To date this week we have discussed how the strength of the senior housing market is being demonstrated by increasing foreign investment in the sector and a strategy of growth through acquisitions by some providers. Additional acquisitions have recently been announced that further demonstrate the attractiveness of these assets. Senior housing providers and others who are interested in acquiring additional properties for their portfolios should continue to look to Cambridge Realty Capital to finance these transactions.
Acquisitions in seniors housing aren’t relegated to one type of buyer, asset class, or geographic area; instead, different types of purchasers are acquiring senior housing properties in various asset classes all across the country. The breadth and variety of these acquisitions demonstrates just how robust and attractive this market is. For example, Sabra Health Care REIT recently announced that it is purchasing the Park Place senior housing campus in Fort Wayne, Indiana for $23.8 million. Park Place has 24 independent living units, 76 assisted living units, and 40 memory care units. It opened in 2011 and is 100% occupied. Meanwhile, over in Florida, San Diego-based Pacifica Senior Living recently purchased the Quiet Oaks Assisted Living Community in Ocala for $5.2 million. Pacifica currently operates 45 senior living communities in 14 states and to date, its primary geographic focus has been on the western states but it wanted to expand its reach and get a foothold in Florida so it purchased the Quiet Oaks senior living facility there. This strategy is demonstrated by a comment from Pacifica’s spokesman Stacy Dykema who stated that “The opportunity in Marion County allows us to extend luxury senior living by Pacifica into that market.”
While Pacifica was expanding into Florida, Aviv REIT was busy purchasing senior living facilities in the western part of the country. Aviv recently announced that it had acquired eight skilled nursing facilities in California and Texas for a combined $70.7 million. Five of the facilities are located in Texas and the remaining three are located in California. Four of the Texas facilities were purchased for $53.7 million and have a triple-net lease with the existing Aviv operator Fundamental Long Term Care. They also have an initial cash yield of 9.5%. The fifth Texas facility was acquired for $3.6 million and has a triple-net lease with the existing Aviv operator Trinity Healthcare. Its initial cash yield is slightly higher than the other Texas facilities at 10.75%. The California communities were acquired for $13.4 million, have an initial cash yield of 10.25% and also have a triple-net lease with an existing Aviv operator, the Providence Group.
The scope of these acquisitions which encompass skilled nursing, assisted living, independent living, and memory care units, that were purchased in geographically diverse locations by both REITs and traditional senior living operators like Pacifica demonstrate the desire of many different entities to take advantage of the returns that are being generated by senior housing assets. Other industry participants that are interested in acquiring senior living communities and obtaining the returns that are generated by these facilities should continue to look to the successful Chicago-based financing firm Cambridge Realty Capital and the many different programs that it offers for their capital needs.
