Senior housing providers and investors continue to take advantage of today’s low interest rates by acquiring additional communities, and the pace of acquisitions might accelerate further because of the positive jobs report that was just released by the Department of Labor. According to the report, the economy created almost 300,000 jobs last month and the unemployment rate fell to 6.1%, the lowest it has been in five years. This has led some economists to update their projections on when the Federal Reserve will raise its benchmark federal funds rate from mid-2015 to the first-quarter of the year instead. These updated projections could increase the demand for senior housing assets in the short-term as industry participants seek to make purchases before interest rates rise and the cost of borrowing increases. Parties such as these and others who are seeking inexpensive capital for acquisitions should continue to look to the successful financing firm Cambridge Realty Capital and its many different financing programs that can be used for acquisitions and other purposes.
Recent Senior Housing Purchases
Examples of senior housing purchases abound all across the country. For example, in Baltimore, Maryland, the real estate group Tryko Partners recently purchased the Rock Glen Nursing and Rehabilitation Center for $9 million. Tryko Partners is based in New Jersey and while it already owns roughly 2,000 apartments in Maryland, the Rock Glen facility will be its first healthcare property in the state. The Rock Glen Nursing and Rehabilitation Center is located in West Baltimore and has 120-beds. Tryko expects to spend $400,000 improving the facility with most of that money going to pay for aesthetic changes. Tryko is excited by this purchase and intends to look for other healthcare opportunities in Maryland, as both an owner and operator, in an effort to grow its healthcare portfolio in the state and take advantage of the strong demand for senior housing services that exists in Maryland.
Meanwhile in Texas, the real estate investment trust Newcastle Investment Corp. recently announced that it has purchased six continuing care retirement communities for $186 million. Newcastle has been a frequent investor in senior housing as evidenced by the more than $700 million of equity it has spent in the past two years to purchase 95 senior housing facilities. It has clearly taken advantage of the low interest rate environment and intends to keep doing so by making additional purchases in the future.
Over in Ohio Capital Senior Living Corporation recently spent $83.6 million to acquire three senior living facilities from joint ventures in which it held a 10% interest. The three facilities that were purchased have 227 independent living units and 200 assisted living units between them. Capital Senior Living previously managed these communities and then decided that taking advantage of today’s low interest rates and purchasing them outright was in its best financial interest. Two of the communities were financed with non-recourse 10-year fixed rate debt that has a blended interest rate of 4.41%, and the third community was financed with a two-year bridge loan that has a variable interest rate of approximately 2.90%.
Lastly, in Pennsylvania, the New York-based company Center Management Group just purchased seven nursing homes and senior assisted living facilities from the Archdiocese of Philadelphia for $145 million. Center Management Group also owns and operates 15 nursing homes in New Jersey and New York and is excited by this purchase because it extends its reach into another state in the region. Indeed, Center Management’s chief executive officer, Charles-Edouard Gros, demonstrated his excitement over the deal when he stated that “We are enthusiastic about the future and grateful for Archbishop Chaput’s confidence in our ability. The experience we bring to delivering premier healthcare to our residents, coupled with our commitment to safeguard and fortify the Catholic religious and ethical practices currently in place, will allow the facilities to continue flourishing.”
Look to Cambridge Realty Capital for Financing
These are just a few of the acquisitions that are taking place across the country as industry participants continue to take advantage of low interest rates and strong demand for senior housing services. Acquisitions should continue at a healthy pace for the time being and might even accelerate because of June’s positive jobs report. Accordingly, senior housing providers and investors who are seeking financing to purchase additional senior housing assets should continue to look to Cambridge Realty Capital for their capital needs.