HCP — which announced a new name, a new ticker symbol, the promotions of several individuals and multimillion dollar deals involving Brookdale Senior Living and Capital Senior Living — wasn’t the only company operating in senior living that shared big plans last week.
- New Senior Investment Group said it will sell its entire assisted living / memory care portfolio for $385 million.
- LTC Properties said “a high likelihood” exists that the real estate investment trust will close on more than $30 million in assisted living, memory care and skilled nursing investments before the end of January.
- Sabra Health Care REIT executives said they have found several interested potential partners in the search for co-investors in the REIT’s joint venture portfolio with Enlivant. In the third quarter, that portfolio produced the best revenue per occupied room since Sabra made the investment, according to Sabra. The REIT also is looking for middle market-oriented independent living communities where the Holiday Retirement management team could assume management.
- The Ensign Group, on the heels of the spin off of senior living, home health and hospice properties into The Pennant Group, suggested that more spinoffs are to come.
Read more below.
New Senior Investment Group
New York-based New Senior Investment Group said Friday that it was selling its entire assisted living / memory care portfolio for $385 million. (A Tuesday filing with the Securities and Exchange Commission revealed the buyer as ReNew REIT.)
New Senior expects the transaction to close in the first quarter of next year.
The portfolio includes 28 properties with a total of 2,840 units across 14 states. The communities currently are managed by six different operators; total occupancy as of the third quarter was 78%.
“Ultimately, we concluded that the sale of the entire portfolio will enable us to simplify our business and achieve several of our strategic goals for the company, including enhancing the overall quality of our portfolio and strengthening our balance sheet,” CEO Susan Givens said during the company’s third-quarter earnings call. “Importantly, the sale of the assisted living / memory care portfolio will enable us to dedicate more of our focus toward growing our core business, which is low-acuity, private-pay senior housing.”
Assisted living memory care currently represents 12% of New Senior’s portfolio, according to the REIT. Blue Harbor Senior Living accounts for 15 of the assisted living / memory care properties; Grace Management, 5; Integral Senior Living, 4; Phoenix Senior Living, 2; JEA Senior Living, 1; and Watermark Retirement Communities, 1.
The portfolio had continued to underperform despite the REIT’s moves to sell some assets and transition others to new owners, Givens said. Selling the entire portfolio — a decision reached after a “thorough and extensive review process,” she said — will better position the REIT for growth, improve the company’s capital structure and liquidity and reduce overall portfolio volatility.
Independent living properties “generally benefit from higher operating margin, longer lengths of stay, lower regulatory risks and less new supply than assisted living / memory care,” the CEO said. “Additionally, our independent living portfolio serves the attractive private-pay middle-market demographics, and we are extremely well-positioned to benefit from fast-growing demand in this segment.”
Westlake Village, CA-based LTC Properties Chief Investment Officer Clint Malin said Friday during the REIT’s earnings call that “a high likelihood” exists that the REIT will close on more than $30 million in assisted living, memory care and skilled nursing investments before the end of January. “These transactions would be with operators new to our portfolio,” he said.
Chief Financial Officer Pam Kessler said the REIT does not have a property type preference when making re-investments. “It’s really opportunistic — whichever type presents itself to us,” she said.
Executives said that during the quarter the REIT transitioned two memory care communities in Georgia and South Carolina from Thrive Senior Living to another operator in the portfolio; the communities had a combined 159 units. LTC also completed the transition of the company’s remaining Thrive property, a 60-unit memory care community in Florida, to an existing operator.
| Read more about the LTC earnings call on sister site McKnights.com, which covers skilled nursing. |
Sabra Health Care REIT
Sabra Health Care REIT’s joint venture portfolio with Enlivant, which consists of 170 properties, and of which Sabra owns 49%, produced the best revenue per occupied room since Sabra made the investment. That’s according to Sabra Chief Investment Officer and Treasurer Talya Nevo-Hacohen, speaking Thursday on the company’s third-quarter earnings call.
RevPOR was $4,307, 6.9% higher on a stabilized same-store year-over-year basis, she said. Average occupancy for the quarter, however, was 81.4%, 0.9% lower on a stabilized same-store year-over-year basis, Nevo-Hacohen said.
Same-store cash net operating income for the quarter rose 15.3% year-over-year and 7.8% sequentially, she said. Cash NOI margin was 26.7%, up from 23.9% on a same-store year-over-year basis, Nevo-Hacohen said. Year-to-date, the Enlivant joint venture cash NOI was 9.2% higher than in the same period in 2018, she said.
The JV portfolio saw 126 move-ins in the third quarter, more than in any other previous quarter, Nevo-Hacohen said.
“This summer, we began the process of identifying potential partners to co-invest the Sabra, so we could jointly own 100% of the portfolio,” she said. “That process continues, with several investors keenly interested in the opportunity.”
The REIT also is looking for middle market-oriented independent living communities where the Holiday Retirement management team is well-suited to assume management, including opportunities within the Sabra portfolio, she said.
| Read more about the Sabra call on sister site McKnights.com, which covers skilled nursing. |
The Ensign Group
Executives of The Ensign Group, on the heels of the spin off of senior living, home health and hospice properties into The Pennant Group, suggested that more spinoffs are to come.
“We have several other post-acute related new ventures we are growing and look forward to watching them follow a similar path as our Pennant Group partners,” Ensign Chief Investment Officer Chad A. Keetch said Thursday on the company’s third-quarter earnings call. ‘While these businesses are relatively small today, we are excited to support them in their growth as they apply proven Ensign leadership and operational principles to their respective businesses.”
Ensign announced one of the largest third-quarter improvements in its history, with GAAP earnings per share for the quarter of $0.48, an increase of 26.3% over the prior-year quarter, and adjusted earnings per share of $0.55, up 19.6% over the prior year quarter, according to CEO Barry Port.
“These extraordinary results … are even more noteworthy given that in [the] third quarter of 2018 we had the largest quarter-over-quarter improvements in our history,” Port said.
During the quarter and since its end, Ensign’s affiliates acquired Joseph’s Villa Independent Living, a 58-unit independent living community in Salt Lake City, and other properties. Pennant acquired Mainplace Senior Living, a 91-unit senior living community in Orange, CA, and Agape Hospice in Tucson.
The new additions bring Ensign’s portfolio to 202 skilled nursing operations, 27 of which also include senior living operations, across 14 states. Ensign owns the real estate at 81 of its 260 healthcare-related facilities.
“Our pipeline remains very healthy, but we continue to be very selective and are keeping plenty of dry powder on hand for what we believe will be an increasingly more attractive buyer’s market,” Keech said. Ensign continues to seek to acquire real estate and to lease both well-performing and struggling senior living, skilled nursing and other healthcare-related businesses in new and existing markets, he added.
| Read more about the Ensign call on sister site McKnights.com, which covers skilled nursing. |
Article updated Nov. 5 to include information about ReNew REIT.