As real estate investment company Invesque prepares to end 2019 having executed on more than $440 million in acquisitions, company executives said Thursday they are looking at a “very robust” pipeline of growth opportunities, especially in senior living and medical office buildings.
And the future for the industry as a whole is looking brighter, CEO Scott White suggested on the company’s third-quarter earnings call.
“Supply in assisted living continues to improve, with construction as a percentage of inventory at its lowest level since 2013. This is especially relevant to Invesque, because our seniors housing portfolio is more than 80% concentrated in assisted living and memory care units,” he said. “It’s important to note that today’s demographic growth of the 80+ age group is much stronger than five years ago. While we’re certainly not calling a bottom, we do believe that seniors housing occupancy may see its first year-over-year increase in 2021 as supply growth slows and demographic growth accelerates.”
The third quarter was “very busy” for Invesque, White said. The company closed on the previously announced acquisition of Charlottesville, VA-based Commonwealth Senior Living and 17 of its private-pay seniors housing communities for $285.4 million. Transactions related to the three remaining Commonwealth communities are expected to close by the end of the year.
Invesque also has transitioned 12 of 13 former Greenfield Senior Living communities in its portfolio to Commonwealth and Blue Bell, PA-based Heritage Senior Living “months ahead of our original timeline,” White said.
Commonwealth is now managing 10 of the communities, and Heritage is managing two of them, he said. The properties are operating under interim management agreements until final licensure approval is received, which should occur by the end of the year.
Invesque had announced the planned moves in August, anticipating that the transactions would be finalized by the end of the year.
“Since the announcement, we have been focused on consummating the transitions as quickly as possible. We proactively came to an agreement with Greenfield to expedite the process,” White said on the real estate investment company’s third-quarter earnings call.
“The Greenfield transition allowed us to quickly scale and capitalize on our recent acquisition of the Commonwealth operating and management company to create the largest seniors housing operator in Virginia and a premier operator in the mid-Atlantic,” Chief Investment Officer Adlai Chester said. Commonwealth will have 34 communities and almost 2,400 units under management when the moves are complete, according to Invesque.
“Commonwealth will now represent our largest source of net operating income, at approximately 26%, and Heritage is now our third-largest operator, at a little under 9% of our NOI,” Chester said. “Symphony will now represent roughly 24% of NOI, down from approximately 70% at the time of our IPO a little over three years ago.”
Invesque is evaluating options for the final Greenfield community, located in Arlington, TX, Chester said.
Memory care communities
Also in the third quarter, Invesque closed on the previously announced $30.7 million acquisition of three memory care properties developed by Ellipsis Real Estate Partners and operated by Constant Care Management Co.
Invesque also closed on a $1.2 million mezzanine loan to Ellipsis to fund the development of a 38-unit / 42-bed freestanding memory care building outside of Grand Rapids, MI. The property is under construction, with an expected completion date in the summer. Upon completion, the property will be operated by Constant Care. Invesque has an option to purchase the property at fair market value at that point.
“Our proprietary relationship with Ellipsis continues to be a huge success and highlights our relationship-driven approach to investing with our preferred partners,” Chester said. “The partnership provides us exclusive access to a right of first offer to invest in all of their senior housing and medical office development projects.”
