Health Care Deal News: Spotlight on Long-Term Care - February 2012

Real estate investment trusts focused on the senior housing and care industry have been on a buying spree thanks to healthy war chests and low, low interest rates. The REITs have been so active that one reader recently asked us whether there are any attractive portfolios left for them to buy. The answer is yes, as evidenced by a recent joint venture between two large long-term care REITs, Health Care REIT (NYSE: HCN) and Chartwell Seniors Housing REIT (TSX: CSH-UN). The two, one American, the other Canadian, have teamed up to buy a portfolio of 42 seniors housing and care facilities in Canada with a combined total of 8,187 units for $925.5 million. The sellers are five Maestro Retirement entities. Thirty-nine of the properties (7,662 units) are to be co-owned by HCN and CSH, while three (525 units) are to be 100% owned by HCN. Chartwell will manage the portfolio under an incentive-based contract. Nineteen of the facilities are located in Quebec, 19 in Ontario, three in British Columbia and one in Alberta. This acquisition gives HCN good exposure to the Canadian market; even so, there remain a number of attractive portfolios south of the border.

 

HCN also acquired Belmont Village, a 120-unit senior living community in Memphis, Tennessee, for $16.9 million. Built in 1999 on 3.8 acres, the property is a three-story, Class A senior living center. Belmont Village Tenant, LLC has leased the property through January 2027.

 

Brookdale Senior Living (NYSE: BKD) recently paid $121.3 million for a portfolio of nine seniors housing communities with a total of 1,295 units. The communities had been previously operated by BKD under long-term leases that were accounted for as operating leases. By owning the properties outright, BKD can now renovate and reposition these assets to improve their performance.

 

In a sale-leaseback transaction, CNL Lifestyle Properties acquired a portfolio of five seniors housing communities with 394 units from Primrose Retirement Communities for $84.0 million. Built between 2004 and 2007, they were 95% occupied at the time of sale. They are located in Wyoming, Nebraska, Montana and Ohio (two). Primrose Retirement will continue to operate the properties under a long-term triple net lease.

 

AEW Capital Management recently acquired The Blake at Gulf Breeze, a 107-unit seniors living facility in Florida with 70 assisted living and 37 memory care units. The purchase price was $24.0 million, or 4.8x revenue. Though opened in 2008, the facility was able to fill up during the Great Recession. The facility is to be operated by Blake Management Group, who was the original developer of the property.  ARA Seniors Housing represented the seller in the transaction.....Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today