REIT Exits Senior Housing by Selling 26-Property Portfolio

A real estate investment trust (REIT) has moved to completely exit the senior housing industry in favor of multifamily real estate, selling off all of its remaining senior housing properties for about $236 million.

Minot, North Dakota-based Investors Real Estate Trust (NYSE: IRET) announced Wednesday it has entered into six different sales agreements with multiple affiliates of Edgewood Senior Living for the planned disposition of 26 of its senior housing properties and one of its multifamily properties for a total of about $236 million. The properties are spread throughout Wyoming, Minnesota, Nebraska, North Dakota, South Dakota and Montana.

Specifically, IRET has agreed to sell:

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  • five senior housing properties with 386 rentable units in Wyoming for a total of $53 million; 
  • two senior housing properties with 256 rentable units in Minnesota for a total of about $36.8 million; 
  • five senior housing properties with a total of 514 rentable units in Minnesota, North Dakota, and South Dakota, for about $71 million; 
  • four senior housing properties with 220 rentable units in Montana, Minnesota and Nebraska, for a total of about $32.3 million; 
  • nine senior housing properties with 278 rental units located in North Dakota, Nebraska, Montana and South Dakota for about $28.8 million; 
  • and one senior housing property with 97 rentable units, as well as one townhome property with 24 rentable units, in Minnesota for $14 million. 

IRET anticipates these sales to close sometime in 2017. Currently, affiliates of the buyers lease 25 of the 26 senior housing properties from IRET.

Edgewood Senior Living, based in Grand Forks, North Dakota, currently owns and/or operates more than 50 independent living, assisted living and memory care communities. The provider’s more than 3,000 beds are spread throughout Nebraska, North Dakota, South Dakota, Wyoming, Montana, Minnesota and Idaho.

“The sale of our senior housing properties is a significant step in our efforts to transform IRET into a pure play multifamily company,” IRET CEO Tim Mihalick said in a press release. “As we move forward, these transactions unlock significant value within our portfolio and provide capital for new investments, while we enhance our operating platform, strengthen our balance sheet and drive cash flow.  We remain excited about our pipeline of opportunities, focusing on our long term strategic growth objective to drive long term value for our shareholders.”

BMO Capital Markets Corp. served as IRET’s financial advisor in connection with the sale transactions.

These six sales agreements are separate from the previously-announced exercise of purchase options by affiliates of the buyers, who are current tenants, to buy eight IRET-owned senior housing properties in Idaho for a total of about $43.5 million. If all of these transactions close, IRET will have completely disposed of its senior housing portfolio for a total of about $279.5 million.

“The sale of our senior housing properties is a significant step in our efforts to transform IRET into a pure play multifamily company,” IRET CEO Tim Mihalick said in a press release. “As we move forward, these transactions unlock significant value within our portfolio and provide capital for new investments, while we enhance our operating platform, strengthen our balance sheet and drive cash flow.  We remain excited about our pipeline of opportunities, focusing on our long term strategic growth objective to drive long term value for our shareholders.”

Written by Mary Kate Nelson

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