NEWTON, MASS. — Senior Housing Properties Trust (NYSE: SNH) has entered into an agreement with CNL Lifestyle Properties Inc. to purchase 38 seniors housing communities for approximately $790 million.
The 38 communities have 3,466 total living units, including 826 independent living units, 1,860 assisted living units, 744 memory-care units and 36 skilled nursing beds.
“We are very pleased to acquire such a high-quality portfolio of private-pay senior living communities,” says David Hegarty, president and COO of SNH. “Upon closing of the acquisition of these 38 communities, approximately 56 percent of SNH’s consolidated net operating income will come from senior living properties.”
In addition, says Hegarty, rents from Newton, Massachusetts-based SNH’s largest tenant, Five Star Quality Care Inc., will now account for less than 20 percent of its annualized revenues.
Eighteen of the 38 communities in the acquisition, with 1,847 living units, are currently leased to six seniors housing operators. These 18 communities 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.
Six senior living operators currently manage the remaining 20 communities, with 1,619 living units. These 20 managed communities are located in six states: six in Illinois; five in Georgia; four in Missouri; three in Arkansas; and one each in Oregon and Nevada.
As of November, the 38 communities were approximately 93 percent occupied.
The capitalization rate for the acquisition of the 38 senior living communities from CNL Lifestyle Properties is expected to be in excess of 7 percent per year. SNH currently expects to assume approximately $153 million of mortgage debt at an average interest rate of 4.8 percent per year.
Simultaneous with the agreement to acquire these properties, SNH received a bridge loan commitment for up to $700 million from Wells Fargo Bank N.A. and Citigroup Global Markets Inc. In addition to the bridge loan, SNH maintains a $750 million unsecured revolving credit facility that is largely undrawn.
The purchase is expected to close during the second quarter of 2015, subject to customary closing conditions.
Senior Housing Properties Trust is a real estate investment trust that owns more than 370 seniors housing communities, medical office buildings and wellness centers throughout the United States.
SNH’s stock price closed at $23.06 per share on Monday, Dec. 22, up from $22.09 per share a year ago.
— Scott Reid