Seniors Housing Business

APR 2018

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

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www.seniorshousingbusiness.com 25 April 2018 n Seniors Housing Business PERFORMANCE ADVANTAGE. CBRE delivers outcomes that drive business and bottom-line performance. Principals of the CBRE National Senior Housing team completed over $10 billion in Senior Housing investment sales and debt transactions between 2014 and 2017 encompassing over 46,000 units across the United States. How can we help you transform your real estate into real advantage? For more information contact: Matthew Whitlock Capital Markets/Secured Debt +1 978 282 0024 matthew.whitlock@cbre.com Aron Will Secured Debt +1 713 787 1965 aron.will@cbre.com Lisa Widmier Capital Markets/Investment Banking +1 858 729 9890 lisa.widmier@cbre.com seniors housing originates in the Middle East and Asia. The inves- tors are comprised of high-net- worth individuals, institutions, sovereign wealth funds and pri- vate investment capital. Foreign investors prefer high- quality seniors housing assets, mostly independent living and assisted living communities. They also like properties in large markets. Somewhat typical of recent deals is the acquisition of a large port- folio of continuing care retirement communities in the Dallas area for $200 million by a joint ven- ture between U.S. seniors housing property manager LCS and Aspect Investment Partners, an invest- ment firm based in Dubai, UAE. The six-property portfolio includes 1,104 units. CBRE Capital Markets arranged the transaction. Fortress Investment Group was the seller of the portfolio. CBRE's Will arranged the acquisition financing, securing $120 million of debt from banks and agency lender Freddie Mac. The deal is a good example of how foreign investors partner with U.S. operating companies such as LCS, says Will. Foreign investors generally don't have U.S. offices. Talented local partners with a solid reputation give foreign investors insights into the market, and are more likely to produce solid returns. Also, foreign investors can be intimidated by the complexity of the U.S. seniors housing and care market. The stiff regulations and multifaceted payment systems are daunting, especially in the skilled nursing sector. "They are amazed by the red tape," says Ryan Haller, vice president of growth and develop- ment at Avamere Health Services, a large regional provider of elder care services and properties based in Wilsonville, Ore. Avamere has a working relation- ship with Chevalier International Holdings Ltd., a large investment company based in Hong Kong. Avamere operates 51 properties, a mix of independent living, assisted living, memory care and skilled nursing. About five years ago, Avamere was tapped to manage a defunct hospital in Portland, Ore., owned by Chevalier. Avamere assisted Chevalier in the conversion of the property to an assisted living and skilled nursing community called Laurelhurst Village. "It was a great success," says Haller. Chevalier has also purchased 20 seniors housing properties in North Carolina, and two in Michi- gan over the past five years. This summer, Chevalier is scheduled to acquire 10 seniors housing assets owned by HCP Inc., a large healthcare REIT. Ava- mere will lease and manage the buildings. Asian investors are looking for more than a healthy return on their capital, says Haller at Ava- mere. They also want to under- stand the senior living business in the U.S. where the private pay model has already been tested, and bring it back to Asia. Seniors housing represents a great oppor- tunity in China where about 220 million people are over age 60. Foreign Investment in U.S. Seniors Housing Eases After heavily increasing spending in 2015 and 2016, foreign investors slowed their involvement in U.S. seniors housing properties dramatically in 2017. However, foreign investors' share of the market and their overall spending is still running well ahead of the pace set in 2012-2014. 2012 2013 2014 2015 2016 2017 Source: Real Capital Analytics 2.5 2.0 1.5 1.0 0.5 0.0 14% 12% 10% 8% 6% 4% 2% 0% 12-Month Trailing Deal Volume, $billions Total Share of the Market Cross-Border Acquisitions Share of Market

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