So far this week we’ve discussed how increased investments in seniors housing from foreign investors, domestic providers, and REITs are providing evidence of the robustness of the sector and the attractiveness of senior housing assets. Today we will provide additional examples of transactions that demonstrate the appeal of these assets. Before interest rates rise as they are projected to, senior living providers and investors who are anxious to make additional investments in the space should continue to look to Cambridge Realty Capital and the many different programs that it offers for financing acquisitions and other wealth generating investment transactions.
Newcastle Investment Corp. Grows its Senior Housing Portfolio
Newcastle Investment Corp. recently had an earnings call where it expounded on its growing investments in seniors housing. For example, in January Newcastle acquired two senior housing properties for $26 million and it is currently under contract to purchase 15 more senior housing facilities for a total price of $319 million. Newcastle believes strongly that this is money well spent given the growth in the industry and projections that demand for these properties will continue to grow for some time as the nation’s population gets older and the improving economy gives seniors additional means with which to transition into seniors housing. Indeed, Andrew White, Newcastle’s managing director and head of senior housing expressed his confidence in these purchases with his statement during the earnings call that, “As we discussed in the past, [the senior housing market] continues to be [a] market that is dominated by smaller players, which we think creates an opportunity to build value through consolidation.” Newcastle’s strategy of consolidation through acquisitions is paying off nicely for the company. For example, it reported a 26% increase in core earnings for the quarter largely because of the performance of 52 properties that it acquired at the end of 2013. Newcastle’s increased earnings indicate that its consolidation through acquisitions strategy has already begun to pay dividends for it and now other industry participants are exploring a similar strategy to see if it can work for them as well.
Health Care REIT Increases Its Investments in Senior Housing
Health Care REIT is a real estate investment trust that invests in health care systems and senior housing assets. It has recently ramped up efforts to grow its senior housing portfolio through various transactions including one involving a California senior housing operator. In this transaction Health Care REIT invested $386 million to purchase a joint venture (JV) interest in a senior housing portfolio that is operated by Senior Resource Group. The portfolio consists of 10 properties that are located in California, Portland, Phoenix, and Tucson and they include independent living, assisted living, and memory care units as well. Other partners in the JV include the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers and Senior Resource Group’s management team. During the first quarter Health Care REIT’s funds from operations per share increased by 10% when compared to the same period from a year earlier and according to its management team, this increase was due largely to $542 million in investments that it made in the first quarter and an 8.1% increase in its senior housing operating portfolio.
As the improving economy and favorable demographics continue to drive demand for senior housing services, investments in senior housing continue to increase and more importantly, continue to pay dividends for providers and investors. Accordingly, industry participants and others who are interested in boosting their holdings in the space through an acquisition, JV, or other method should contact the successful Chicago-based financing firmCambridge Realty Capital for their financing needs.
