Earlier this week Ventas, Inc. announced that it was purchasing American Realty Capital Healthcare Trust for $2.6 billion. This mega-deal immediately caught the eye of industry watchers as it propelled Ventas into the number six spot of the nation’s largest REITs. While Ventas’ acquisition of American Realty Capital received significant publicity, a number of smaller less publicized deals have also recently taken place and, together with the Ventas deal, they demonstrate the attractiveness of senior housing assets to providers and investors alike.
In the western part of the country, the real estate investment trust National Health Investors Inc. has announced that it is acquiring a 56-unit assisted living facility in Sacramento, California that specializes in memory care services. The community was built in 1999, is private pay, and with a 94% occupancy rate and $7,300 in revenue per occupied unit it should generate substantial revenue for the buyer. The community will be leased and operated by a subsidiary of Chancellor Health Care LLC and National Health Investors is excited by this as evidenced by its CEO and President’s Justin Hutchens statement that “This community is a nice addition to our portfolio and the transaction offers NHI the opportunity to expand our relationship with Chancellor Health Care.”Meanwhile, in the southeastern part of the country, another real estate investment trust continues to acquire senior housing assets as well.
AVIV REIT, Inc. just announced that it has purchased a post-acute and long-term care skilled nursing community in Kentucky for $6 million. This facility is triple-net leased to the existing AVIV operator Diversicare Healthcare Services and has an initial cash yield of 9.8%. This is AVIV’s ninth purchase of the year and its year to date investments have now reached $195 million. In keeping with its growth through acquisitions strategy, AVIV’s management has consistently stated that it will look for purchase opportunities throughout the year and this acquisition is just another example of that. Another company that is using a growth through acquisitions strategy is the Ensign Group and it recently announced some additional purchases as well.
Earlier this week, the Ensign Group announced that it has acquired Englewood Post-Acute and Rehabilitation in Englewood, Colorado and Rainer Rehabilitation in Puyallup, Washington. Both of these facilities are skilled nursing communities and although their combined occupancy rate is only 71%, Ensign’s management is still excited by these acquisitions as demonstrated by comments from its President and CEO Christopher Christensen, who stated that “We are thrilled to increase our presence and capacity in the Denver healthcare community and to strengthen our solid footprint in the Greater Seattle area. Both facilities fit well within our clustering strategy and will benefit from the reputations we’ve developed in these markets as well as enhancing operating synergies we already enjoy there.” Mr. Christensen is confident that even though these communities currently have a low census count, Ensign’s brand and scale will lead to increased occupancy rates and these acquisitions will ultimately benefit Ensign’s bottom line.
These acquisitions and others that have taken place during the year provide additional evidence that senior housing assets remain in demand due to favorable demographics and low interest rates. While these circumstances continue, industry participants and others who are anxious to add senior housing assets to their portfolios should contact the Chicago-based financing firm Cambridge Realty Capital to learn more about the many different financing options that it offers for acquisitions and other purposes as well.
