annual escalators and lease terms of 10 years.

Four of the SNFs, located in Texas, were purchased for $53.7 million and are triple-net leased to existing Aviv operator Fundamental Long Term Care at an initial cash yield of 9.5%. Three of the SNFs, located in California, were purchased for $13.4 million and are triple-net leased to existing Aviv operator Providence Group at an initial cash yield of 10.25%. The remaining SNF, located in Texas, was purchased for $3.6 million and is triple-net leased to existing Aviv operator Trinity Healthcare, LLC at an initial cash yield of 10.75%. 

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