Senior Housing Investments & Transactions: REIT Mega Deal, LTC Properties

Washington Nursing Facility Sells for $6.6 Million 

Shoreline Health and Rehab, a 106-bed skilled nursing facility in Shoreline, Wash., recently sold for $6.625 million, a purchase price driven, in part, by its $3 million renovation in 2012, according to Evans Senior Investments, which facilitated the sale.

“Although well-managed from an expense perspective, the facility historically had difficulty driving census above 80%. The remodel and conversion to more private rooms is projected to attract more residents and a higher census over time, particularly Medicare Part A residents due to the facility’s spacious first floor therapy room,” said Kristy Ortwein, exit strategy specialist for ESI.

ESI worked with the seller to develop a pro-forma of the facility, demonstrating the profitability of the property under new ownership and an improved census. The community currently has a 77.2% occupancy and a 27.7% quality mix.

ESI showcased the property to a select group of buyers and procured a dozen letters of intent from private REITs, public REITs and private equity firms. In a competitive bidding process, a publicly traded REIT emerged as the winner.

The in-place cap rate of the facility was 8.7% on the trailing twelve months NOI of $578,000 and a 12.15% cap rate on the pro-forma NOI of $805,000.

Griffin-American Healthcare REIT Acquires 2 Properties for $66 Million

Mark Myers and Joshua Jandris of the Institutional Property Advisors (IPA) represented the seller, a family-owned private development company, in the recent sale of two Dial Retirement Communities to Griffin-American Healthcare REIT.

The transaction closed on May 29, 2015, for $66 million. The two properties in the transaction were Fountain View in Omaha, Neb., and Ridgewood in Bennington, Neb.

Both properties have assisted living, independent living and memory care. The purchase price represents a cap rate of 6.21% and a price per unit of $300,000.

Senior Living Investment Brokerage Sells Community for $14 Million

On June 1, 2015, Ryan Saul of Senior Living Investment Brokerage Inc. represented the seller in the sale of Waterford Crossing, an Indiana assisted living/memory care community, for $14 million.

Waterford Crossing consists of 80 assisted living/memory care units. Original construction was in 2004 (55 apartments) with a 2007 addition of 26 apartments (one unit is being used as an office). The community is comprised of approximately 92,156 square feet and sits on 6.78 acres.

At the time of the sale, overall occupancy was 98%.

The offering included approximately $9.8 million of Department of Housing and Urban Development (HUD) debt at 2.55% interest, which was assumed by the buyer.

The seller was The Manor House, LP, made up of a group of investors and an operator looking to retire. Their desire was to find an owner to continue the tradition and high level of care in the community.

The buyer, Trilogy Health Services, owned a nursing home just 20 yards away, on the adjacent parcel to Waterford Crossing. This acquisition fits into Trilogy’s operating platform and will serve as a campus that includes a continuum of care.

“This transaction was a win-win for buyer and seller. It provided an opportunity for the buyer to acquire a quality seniors housing asset adjacent to their existing skilled nursing facility and the seller was pleased to sell the community, in the town where they live, to a high quality operator,” Saul said.

HCP Affiliate Acquires Tennessee Community for $65.5 Million 

A subsidiary of HCP, Inc. (NYSE: HCP) has purchased a Brookdale Senior Living facility in Germantown, Tenn., for more than $65 million, according to local reports.

FSP-Germantown LLC of Delaware sold the Solana Germantown to HCP Germantown LLC, an affiliate of HCP Inc., for $65.4 million.

The 210,900-square-foot facility, built in 2012, sits on 6.8 acres and provides independent living as well as personalized assisted living and Alzheimer’s and dementia care services.

LTC Acquires Chicago Metro Area Land Parcel

LTC Properties, Inc. (NYSE: LTC), a real estate investment trust that primarily invests in seniors housing and health care properties, recently announced it has acquired approximately 3.5 acres of land in Tinley Park, Ill., for approximately $700,000.

The company also made a development commitment to fund the construction of a 66-unit memory care community on the newly acquired parcel in an amount not to exceed $11.2 million. The new project is scheduled to open in the summer 2016.

The land parcel was added to an existing 10-year master lease with an affiliate of Anthem Memory Care. The Tinley Park community is one of two projects under development in the Chicago metro area with Anthem. The other is a 66-unit memory care community in Burr Ridge that is expected to open in the fourth quarter of 2015.

Additionally, Anthem and LTC have a parcel of land currently under contract in Glenview, also located in the Chicago metro area, on which development of a memory care community is scheduled to commence later this year subject to completion of due diligence.

“Anthem has been a great partner to LTC for the past three and a half years, and we are pleased to further extend our partnership in Chicago,” said Wendy Simpson, LTC’s chairman and CEO. “With an attractive risk-adjusted return profile relative to acquisitions, development will be an ongoing driver of growth for LTC. At the same time, we will continue to execute on our strategy of diversifying our portfolio by geography, property type and operator.”

RMR-Managed REITs Acquire Half of RMR Management Company

Senior Housing Properties Trust (NYSE: SNH), Hospitality Properties Trust (NYSE: HPT), Select Income REIT (NYSE: SIR) and Government Properties Income Trust (NYSE: GOV) recently announced that they have acquired combined economic ownership of approximately half of REIT Management & Research LLC (RMR).

Each of the REITs is managed by RMR and, simultaneously with the REITs’ acquisition of ownership in RMR, the management agreements with RMR were amended and extended for 20-year terms.

The REITs’ ownership in RMR is held indirectly through RMR INC, a new holding company of RMR. Pursuant to the agreements entered for this transaction, the REITs have agreed to distribute approximately half of the RMR INC shares held by them to their shareholders as a special dividend, and RMR INC has agreed to facilitate this by filing a registration statement with the Securities and Exchange Commission (SEC) to register the RMR INC shares to be distributed, and by seeking a listing of those shares on a national stock exchange upon the registration statement being declared effective by the SEC.

The purchase price paid by each REIT for its respective ownership in RMR INC was paid to the historical owners of RMR by delivery of restricted common shares of each REIT, which are subject to 10-year lock up agreements and which were valued at the volume weighted average trading prices for each REITs’ common shares during the 20 trading days prior to the acquisition, as well as cash.

It is expected that upon completion of the anticipated distribution of RMR INC shares to the REITs’ shareholders and listing of those shares, approximately 24.2% economic ownership in RMR will be publicly traded.

The remaining RMR INC shares held by the REITs which are not distributed to the REITs’ shareholders will be unregistered, but these RMR INC shares will not be subject to any lock-up provisions and the REITs will have certain registration rights for the RMR INC shares that they retain.

The REITs currently expect to distribute the RMR INC shares to their shareholders before year-end 2015.

Written by Emily Study