Senior Housing Properties Grabs Assets for $304M

March 11, 2011
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Bohman

Senior Housing Properties Trust is planning to beef up the senior living segment of its multi-faceted healthcare real estate holdings with the $304 million acquisition of a 20-property, multi-state portfolio.

The group of senior living communities spans five predominantly southern states. Seven properties are located in North Carolina, five are in South Carolina, four are sited in Florida, and Virginia and Georgia are home to two facilities, each. Encompassing an aggregate 2,111 residential units, the portfolio, which has an average occupancy level of 91 percent, includes 814 independent living apartments, 939 assisted living suites, 311 suites for Alzheimer’s care and 47 skilled nursing beds.

To finance the purchase, SNH will fork over $225 million in cash, culled from on-hand reserves and drawings under its $550 million credit facility, and assume approximately $79 million of mortgage loans.

The deal marks just one of a growing number of REIT investment transactions in the healthcare property sector. “Healthcare REITs, with their relatively low cost of capital and much improved balance sheets from 18 months ago, are dominating the large transaction market,” Stephen M. Monroe, a partner with seniors housing and healthcare industry data publisher Irving Levin Associates Inc., noted. “Very few buyers can compete with the REITs for large acquisitions in this market.”

The list of large acquisitions over the last few months includes Ventas Inc.’s deal to buy Nationwide Health Properties Inc. for $7.4 billion; HCP Inc.’s commitment to purchase nearly all of HCR ManorCare Inc.’s real estate assets at a price of $6.1 billion; and Health Care REIT Inc.’s agreement to acquire substantially all of Genesis HealthCare’s assets for $2.4 billion. On the somewhat lower end of the transaction frenzy, Health Care REIT walked away with the U.S. senior housing portfolio of Australia’s GPT Group in an $890 million deal, and SNH recently closed its $470 million acquisition of a 2.8 million square-foot, 27-property medical office building portfolio from CommonWealth REIT.

“At long last, this market has legs, and while we do not expect to see the heady days of 2006 and 2007 anytime soon, the strong fourth quarter performance last year bodes well for a busy senior care acquisition market in 2011,” Monroe said. SNH’s latest purchase is on track to close during the second quarter of this year.