February 5, 2014
Senior Housing Acquisitions Heat Up
Fueled by favorable demographics and strong demand, recent senior housing acquisitions continue to demonstrate the strength of the market. As this activity continues, Cambridge Realty Capital, one of the nation’s preeminent debt and equity financing firms dedicated to senior housing and healthcare properties, stands at the ready to assist interested parties with financing for acquisitions and other needs as well.
Senior Housing Acquisition Activity
With respect to senior housing acquisitions, The LaSalle Group, a Texas based company that specializes in assisted living properties, has been extremely aggressive as of late. LaSalle has begun developing memory care projects in Texas and Oklahoma, and last week it announced that it was acquiring a suite of properties through a new joint venture (JV) into which it entered. The JV will be the acquisition of six properties for $17 million, as well as plans to acquire more in the future. In addition to LaSalle’s announcement, LCS also announced that it would be making a significant acquisition in the senior housing space.
LCS is an Iowa based company that focuses on developing and managing senior living and continuing care retirement communities. Last week it announced that it will acquire Encore Senior Living, a Portland based management company that operates nine communities in multiple states across the country. After the acquisition has been finalized, some of Encore’s key employees, including its principal, Peter Muhlbach, will join LCS and continue to manage the acquired properties under the Encore brand. This acquisition will help diversify LCS’ portfolio by increasing its involvement in senior living communities. This was emphasized by LCS’ president and CEO, Ed Kenny, in the company’s press release announcing the acquisition. In the release Mr. Kenny stated that “[o]ur CCRC business remains an important part of the LCS strategy and we also see great opportunity to be more involved in the assisted living, memory care, and rental markets.” In addition to these deals, Aviv REIT also recently acquired additional senior living properties for its portfolio.
Aviv REIT has been very active lately as evidenced by its recent purchase of four skilled nursing facilities in Texas and Illinois, a skilled nursing facility in Minnesota, and an independent living facility in Texas. The skilled nursing facilities are triple-net leased to existing Aviv operators and have a blended initial cash yield of 9.9 percent.
Lastly, the new senior living player Memory Care America recently purchased a 50-unit assisted living property in Naples, Florida for $5.6 million. The facility’s occupancy is currently 80 percent, but its operator intends to improve on this by focusing on memory care services.
These acquisitions demonstrate that demand for senior housing remains strong and should continue to stay this way because of the industry’s favorable demographics and the growing economy. Industry participants that are interested in entering the space or diversifying their portfolios through acquisitions should consider the successful financing firm Cambridge Realty Capital for their capital needs as they explore purchasing senior housing assets.