So far this week we’ve discussed a number of reports covering a range of topics from the increased bank lending that real estate professionals are projecting this year, to the continued appreciation in the value of senior housing assets, to occupancy gains that were made in the year’s first quarter by skilled nursing facilities and independent living communities. These reports shows the continued strength of the senior housing market and their findings are reinforced by the rapid pace of acquisitions in the space. Senior housing properties are being purchased for a variety of reasons; for example, to obtain the additional cash flows that the purchased community generates, to increase the value of a particular company or investor’s portfolio and to diversify a portfolio as well. Regardless of why these purchases are being made, the fact that acquisition activity in senior housing continues to be strong demonstrates the attractiveness of these assets and validates much of the information that was in the reports we’ve discussed this week. Senior living providers and others who are interested in purchasing senior housing assets for whatever purpose suits them should contact Cambridge Realty Capital to learn more about the many different financing options they offer.
Examples of Recent Acquisition Activity
In an attempt to grow and diversify its portfolio, LCS recently purchased the senior living community Danberry at Inverness for an undisclosed price. Danberry is a rental based community that is located in Hoover, Alabama. It has 160 independent living residences and 72 assisted living residences. The LCS company Life Care Services will handle the community’s marketing, sales, and management. This is the second purchase that LCS has made this year and with the second quarter just getting underway it’s likely that it will make other purchases before the year is over as it continues its growth and diversification strategy by acquiring additional senior living facilities.
In addition to traditional senior living companies taking advantage of the market’s strong dynamics and low interest rates to make purchases, real estate investment trusts are also getting in on the action. For example, HealthLease Properties Real Estate Investment Trust plans to acquire a high-end 100 unit senior housing and care facility in Kokomo, Indiana from Mainstreet Property Group at a capitalization rate that is expected to be somewhere between 7.5% and 8.5%. HealthLease Properties is excited about this purchase as it believes high-end facilities with their hotel-like amenities and concierge services can attract high-net worth residents and the higher rates that come with them.
Lastly, earlier this month Dimensions Health Properties IX closed on its purchase of Chris Jensen Health and Rehabilitation Center in Duluth, Minnesota. The Center is a 170-bed skilled nursing facility that provides short-term rehabilitation services, memory care, and long-term care services to its residents. Chris Jensen LLC will lease the property from Dimensions Health and prior to the sale it had already invested over $575,000 in capital improvements to the building and plans to invest over $1 million more to make additional upgrades during the next two years. Naturally, Dimensions Health is excited by these upgrades and is looking forward to reaping some of the financial benefits of them.
As these purchases demonstrate, the data from the recently released 2014 Emerging Trends in Real Estate report, the 2014 Senior Care Acquisition Report, 19th Edition, and the first quarter report from the National Investment Center for the Seniors Housing and Care Industry on the robustness of the senior housing market appears to be accurate. Senior living providers and others who are interested in taking advantage of the market’s strong dynamics through an acquisition, joint venture, or other wealth generating transaction should contact Cambridge Realty Capital to learn more about their many different financing programs and how they can assist in facilitating the desired transaction.