Senior Housing Investments & Transactions: Ensign Group Completes 18-SNF Acquisition

Ensign Group Completes Acquisition of Legend Healthcare

The parent company of the Ensign group of skilled nursing, rehabilitative care services, home health care, hospice care, assisted living and urgent care companies, The Ensign Group, Inc. (NASDAQ: ENSG), has completed its previously announced acquisition of 18 skilled nursing operations in Texas. All facilities were previously operated by Legend Healthcare.

The acquisition took effect May 1, 2016 and adds 2,177 skilled nursing beds to Ensign’s portfolio. The operations had an average occupancy rate of 77% as of May 1.


As part of the transaction, Ensign’s operating subsidiaries entered into a new 15-year lease with National Health Investors, Inc. (NYSE: NHI) for 15 of the operations, or 1,806 beds, for an initial amount of $17.75 million. NHI also sold the real estate of two of the Legend facilities in the state to Ensign subsidiaries.

“Our experienced team of local leaders in Texas have been collaborating with Legend on the transition for several weeks and are poised to integrate each of these new operations—which fit nicely into the geographies currently served by our existing 27 operations in Texas—into our operating cluster model,” Christopher Christensen, Ensign’s president and CEO, said in a prepared statement.

The acquisitions bring Ensign’s portfolio to 204 health care facilities. 


CareTrust REIT Acquires Several Senior Living Properties

CareTrust REIT, Inc. (NASDAQ: CTRE), a publicly traded real estate investment trust (REIT), has acquired two assisted living and memory care communities in North Carolina, an independent and assisted living community in Virginia and a 98-bed skilled nursing facility in Boise, Idaho.

The REIT acquired Croatan Village, a 46-unit assisted living and memory care facility located in New Bern, North Carolina, and Countryside Village, a 21-unit memory care facility located in Pikeville, North Carolina. The transaction price for both communities was $11.8 million. The acquisition was funded with proceeds from a recent 8.5 million share equity offering, which took place March 21, 2016.

In connection with the acquisition, CareTrust entered into a triple-net master lease for both properties with Premier Senior Living, LLC, a privately held New York-based assisted living and memory care operator with locations in four states. Premier Senior Living took over the operations May 1, 2016. 

In Bedford, Virginia, CareTrust acquired a 175-unit independent and assisted living campus for $10 million. The transaction was the second sale-leaseback agreement between CareTrust and Twenty/20 Management, Inc., a well-known assisted living operator in western Virginia. Twenty/20 acquired the community in 2014 from Benevolent and Protective Order of the Elks, a non-profit organization. The community serves more than 185 residents daily. The community was added to CareTrust’s existing triple-net lease with Twenty/20, which is already approximately 16 months into its 15-year initial term. 

CareTrust also acquired a 98-skilled nursing facility in Boise for $9.8 million. The facility has been leased to Cascadia Healthcare, LLC, at an annual rental revenue of approximately $0.85 million. 

AdCare to Sell Nine Facilities for $55 Million

AdCare Health Systems, Inc. (NYSE: ADK), a self-managed health care real estate investment company that currently owns, leases or manages for third parties 38 health care and senior housing facilities, announced an affiliate of Skyline Healthcare, LLC is exercising its option to purchase nine facilities.

AdCare commenced a new master lease agreement for nine facilities located in Arkansas to affiliates of Skyline Healthcare, LLC on April 1, 2016. The terms of the lease allows the affiliate to purchase the properties for $55 million. 

The sale is expected to be completed on or before August 1, 2016, contingent upon a definitive purchase agreement containing usual and customary representations, warranties and closing conditions. AdCare expects to use approximately $30 million of the proceeds from the sale to repay mortgage debt associated with the properties.

Marcus & Millichap Complete Sale of Two SNFs

Marcus & Millichap, the largest national commercial real estate brokerage firm, has sold two skilled nursing facilities (SNFs) in Southeast Iowa. Mark Myers, Ryan Fleming and Joshua Jandris of Marcus & Millichap represented the seller, a husband and wife partnership exiting the nursing home business. 

A 90-bed facility, All-American Care of Washington, was sold for $3.1 million, or roughly $35,000/bed. The facility sits on 5.23 acres and has 74 private rooms and 16 semi-private rooms with a census of 13 Medicare, 41 Medicaid and seven private-pay residents. 

The second asset, All-American Care of Muscatine, is a 100-bed facility that was sold for $4.1 million, or roughly $41,000/bed. The site consists of 3.89 acres and has a census of 56 Medicaid, 10 Medicare, eight private-pay and five hospice residents.

The facilities, which comprise of about 60,000 total square feet, were purchased by a private owner/operator out of the Northeast that is continuing its expansion in Iowa. The combined assets were priced at nearly $38,000/bed. Both sites have experienced regulatory issues with the state but have maintained adequate performance. Both facilities were operating with a 12% margin. Both assets are 1970’s vintage properties with renovations completed in the 90’s and early 2000’s.

SLIB Sells $8.4 Million Assisted Living Community

Senior Living Investment Brokerage, Inc. (SLIB) has facilitated the sale of a 38-unit assisted living community in a sub market of Atlanta, Georgia, for $8.4 million. The community, The Overlook at Cedarcrest, is comprised of 38 assisted living units and features high-end finishes. The community was constructed in 2014. 

The asset was leased-up ahead of schedule and was listed as stabilized by the developers. The transaction was facilitated by SLIB’s Bradley Clousing and Jeff Binder.

LTC Properties Announces Several Acquisitions

LTC Properties, Inc. (NYSE: LTC), a REIT that primarily invests in senior housing and health care properties with a presence in 30 states, announced several recent acquisitions in its first quarter earnings report.

The REIT acquired two memory care communities in Kansas for an aggregate purchase price of $25 million. The two communities, totaling 120 units, were added to an existing master lease agreement at an initial incremental cash yield of 8%. 

LTC Properties also acquired a 60-unit memory care community in Kentucky for $14.3 million, and added the property to an existing master lease agreement at an initial incremental cash yield of 8%. 

During the first quarter of the year, the company purchased a newly-constructed 126-bed skilled nursing center inTexas for $16 million, which was added to an existing master lease agreement for an initial incremental cash yield of 8.5%. 

Written by Amy Baxter

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