November’s positive jobs report and the encouraging Beige Book that was just released by the Federal Reserve have some Fed watchers thinking that the Federal Reserve might raise its benchmark federal funds rate during the first-quarter of 2015. And although acquisitions in the senior housing space are already occurring at a fast clip, the possibility of future interest rate hikes could increase this pace even further during the start of the new year, resulting in increased competition and higher prices for priced assets. Accordingly, senior housing providers and investors who are interested in taking advantage of today’s low rates to acquire additional properties for their portfolios should contact the Chicago-based financing firm Cambridge Realty Capital to learn more about the different financing options that it offers for acquisitions, sale/leasebacks, joint ventures, and other purposes.
National Health Investors Makes a Large Investment
The healthcare real estate investment trust National Healthcare Investors (NHI) announced that it will spend approximately $480 million to acquire eight senior housing properties before the end of the year. The properties are considered high-end, and NHI’s management is extremely excited about them. The properties will diversify the REIT’s income sources, property type, and payor source while also expanding its geographic reach.
Once the transaction is closed, NHI plans to lease all eight communities to Senior Living Communities, LLC. The lease will be a 15-year master lease and should generate an initial cash yield of roughly 6.5 percent of the deal’s purchase price. Furthermore, the lease also includes annual escalators of four percent in years two through four, and three percent after that. National Health Investors also plans to provide a working capital line of $15 million to Senior Living Communities that they will use to fund construction and expansion projects within the acquired portfolio.
CNL Healthcare Properties Acquires a Community in Utah
Another healthcare real estate investment trust is busy acquiring senior housing assets as of late. Specifically, CNL Healthcare recently purchased the Utah-based senior living community Fairfield Village of Layton. Fairfield Village of Layton was built in 2010, is located in the Salt Lake City area, and contains 246 units. 108 of these units are for independent living, 74 are for assisted living, 24 are for memory care, and the remaining 40 are for skilled nursing and rehabilitation. The property will be managed by Generations Retirement Communities and, as of September 30, its occupancy rate was 98.6 percent. Similar to NHI, CNL is excited about its recent purchase because of Fairfield Village’s already high occupancy rate and its location in a major metropolitan area.