NEW YORK CITY — American Realty Capital Healthcare Trust (ARC Healthcare) has entered into a contract to acquire 12 healthcare facilities for $257.5 million. The deal includes three rehabilitation hospitals, two ambulatory surgery center/medical offices, two hospital/medical office buildings, three post-acute care rehabilitation facilities, one long-term acute care hospital, and one medical office building. These 12 assets total 765,038 square feet.
“Our latest acquisition is very reflective of the strategy for this REIT, being well diversified within the healthcare field, both from an asset and geographic standpoint,” says Todd Jensen, chief investment officer for ARC Healthcare. “Our investment strategy is focused on newer, high-quality assets, and the average age of these 12 properties is less than two years.”
The portfolio is approximately 93 percent leased to 49 tenants. Only about 16 percent of the tenants, based upon occupied square feet, have lease expirations prior to December 31, 2016, and nearly 45 percent of the tenants have lease terms expiring more than ten years from the projected closings. These properties boast predominantly long-term, triple-net leases with contractual annual rent increases across six different types of healthcare assets. National and regional healthcare tenants dominate the rent roll, with more than a third of the tenancy leased to credit-rated organizations.
“We saw a great opportunity to purchase an institutional quality, diversified portfolio of healthcare facilities through a direct relationship with the seller,” adds Jensen. “Overall, we find a favorable climate for these types of investments because there are lots of opportunities, and financing is very affordable with low interest rates. We’ve also been fortunate, as 95 percent of what we have under contact has been sourced in off-market opportunities.”
Upon closing, the REIT’s portfolio — including closed assets and those under contract — will include 17 properties encompassing approximately 890,000 square feet, aggregating a total of $307.1 million. ARC Healthcare is a publicly registered, non-traded real estate investment program that has commenced its initial public offering of up to 150 million shares of common stock, at a purchase price of $10 per share, for an aggregate offering amount of up to $1.5 billion. The company intends to use the proceeds from the offering to acquire income-producing, medical facilities located throughout the United States.
“This acquisition will help accelerate our offering and fundraising because it allows investors to see the types of assets we are and will be buying,” says Jensen. “While we started as a blind pool earlier this year, we now have $307 million closed or under contract, which gives investors a concrete sense of our strategy.”
— Dan Marcec