CHICAGO — Aviv REIT Inc. (NYSE: AVIV) has acquired several seniors housing properties and land parcels in Massachusetts for $94.2 million.
The Chicago-based REIT acquired two assisted living facilities and one post-acute and long-term care skilled nursing facility for $82 million. Aviv also purchased two parcels of land and the entitlements for the construction of two new assisted living facilities and a 50-unit addition to an existing assisted living facility for $12.2 million.
The acquired properties include a 126-unit assisted living facility and a 72-unit skilled nursing facility located in West Yarmouth; and a 93-unit assisted living facility located in Weston, a suburb of Boston. The new construction projects include two assisted living facilities in West Yarmouth and an assisted living facility in Brewster.
“This deal demonstrates our ability to opportunistically acquire high-quality seniors housing properties at attractive valuations, complementing our primary investment strategy of acquiring post-acute and long-term care skilled nursing facilities,” says Craig Bernfield, chairman and CEO of Aviv.
The properties will be triple-net leased to existing Aviv operator Maplewood Senior Living, an operator of 12 facilities in three states that are triple-net leased from Aviv.
“We further diversified our high-quality portfolio, adding best-in-class private pay healthcare properties in desirable Northeast markets, and further enhanced our tenant diversification by materially growing our relationship with Maplewood,” Bernfield continues.
The acquisition has an initial cash yield of 8 percent, which increases to 8.5 percent in year two, with consumer pride index (CPI)-based annual escalators thereafter; and an initial lease term of 10 years. The new construction projects have an initial cash yield of 9 percent upon completion, with CPI-based annual escalators and an initial lease term of 10 years.
The monthly revenues per occupied room at the properties are approximately $6,000 and the facilities are 91 percent occupied.
The total expected cost for the new construction projects is $69.7 million, inclusive of the $12.2 million paid for the land parcels and entitlements, with construction expected to take place from the end of 2014 to the end of 2016.
The new construction projects are already subject to a triple-net lease with Maplewood. The projects include:
– A 50-unit addition to the existing assisted living facility in West Yarmouth with a total estimated cost of $12.6 million and an initial cash yield of 9 percent. Construction is expected to begin in the second quarter of 2015 and is scheduled for completion during the third quarter of 2016.
– A 75-unit existing assisted living facility West Yarmouth with a total estimated cost of $19.8 million and an initial cash yield of 9 percent. Construction is expected to begin in the second quarter of 2015 and set for completion during the third quarter of 2016.
– A 131-unit existing assisted living facility in Brewster with a total estimated cost of $37.3 million and an initial cash yield of 9 percent. Construction is expected to begin in the fourth quarter of 2014 and is slated for completion during the second quarter of 2016.
Aviv is a real estate investment trust that specializes in owning post-acute and long-term care skilled nursing facilities and other healthcare properties. The company currently owns 312 properties that are triple-net leased to 39 operators in 29 states.
Aviv’s stock price closed Thursday at $27.95 per share, up from $25.52 per share this time last year.
— Danielle Everson