At this year’s National Investment Conference for Seniors Housing and Care that just wrapped up in Chicago, a number of discussions centered around the role of large real estate investment trusts and non-traded real estate investment trusts in the senior housing space. The other day we discussed the role of large REITs in the sector, and today we will discuss the impact that some of the more well-known non-traded REITs are having on senior housing. Industry participants looking for financing in order to follow in the path of these REITS by investing in senior housing should contact the Chicago-based firm Cambridge Realty Capital to learn more about the many different options it offers for senior housing acquisitions.
Capital Formation Trends Upwards
In 2013, non-traded REITs played a major role in senior housing by raising almost $20 billion in capital and monetizing some $17 billion worth of deals, compared to the $9.2 billion they monetized in 2012. This year, because interest rates remain low and demand for senior housing services remains strong, some industry members are expecting even higher numbers before 2014 is over. If 2014’s numbers do turn out stronger than 2013’s, a large part of the credit will go to the non-traded REITs American Realty Capital Healthcare Trust, Sentio Healthcare Properties, Inc., and Griffin-American Healthcare REIT III. These REITs currently account for over $25 billion in capital, and became major players in the senior housing space over the past few years.
Major Non-Traded REITs Look to Deploy Capital
By far, the non-traded REIT investing the most in senior housing is American Realty Capital Healthcare Trust (“ARC Healthcare”). ARC Healthcare has been extremely active in senior housing for a number of years, and is now responsible for 50 to 60 percent of non-traded REIT activity in the space. ARC Healthcare began making large senior housing investments all the way back in 2011. Between then and now, it was involved in 259 acquisitions, and spent nearly $44 billion on various senior housing and healthcare related assets. The REIT is obviously excited about the senior housing industry, and its management often says that they are looking to expand ARC’s fingerprint in the space by pursuing senior housing assets over the long-term.
Similarly, Griffin-American Healthcare REIT III (“Griffin”) is also an active player in the sector. Griffin’s view is, if you hold capital, you need to invest it. Griffin is doing just that, and is also focused on building a portfolio with a number of different payors, such as the government, private insurance, and private pay. Griffin currently maintains nearly ten development projects in its pipeline, and is continuing to expand its pool of assets.
Lastly, Sentio Healthcare Properties was not as active as other REITs in terms of raising capital, but it is continuing to pursue worthy investments. This is evidenced by its recently announced $42.5 million purchase of a continuing care retirement community in Aurora, Colorado. Similar to ARC Healthcare and Griffin, Sentio Healthcare is also targeting senior housing assets that can contribute to its long-term growth, while also generating strong returns for its investors.
2014 is shaping up as another banner year for senior housing, and these three REITs are using the market’s strong dynamics to strengthen their portfolios. Time will tell if this trend continues in 2015, but for now, they continue to expand their portfolios in a strategic manner that benefits them and their investors.
