National Health Investors, a Murfreesboro, Tenn., senior housing and medical real estate investment company, announced this week it intends to acquire eight communities for $476 million, including the Cascades Verdae retirement community in Greenville and Summit Hills in Spartanburg.
The eight communities are located across North Carolina, Florida, Georgia and South Carolina. A ninth property owned by Senior Living Communities is not part of the deal, as financing is with an Orlando, Fla., partner.
NHI specializes in sale-leaseback, joint venture, mortgages and mezzanine financing of need-driven and discretionary senior housing and medical investments, according to a statement issued by the company. NHI’s portfolio consists of independent, assisted-living and memory-care communities, continuing-care retirement communities, skilled nursing facilities and specialty hospitals. NHI’s agreement for the eight communities is a definitive asset purchase agreement.
Following the closing of the acquisition, the eight communities will be leased back with a 15-year master lease and will continue to be managed by Senior Living Communities, headquartered in Charlotte, which currently owns all the communities. The lease equates to an initial gross cash yield of 6.5 percent of the purchase price and has annual escalators of 4 percent in years two through four and annual escalators thereafter of 3 percent. The eight communities’ total 1,671 units have an average age of 12 years and have an average occupancy rate of 85.4 percent for the three months ended Oct. 31, 2014.
“NHI’s agreement to acquire a portfolio that includes high-end communities strengthens our portfolio by further diversifying our sources of rental income by operator, geography, property type and payor source while significantly reducing our exposure to government reimbursement,” said Justin Hutchens, NHI’s president and CEO. “This acquisition is consistent with our conservatively funded growth strategy including partnering with experienced senior housing operators and portfolio diversification.”
NHI also expects to provide a $15 million working capital line of credit to Senior Living Communities that will be used to finance construction projects within the Senior Living Communities portfolio, including building additional units at several of the communities.
A second phase of the Cascades Verdae is already underway with land being cleared to make room for 23 additional cottage lots. Deposits have already been received on all cottages and construction is expected to begin April 2015, said McSwain Bell, vice president of development and procurement for Senior Living Communities.
A sixth apartment building with 40 additional apartments is also planned at Cascades Verdae and is currently in the pre-sales stage. Bell said that deposits have been received on 50 percent of those units and construction is expected to being summer 2015.
The acquisition is expected to close by Dec. 31, 2014.
