Invesque is moving 13 Greenfield Senior Living communities to other operators, company executives announced Thursday on the healthcare real estate company’s second-quarter earnings call.
The communities were inherited as part of Invesque’s acquisition of Care Investment Trust, announced in late 2017, said Adlai Chester, Invesque director and chief investment officer. Invesque Chairman and CEO Scott White described the buildings as “spectacular.”
Ten of Falls Church, VA-based Greenfield’s communities will transition to Charlottesville, VA-based Commonwealth Senior Living, the acquisition of which Invesque announced in May and closed on earlier this month. The first Greenfield community moved to Commonwealth on Aug. 2, and Invesque hopes to transfer the others by the end of the year, pending regulatory approval and other closing conditions, Chester said.
Two of the Greenfield communities — one in Pennsylvania and one in New Jersey — will move to Blue Bell, PA-based Heritage Senior Living, probably in a joint venture. “The assets are in markets where Heritage already successfully operates buildings in partnership with Invesque,” Chester said, adding that Invesque was “thrilled” to expand its relationship with Heritage.
“After the transitions are complete, Commonwealth will become our largest source of net operating income, at approximately 26% on a pro forma basis,” he said. “Heritage will become our third-largest operator and represent approximately 8% of our net operating income on a pro forma basis.”
Invesque did not share the fate of the remaining Greenfield community.
The portfolio of the Toronto-based company, which announced a name change from Mainstreet Health Investments in 2017, has grown “over four-fold” since its initial public offering more than three years ago and now has investments totaling almost $2 billion, White said.
Discussions related to the Greenfield properties had been taking place for about nine months, he said. “But it wasn’t where, a year ago we needed to find a replacement operator for 13 assets and went out to find Commonwealth,” White added. “That is not how it worked. It was truly, Commonwealth was a great opportunity.”
As for the Commonwealth acquisition, it wasn’t just Commonwealth’s 20 private-pay senior living communities that appealed to Invesque, he said, noting that Commonwealth now will be the largest senior housing operator in Virginia.
The $340.4 million acquisition also was the opportunity to acquire Commonwealth’s management company, led by Commonwealth CEO Richard Brewer, White said.
“We are a real estate company, and we continue to be a real estate company,” he said. “You should not expect, over the course of the next couple of years, that we will become predominantly an operating company. That is not in our strategic plan.”
The CEO said the Commonwealth team will work with other operators in Invesque’s portfolio, sharing insights and best practices. Invesque also plans to move other properties to Commonwealth, he added.
“The ability to strengthen our existing portfolio by transitioning operators was a key strategic reason for the acquisition of an operating and management company,” White said.
When the Greenfield transitions are complete, Commonwealth will manage 33 buildings, and the company has the capacity to manage 50, Chester said. “With that said, we don’t have anything in our existing portfolio that we plan to additionally transition to them,” he added.
With the Commonwealth acquisition, Invesque now is predominantly a private-pay healthcare real estate investment company and will have approximately 55% of pro forma net operating income coming from seniors housing by the end of the year, White said.
Invesque now plans to focus on acquisitions in mid-sized markets, “very selective”” development and “a few sales,” White said.
“You shouldn’t expect massive dispositions,” he told those on the earnings call. “It’s hard to be in growth mode while you’re selling. But we also need to be smart about maximizing value, and right now, there are certain assets in our portfolio that we think don’t make sense long-term in terms of maximizing value … for our shareholders.”
Chester said Invesque’s growth pipeline “continues to be very significant, particularly in the private-pay space.”
In other senior housing-related news, Invesque announced an agreement to acquire three memory care properties for $30.7 million. The communities were developed by Ellipsis Real Estate Partners and will be leased to Constant Care Management Co., which will bring the total number of properties that Constant Care manages for Invesque to seven.
Invesque also announced that it closed on the sale of The Springs of Mooresville, a 70-bed transitional care and assisted living community, to the current operator, Trilogy Health Services.
Read more about the earnings call in sister publication McKnight’s Long-Term Care News.