Seniors Housing Business

FEB-MAR 2018

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

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Acquisitions 20 www.seniorshousingbusiness.com Seniors Housing Business n February-March 2018 Welltower buys four Sunrise CCRCs for $368 million Arlington, Va., Charlottesville, Va., Boca Raton, Fla., and Silver Springs, Md. — Well- tower Inc. (NYSE: HCN), the largest REIT in the seniors housing sector, has agreed to acquire a portfolio of four continuing care retirement communities (CCRCs) for $368 million. Senior Housing Properties Trust (NASDAQ: SNH) is selling the properties, which are located in the Washington D.C., Miami and Charlottesville, Va., areas. The portfolio totals 1,179 units spanning the continuum of care, for a price per unit of approximately $312,129. SNH purchased the communities in 1994 for approximately $124.3 million. "SNH believes these communities now require updating and renovation capital, and the current tenant arranged for SNH to sell these communities to a buyer inter- ested to make the necessary investments on terms acceptable to the tenant," says David Hegarty, president of SNH. "In these cir- cumstances, now is the right time for SNH to harvest its significant capital gains on this investment and to use the proceeds to reduce SNH's debt leverage and/or to re-deploy the capital received from these sales into new investments." The sale of the property in Arlington has already closed, with the other three transac- tions scheduled for completion before March 31. Sunrise Senior Living manages all four CCRCs under triple-net leases. The operator is already a large-scale partner with Welltower. The REIT owns $6 billion in Sunrise-operated properties. Lease terms were set to expire at the end of 2023, according to SNH. The seller expects to see a total gain of $308 million on the transaction. Following the sale, Welltower plans to tran- sition the leases to RIDEA structures. "These assets, located in top markets, repre- sent both an enhancement to our Sunrise port- folio and a significant above-market return for our shareholders," says Tom DeRosa, Well- tower's CEO. In a separate transaction, Welltower has added a new institutional investor for its Sunrise at East 56th Street development, a 16-story, 130,000-square-foot seniors housing project in Midtown Manhattan. The high-profile project is a joint venture with Hines. Sunrise will operate the commu- nity, which is already under construction. The name of the new investor was not disclosed. A new institutional investor has partnered with Welltower and Hines for the development of Sunrise at East 56th Street in Midtown Manhattan.

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