CHICAGO — Aviv REIT has agreed to purchase 29 properties from Diamond Senior Living for $305 million. All of the properties are currently triple-net leased to new Aviv operator Laurel Health Care for a remaining term of 15 years.
The acquisition includes 23 skilled nursing facilities (SNFs), four assisted- iving facilities, one independent living facility and one office building. The properties are spread throughout five states, including 11 facilities in Michigan, eight facilities in Ohio, seven facilities in North Carolina, one facility in Virginia and another in Indiana. It also includes Laurel’s corporate office building in Ohio.
Two of the properties are leasehold interests, which have terms expiring in 2025 and 2020. Both of those properties will be subleased to Laurel until the end of their respective terms.
Aviv will fund about 40 percent of the purchase price, or $125 million, with cash and its available credit line. The remaining 60 percent, or $180 million, will be financed through a secured loan that should be made by GE via its business unit, GE Capital, Healthcare Financial Services.
“This is a strategic investment for us at a seminal moment having just announced our merger with Omega Healthcare Investors,” says Craig Bernfield, Aviv’s chairman and CEO. “This is an exciting transaction for us in many ways. It is the single biggest acquisition we have made in more than 30 years as investors in the SNF industry. We have renewed our long-standing relationship with GE as a strategic seller and lender in this transaction, as GE is one of the most important players in our industry as an owner and lender to the sector.”
Diamond Senior Living is a subsidiary of General Electric Credit Corp. of Tennessee, which itself is a subsidiary of General Electric Capital Corp.
Westerville, Ohio-based Laurel has operated skilled nursing facilities and other healthcare facilities for more than 20 years. Laurel operates 42 facilities in five states. It will now lease 28 of those facilities from Aviv.
“We have forged a new, growth-oriented relationship with Laurel, a high-quality company that we have been getting to know over the past few years,” says Steven Insoft, Aviv’s president and COO.
“This deal meaningfully enhances our operator and geographic diversification, which remains critical to our overall strategy. With this acquisition, we will have completed approximately $750 million of investments this year, not including numerous other identified acquisitions we will continue to work on in 2014. This acquisition is another example of our resolute investment focus on high-quality operators, real estate, markets and disciplined valuation.”
Chicago-based Aviv REIT specializes in owning post-acute and long-term care skilled nursing facilities and other healthcare properties. The company currently owns 317 properties that are triple-net leased to 37 operators in 29 states.
— Nellie Day