Seniors Housing Weekly Update - Health Care REIT Sells, NHI Buys, Eight CCRCs

December 2, 2014

December 2, 2014. 60 Seconds with Steve Monroe. Health Care REIT is selling eight CCRCs to its tenant, who is re-selling them to National Health Investors...

Health Care REIT Sells, NHI Buys, Eight CCRCs

Health Care REIT has agreed to sell eight CCRCs, seven of which are entrance-fee, to the tenant, Senior Living Communities, for $435 million, or about $260,000 per unit. In turn, Senior Living will be selling the portfolio to National Health Investors (NHI) for $476 million, or $285,000 per unit. Why the higher price? The annual rent will increase from about $24.4 million with Health Care REIT to $30.0 million, providing NHI with an initial cash yield of 6.51% with annual escalators of 4% in years two through four and 3% thereafter. Six of the communities are in the Carolinas, and one each in Georgia and Florida. I spent a morning in the Georgia property while on vacation two years ago (what else would I be doing on vacation?), and I have to admit, I was ready to move in. The only problem was that it was a bit remote and occupancy suffered from the recession. While I don’t know where occupancy stands now, the overall portfolio is at 85.4%, which needs to increase. But this is an attractive portfolio that furthers NHI’s growth plans.

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