In an earlier post, we discussed the recently announced merger between Omega Healthcare Investors and Aviv REIT. Merger and acquisition activity in senior housing has taken place at a rapid pace this year because of the industry’s strong fundamentals and continued low interest rates, which drove down the cost of capital and increased the value of senior housing properties. In addition to the mega-merger between Omega Healthcare and Aviv REIT, a number of other recent acquisitions have taken place, demonstrating the strong demand for senior housing assets. Before interest rates rise, senior housing providers and investors who are interested in obtaining capital to acquire additional properties should contact Cambridge Realty Capital to learn more about the different financing options that they offer.
Acquisitions in the Northeast
In Long Island, New York, the publicly traded real estate investment trust NorthStar Healthcare Inc. recently acquired four assisted living properties for $125 million. These facilities contain a combined 570 units and an occupancy rate of 89 percent as of the end of July. All four facilities are leased to Arcadia Management, and each lease contains annual rent escalations, guaranteeing NorthStar an increase in lease revenue each year. Because New York is a Certificate of Need state and maintains strict zoning regulations in order to prevent overbuilding, the properties are in an area with high barriers to entry, and this should help keep occupancy high going forward.
Acquisitions in the South
In the southern region of the country, American Realty Capital Healthcare Trust II Inc. recently announced that it acquired five senior living properties from Allegro Senior Living, a well-known operator of luxury senior housing properties. Four of the properties are located in Florida, and the fifth is in Elizabethtown, Kentucky. The properties run the gamut from independent living, to assisted living, to memory care and skilled nursing, and have almost 700 units combined. The sale price for these assets, excluding closing costs, was $172.5 million, and Allegro will continue to operate the facilities under its brand. Both parties are extremely happy about the deal, as evidenced by statements from their leadership. For example, in commenting on the acquisition, Ross Sanders, the vice president at American Realty Capital Healthcare Trust, said, “ARC is excited to add these Class A communities to our portfolio and grow our operating relationship with Allegro.” This sentiment was echoed by Larry Schiffer, the chairman and CEO of Allegro, who said, “We are very pleased to enter into this relationship with ARC. This transaction supports future growth for Allegro and aligns with our goals and mission to provide quality care for our residents.”
Acquisitions in the Midwest
Lastly, in the upper Midwest, American House Senior Living Communities recently purchased Oak Crest of Communities of Michigan for an undisclosed price. This purchase added five properties and 532 units to American’s portfolio and, in the process, it increased the total number of units that American owns to almost 4,300, making it one of the 25 largest senior living companies in the country.