Seniors Housing Business

OCT-NOV 2017

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

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30 www.seniorshousingbusiness.com Seniors Housing Business n October-November 2017 Let Our Team Work For You Senior Living Investment Brokerage, Inc.: The leader in Seniors Housing Brokerage WHAT WE OFFER: • Represent over 30% of announced transactions • Built a team with over 235 yrs. of brokerage experience • Sold over $4,000,000,000 • Assembled largest team of dedicated Sr. Housing brokers • Represent Sellers confidentially • Achieve an average 96% of list price • Preserve wealth for our clients • Manage transactions from start to finish Ryan M. Saul / Managing Director Don't sell direct when you can leverage the experience of our team of dedicated brokers to generate the controlled competition that will maximize your investment objectives. Allow us to put together a confidential proposal to determine your market value. We'll show you how our services will create value and navigate through challenging market conditions. Contact Ryan today at 630-858-2501 ryansaul@slibinc.com www.slibinc.com / www.ryanmsaul.com develop the new apartments. She believes that the acquisition is a smart investment because the property is a trophy, Class A-plus asset in an affluent market with high barriers to entry. "Those don't come around very much," she emphasizes. Rising prices in the marketplace have led to opportunistic sales. CNL Healthcare Properties, a non- traded REIT, recently sold Dog- wood Forest of Acworth, a 92-unit assisted living and memory care building near Atlanta, for about $34 million. CNL developed the property, which opened in 2014, for about $19 million. CNL President and CEO Steve Mauldin says that the company had every intention of owning the community for an extended period of time, but elected to sell because the exit value was so high. The company liquidated its Life- style Properties REIT with more than $1.6 billion in seniors housing assets in 2015. Its new fund cur- rently includes 71 seniors hous- ing communities, plus ground-up development worth nearly $120 million. "CNL remains very convicted and optimistic about the seniors housing space," says Mauldin. "Capital is avail- able and a fairly broad set of investors remain active." Pathway to Living owns and operates 25 properties, and has another five projects in partner- ship with other investors. The company has two new ground-up developments in the Chicago area: Azpira Place of Lake Zurich and Aspired Living of Westmont. Both buildings offer assisted living and memory care. The company is avoiding cer- tain markets, such as Florida and Texas, because of overbuilding concerns. But Pathway figures to be a long-term owner and sees the senior living market as a good opportunity, according to Patrick Dimaano, director of acquisitions and strategic partnerships at the Chicago-based company. "Healthy markets can withstand a dip in occupancy," he says. While some investors sit on the sidelines waiting for distressed properties to come on the market at better prices, others are tweak- ing their strategies as they hunt for special opportunities. These could be new buildings struggling to lease up in markets with a lot of new competition, or poorly man- aged properties. For example, National Health Investors Inc. (NYSE: NHI) has set its sights mostly on single-asset investments. Asked to character- ize whether the REIT is in more of a "hold" mode, Chief Investment Officer Kevin Pascoe describes the company's approach as "cau- tious." He says the Murfreesboro, Tennessee-based REIT is looking to acquire properties while adher- ing to its rigorous criteria, includ- ing a thorough underwriting of the operator to assess the credit they bring to the deal to help bol- ster the invest- ment. "It has to be a compelling o p p o r t u n i t y, " says Pascoe. In a recent o p p o r t u n i t y, NHI provided a $10 million acquisition loan to the purchaser of a 40-unit memory care building in New Hampshire. The building, renamed Evolve at Rye, was pur- chased out of bankruptcy. "It was a good asset in a great market, but the operator did not have its arms around the property," says Pascoe. An experienced seniors housing team, Evolve Senior Living, with new management systems, is now operating the property. NHI has a purchase option on the building. Value-add opportunities Other investors are seeking underperforming projects. In June, Focus Healthcare Partners LLC closed its $312 million fund, Focus Senior Housing Fund I. Investors include institutions and university endowments, says Curt Schaller, co-founder and principal of Chi- cago-based Focus. "The dynamics in many markets are better suited now for acquisitions that can be significantly improved rather than new construction," he says. Focus doesn't invest in skilled nursing or continuing care retire- ment communities (CCRCs). The company prefers senior apart- ments, rental CCRCs, independent and assisted living, and memory care facilities. Though stabilized buildings are preferred, Focus will consider properties that can be improved, says Schaller. An example is a prop- CNL Healthcare Properties developed Dogwood Forest of Acworth near Atlanta three years ago for about $19 million. The REIT recently sold the property for about $34 million. Kathryn Sweeney Blue Moon Capital Joshua Jandris Institutional Property Advisors

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