EXPERT OPINION: A Conversation with Todd Jensen

December 8, 2013

In this "Expert Opinion" interview, Todd Jensen, Chief Investment Officer, ARC Healthcare Advisors, American Realty Capital, discusses senior housing assets, RIDEA, geography, future investments, changes, and more.......

Todd Jensen    Watch the video      Read the transcript

Mr. Jensen currently serves as Chief Investment Officer of ARC-Healthcare Trust. He has been in the real estate industry for 20 years, specializing primarily in healthcare properties. Most recently he helped build the healthcare real estate development and acquisition business at DASCO, a national leader in the development, financing, leasing and management of medical office buildings and outpatient facilities. There he established relationships with hospitals and health systems representing $300 million in potential development. Prior to that, Mr. Jensen was a Healthcare Partner at Lauth Property Group, where he led and managed the national Healthcare Group with complete financial responsibility for the business. He grew the business from start-up to the 8th largest medical development business in the nation with more than $150 million of annual sales. Mr. Jensen established six regional offices and recruited, developed and led a staff of 42 professionals. At the Hammes Company, a recognized leader in the health care industry, he was a partner and established the Mid-Atlantic office. He also initiated and managed relationships with senior management of client organizations and investment/capital partners. Mr. Jensen received his BA in Economics and Mathematics from Kalamazoo College and his MBA from the Wharton School at University of Pennsylvania. He has his real estate license in Florida. Mr. Jensen has two daughters, ages 7 and 10.

Contact Information:
Todd Jensen
Chief Investment Officer ARC Healthcare Advisors
American Realty Capital
T: (212) 415-6542
M: (561) 252-2478
F: (212) 421-5799
tjensen@arlcap.com



Watch the video of the interview: 

Read the interview transcript:

 

Steve Monroe
There’s been a big growth in non-traded healthcare REITs these days. Several of them have been—I don’t want to say dominating the acquisition market, but have been very active acquirers in seniors housing and care. I’m here with one of them today, Todd Jensen. He’s the chief investment officer of American Realty Healthcare Trust, you all have been growing very, very quickly. You haven’t been in the seniors housing space for that long, but you’ve made a big splash. Since you’ve been investing, what’s the total dollar amount you’ve put into the senior housing and care side of your business?

Todd Jensen
We currently own about $420 million of senior housing assets.

Steve Monroe
And you also own MOBs and other outpatient facilities.

Todd Jensen
And even some select post-acute care facilities, long-term acute care hospitals, in-patient hospitals.

Steve Monroe
How are you finding the properties and portfolios that you’re buying?

Todd Jensen
We like to network directly with owner/operators of these properties, developers. We’ve also gone to great lengths to develop relationships in the brokerage community. It certainly helps when brokers see you successfully transacting. That elevates you in their mind in terms of a prospect for the next opportunity.

Steve Monroe
Sure. They see you doing deals and they know you have the money, right?

Todd Jensen
Right.

Steve Monroe
And at ARC, you’re focusing more on assisted living, assisted living with memory care, Alzheimer’s, independent living with assisted living—I mean, what’s the kind of unit mix that you’re focusing on, if anything?

Todd Jensen
Most of what we own right now is a combination of assisted living and memory care. We would do and have interest in CCRCs, particularly rental model CCRCs. We look selectively at skilled nursing properties. We don’t acquire many, but we do look selectively at them. The one property type we’re probably most cautious about is freestanding independent living, in terms of IL, AL or memory care. So it’s not likely that we would buy a community that was only independent living.

Steve Monroe
Are you focused geographically anywhere, or in your current hyper-growth, you’re looking all over the country?

Todd Jensen
Yes, we’d like to be geographically diverse and balanced. At the moment, most of our senior housing properties are in the Southeast and the Pacific Northwest. We’re looking to expand in other regions, including the Midwest and the Southwest.

Steve Monroe
How about where the acquisitions are? Most of the deals you’re doing, are they sale-leasebacks? Or on the sale-leaseback deals, are you looking at where the owner is selling and then leasing it back from you? Or are you doing a lot of third-party deals, where the seller is out and a new manager comes in?

Todd Jensen
Both. It doesn’t matter to us, no. Most of the transactions that we’ve done to date have been RIDEA, where it would be an owner/operator selling and managing back for us, but we’re equally as interested in sale leasebacks or third-party sales, where we could have a third-party operator or bring a third party operator.

Steve Monroe
You’ve done several RIDEA transactions. Is that something that you think you will be growing, as opposed to what historically has been a more traditional REIT, the sale-leaseback type of transaction?

Todd Jensen
Yes, we’d like to grow in both regards. We expect to do more RIDEA transactions, and we’d also like to do more lease transactions.

Steve Monroe
And recently, and especially very recently, you’re doing some mid-sized portfolio deals. Is that your sweet spot? Is that what you’re kind of looking for, for the growth? As opposed to one-off transactions?

Todd Jensen
We do both. And again, we would be interested in doing large transactions. Sometimes the largest transactions get priced at a yield such that they may not make sense for us. So we find that we get more yield in smaller, mid-sized portfolios, or even better yield in single-asset transactions.

Steve Monroe
You mentioned that you have done some skilled nursing, but that’s not going to be a major focus?

Todd Jensen
Right. We have two properties really that are licensed as skilled nursing, even though they don’t operate as traditional skilled nursing facilities. We do have a couple properties under contract that are traditional skilled nursing facilities, so I think we will make some investments in that. It’s not ever going to be an area where we allocate a lot of our capital, but we do look selectively at that property type.

Steve Monroe
I would think, just given how competitive in the private-pay senior housing acquisition market, and you said that yes, sometimes portfolio deals are too expensive, cap rate’s too low. It doesn’t make sense with your cost of capital. Wouldn’t the skilled nursing side, with the higher cap rates relative to your cost of capital, isn’t there more wiggle-room?
Todd Jensen
Yes, well, that’s one of the more appealing attributes of that property type, is the yield that you can get.

Steve Monroe
Yes. Because to me, that would be very productive. Obviously 2013 was your best year, since you’re relatively new. How much do you think you’ll have put into the business by the end of the year?

Todd Jensen
We’ve invested a billion dollars year to date across all the different healthcare property types. Year to date this year, we’ve probably invested 300 to $350 million in senior housing and would still expect to add another $100 million to that before the end of the calendar year.

Steve Monroe
And how about 2014? What do you think?

Todd Jensen
I think we could invest as much as $700 million in senior housing in 2014.

Steve Monroe
That number is going to take you up—forget the big three, but that’s going to kind of put you up there. Has that been the goal, to kind of get the growth going that quickly?

Todd Jensen
Yes. Our company is in the business of raising what we would call blind-pool capital, as a non-traded REIT. We raise our capital really through the retail independent broker/dealer channel. And one blessing that we have is our company is very proficient at raising capital. So, across all of our platform, American Realty Capital will probably raise $14 billion of equity in 2013, so we expect.

Steve Monroe
How much?

Todd Jensen
$14 billion probably of equity, across all of its different REITs, not just the healthcare REIT. So we’ve started raising our second healthcare REIT and expect to raise $1.7 billion of equity in that REIT. Most of that money would likely be raised in 2014. So we’ll have all of that money to invest, plus $700 million of debt capacity that we have still in Healthcare REIT One.

Steve Monroe
So, are you hiring more staff, so you can invest all this money?

Todd Jensen
Perhaps selectively, yes. We’ve done a great job so far with a small team, and continue to make progress. But we’ll add as we need to.

Steve Monroe
If you keep on adding like that and raising that equity, you’re obviously going to be doing a lot of deals, so that’s great. Good luck for next year, and wish you continued success.

Todd Jensen
Well, thank you. Appreciate it.

 


 


 

 

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