Seniors Housing Business

AUG-SEP 2015

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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68 Seniors Housing Business n August-September 2015 to leverage our strength on the capital markets side to get better pricing with banks. Lastly, we're also able to leverage the Fortress national vendor con- tracts to save on operating expenses such as food, utilities and main- tenance supplies, which is a huge beneft to our operating partners. SHB: Can you clarify the business relationship today between For- tress, Holiday Retirement and New Senior? For example, will Holiday still operate the 28 com- munities it sold to New Senior for $640 million? Givens: Holiday has been owned by private equity funds that are managed by Fortress since 2007. Fortress has a long-standing relationship with Holiday. In the past couple of years, Holiday has been selling its real estate and has announced seven transactions to date, two of which New Senior has purchased. New Senior has been, and we expect it will continue to be, Fortress' dedicated vehicle for investing in the seniors housing industry. While the private equity funds have a fnite life to them, New Senior is one of the permanent capital vehicles at Fortress, given it is a public company with no time period upon which the equity has to be returned to investors. Growing for the right reasons SHB: Since 2012, New Senior has made investments in seniors housing totaling $3.1 billion. That's tremendously rapid growth. Is New Senior likely to acquire more properties before the year is out, or is the company content to digest what it has in the short term? Givens: When we decided to create this business three years ago, our strategy was simple: cre- ate a business focused on acquir- ing seniors housing assets, and do so by developing a two-pronged acquisition strategy. On the one hand, we focus on sourcing and underwriting smaller, off-market transactions where we think the assets are undervalued or underperforming. At the same time, we selec- tively source larger portfolio deals, which tend to include more stable, higher-quality assets that can improve the overall profle of the company. Since 2012, we've completed or announced 24 transactions, 21 of which were smaller deals and three that were larger deals. We expect to continue to target a mix of small and large deals going forward. We also expect to continue to acquire private pay seniors hous- ing properties over the long term. But we are focused on only doing the right deals, not just doing deals for the sake of doing deals. We're very focused on acquisi- tions, but there are times where it makes sense to digest for a little bit. That's where we are now. SHB: In what way is the 28-prop- erty acquisition from Holiday a game changer for New Senior? Givens: We've had a lot of success pursuing smaller, one-off transactions, and that is a core component of our strategy. But there are benefts to selectively doing larger transactions. This portfolio includes 28 private-pay independent living assets. It increased our overall private-pay exposure to 92 per- cent, it increases our independent living contribution to 70 percent of our NOI, and it adds fve new states to our portfolio. Occupancy on the portfolio is 88 percent today — which is a good, healthy level — but we believe there are opportunities for

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