Welltower Inc. (NYSE: HCN) is set to buy four continuing care retirement communities (CCRCs) from Senior Housing Properties Trust (Nasdaq: SNH), the real estate investment trusts (REITs) announced separately earlier today.
The properties, which are leased to McLean, Virginia-based provider Sunrise Senior Living and located in Arlington and Charlottesville, Virginia; Boca Raton, Florida; and Silver Spring, Maryland; are changing hands for $368 million. In total, the CCRCs have 1,179 living units/beds, excluding those owned by Sunrise and separately owned independent living condominium units.
Toledo, Ohio-based Welltower closed on the Arlington community on Dec. 29, and the remaining three are expected to close in the first quarter of 2018. The portfolio is currently managed by Sunrise under triple-net leases, though Welltower plans to transition the communities to a RIDEA structure.
“We are pleased to announce the acquisition of this unique portfolio,” Tom DeRosa, CEO of Welltower, said in a press release. “These assets, located in top markets, represent both an enhancement to our Sunrise portfolio and a significant above market return for our shareholders.”
The REIT currently owns 122 Sunrise communities in the U.S. and 45 in the U.K. All told, Welltower has more than $6 billion worth of investments with Sunrise Senior Living.
Welltower and Canadian senior living operator Revera Inc. jointly own the Sunrise Senior Living management company, with Welltower owning a 34% interest.
In its own announcement, Newton, Massachusetts-based Senior Housing Properties Trust said it stood to gain $308 million from the sale.
“SNH believes these communities now require updating and renovation capital; and the current tenant arranged for SNH to sell these communities to a buyer interested to make the necessary investments on terms acceptable to the tenant,” said Senior Housing Properties Trust President David Hegarty in a press release. “Now is the right time for SNH to harvest its significant capital gains on this investment and to use the proceeds to reduce SNH’s debt leverage and/or to re-deploy the capital received from these sales into new investments.”
Senior Housing Properties Trust first purchased the four properties in 1994 for about $124.3 million. At that time, the communities were leased to Marriott Senior Living Services, which was then a wholly owned subsidiary of Marriott International, Inc. (Nasdaq: MAR). In 2003, Marriott International sold its senior living business to Sunrise.
Written by Tim Regan