If the recent performance of CNL Healthcare Properties is any indication, private real estate investment trusts (REITs) aren’t struggling nearly as much with senior housing occupancy as their publicly traded counterparts.
The Orlando, Florida-based non-traded REIT, which is sponsored by private investment management firm CNL Financial Group, increased same-store net operating income across its portfolio 8.3% during the quarter ended June 30, compared to the quarter ended June 30, 2016.
Meanwhile, the REIT’s same-store net operating income for the six months ended June 30 rose by about $6.6 million, compared to the same period a year earlier.
The gains in the REIT’s same-store net operating income are primarily due to year-over-year occupancy and revenue increases at its seniors housing communities—and specifically at its Pacific Northwest communities, which represent “a significant portion” of the REIT’s value-add properties, Kevin Maddron, CFO and COO of CNL Healthcare Properties, told Senior Housing News.
The CNL Healthcare Properties portfolio is made up of 92.4% stabilized properties, as well as 7.6% stabilizing or value-add properties, based on revenues for the six months ended this past June 30, Maddron said.
Unlike several public health care REITs—including Welltower Inc. (NYSE: HCN), HCP Inc. (NYSE: HCP) and New Senior Investment Group (NYSE: SNR)—CNL isn’t having too much trouble with occupancy as of late, Maddron implied.
“While it is true new development properties have entered the marketplace, we are pleased with the performance of the portfolio as a whole,” Maddron said. “…We believe the operators managing our assets know their markets exceptionally well and have performed admirably, even in cases with new competition coming on-line.”
CNL also places a great deal of emphasis on choosing the right senior housing operating partners, Maddron explained.
“In particular, we really focus on their operating and care reputation in the market; a certain critical mass, coverage and scale to their operations; their depth of knowledge of their markets and surrounding areas; and how they have performed historically over an extended period of time in the region,” he said.
In addition, the REIT carefully underwrites an operator’s company culture, as well as the tenure of key personnel in its communities. Ideally, CNL will use this information to justify keeping current operators in place after an acquisition.
“When acquiring an asset, our bias is to retain the existing operator, provided they are delivering exceptional care and results, as we believe many times it’s important for them to continue their relationship in the community,” Maddron said.
As of June 30, 2017, CNL Healthcare Properties had invested more than $3 billion, amassing a portfolio of 142 properties in 34 states, including 71 seniors housing communities, 12 post-acute care facilities, 54 medical office buildings and five specialty hospitals.
On Tuesday, CNL Healthcare Properties II announced that its board of directors approved an estimated net asset value per share (NAV) of $10.00 for all share classes as of June 30, 2017.