December 26, 2014, Gail Kalinoski, Commercial Property Executive - Senior Housing Properties Trust, a Newtown, Mass.-based REIT, has agreed to buy 38 senior-living communities for $790 million from CNL Lifestyle Properties, Inc., including assumption of debt. The deal is expected to close in the second quarter.
The communities have a total of 3,466 total living units, including 826 independent living units, 1, 860 assisted living units, 744 memory care units and 36 skilled nursing beds. The properties were approximately 93 percent occupied as of November. Historically, more than 95 percent of the revenues at the 38 communities come from residents' private resources.
CNL Lifestyle Properties is exiting the seniors housing sector with this transaction. The Orlando, Fla.-based REIT announced in the fall that it was seeking a potential liquidity event and has since sold off its golf portfolio. The projected net cash to the company from the sale of the seniors housing portfolio is expected to be approximately $486 million after repayment or assumption of approximately $286 million of debt, according to a filing with the U.S. Securities and Exchange Commission. The company's remaining assets will be in the ski and mountain lifestyle, attractions and marinas sectors. CNL Lifestyle Properties entered the seniors housing sector in January 2011 with the $630 million purchase of 29 properties in a joint venture with Sunrise Senior Living Inc.
Eighteen of the 38 communities in the SNH deal, with 1,847 living units, are leased to six senior living operators, none of which are currently SNH tenants. They are located in 12 states: four in California; two each in Georgia, Washington and Oregon; and one each in Alabama, Arizona, Colorado, Florida, Indiana, Montana, North Carolina and Rhode Island.
The remaining 20 communities, with 1,619 living units, are managed by six senior living operators, none of which are currently SNH managers. SNH said it intends to meet with these managers in the coming weeks to discuss the pending ownership change. They are located in six states: six in Illinois; five in Georgia; five in Missouri; three in Arkansas; and one each in Oregon and Nevada.
"We are very pleased to acquire such a high -quality portfolio of private-pay senior living communities," David Hegarty, SNH president & COO, said in a news release. "In 2014, SNH has made great strides towards diversifying its tenants and upgrading the quality of its portfolio."
SNH is also in the process of buying 23 medical office buildings with 2.2 million square feet of space in 12 states for $539 million. That deal is expected to close in the first quarter of 2014. Once both deals are completed, Hegarty said 56 percent of SNH's consolidated net operating income will come from seniors living properties and 44 percent from medical office buildings.
In May, the REIT completed one of the biggest deals in Boston this year when it acquired the Vertex Pharmaceuticals headquarters on Fan Pier in the Seaport District for $1.1 billion. The 1.6 million-square-foot property has two buildings with office and lab space.
SNH said it received a bridge-loan commitment for up to $700 million from Wells Fargo Bank, N.A., and Citigroup Global Markets Inc. The REIT also maintains a $750 million unsecured revolving credit facility that is currently substantially undrawn. SNH said it has "more than enough liquidity" to close on the acquisition of the 23 medical office buildings and the 38 seniors housing properties.