Sabra Health Care REIT will acquire a 49% equity interest in a $1.62 billion portfolio of 183 senior housing communities managed by Enlivant, the companies announced Tuesday.
The REIT’s investment in the transaction, which is expected to close by the end of the year, is valued at $371 million. Sabra said it expects to use its revolving credit facility and cash generated from the planned sale of some Genesis Healthcare facilities and other assets to finance the investment.
“Enlivant’s future has never been brighter as we look to capitalize on the many long-term value creation opportunities that lie ahead of us over the next several years,” Enlivant CEO Jack R. Callison Jr. said in a statement.
Sabra said the deal puts it on the path to 100% ownership of the properties, with joint venture agreements containing an option for the REIT to acquire TPG Real Estate’s 51% majority interest over the next three years. TPG Real Estate, a platform of private investment firm TPG, also was part of Tuesday’s announcement.
“Sabra’s investment is a testament to the tremendous progress Enlivant has made toward stabilizing this large, national portfolio,” said Tripp Johnson, a partner at TPG Real Estate and a member of the board at Enlivant.
The REIT said the Enlivant deal will increase diversification in its portfolio as well as private-pay net operating income; most of the Enlivant properties are private-pay. Cash NOI derived from private-pay seniors housing would increase to 24.3% of the Sabra’s portfolio from the 16.8% pro-forma annualized concentration as of the second quarter.
“We are excited about this investment and believe that this opportunity is a direct benefit of our merger with [Care Capital Properties],” Sabra CEO and Chairman Rick Matros said. The REIT’s merger with skilled nursing-focused CCP was approved by the boards of both companies in August.
The senior living communities involved in the deal have a total of 8,280 units across 20 states. The occupancy rate is 82%, up from 63% from when Elivant began managing the communities.
“The same-store average daily rate, occupancy and NOI for this portfolio have increased by 18%, 20% and 65%, respectively, since the trough after TPG’s acquisition in 2013, which is a testament to the Enlivant team’s strong capabilities and expertise,” Matros said.
Enlivant will continue to manage the properties under a 10-year contract, which has two, sequential five-year extension options.
Enlivant is owned by private equity funds managed by TPG. TPG Real Estate will continue to own more than 40 senior living communities, mainly acquired in late 2016, that are managed by Enlivant and are not part of the deal with Sabra.