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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26 www.seniorshousingbusiness.com Seniors Housing Business n April 2018 "They are learning," says Haller. Capital crackdown China is expected to account for fewer U.S. seniors housing deals going forward. The Chinese gov- ernment has instituted policies to curb foreign property purchases as a way to keep money from leav- ing the country in order to lessen downward pressure on the Chi- nese currency. The crackdown is impacting companies that have purchased high-profile seniors housing and care properties here and in Canada. In February 2017, Anbang, a giant Chinese insurer, purchased Vancouver-based Retirement Con- cepts with 24 communities in Can- ada for about $1 billion. The Chi- nese government seized Anbang in February. Since then, Canadian lawmakers have expressed worries about the ongoing operations of the communities under a changed ownership structure. Anbang announced in late February that it remains committed to its overseas investments. In October 2017, a proposed $4 billion acquisition of Brookdale Senior Living by Beijing-based real estate firm Shonghong Zhuoye Group was scuttled. Some reports said the deal fell apart because of the difficulty the Chinese com- pany encountered trying to secure financing amid increased scrutiny by Chinese regulators. Not all deals have been impacted, however. In November 2016, two Chinese investors — Cindat Capital Management and Union Life Insurance — paid $930 million for a 75 percent stake in a portfolio of 39 seniors housing and skilled nursing properties owned by Welltower, a large healthcare REIT. Seniors Housing Business reached out to Cindat's U.S. office for comment, but did not receive a call back. "Capital restrictions on Chinese investors are having an impact," says Mike Wolfson, associate direc- tor of capital markets research with Newmark Knight Frank based in New York. "The govern- ment is taking away their spend- ing power." "It's a big headwind," says CBRE's Will. However, he adds, it's important to know where Chi- nese investment funds are actually located. "Some investors already have money domiciled in the U.S. or Europe, and those funds can flow freely," he explains. "It can determine the viability of a deal." Another factor contributing to a slowdown of foreign investor interest is concern about the EB-5 visa program. The program enables foreign nationals to receive a U.S. visa if they invest in projects that cre- ate jobs and meet other qualifica- tions. Following the Great Reces- sion, EB-5 funding, especially from China, became an important source of capital for developers. The program has come under increased scrutiny and encoun- tered other problems, such as charges of fraud, and lack of clar- ity regarding how EB-5 invest- ments will be handled under the Tax Cuts and Jobs Act of 2017 that took effect in January. Some seniors housing develop- ers without access to traditional financing are still using the EB-5 program to partially capital- ize their development pipelines, sources say. But use of the pro- gram is declining. "We are looking for other oppor- tunities to bring cash into the U.S.," Avamere Health Services helped to turn around Laurelhurst Village in Portland, Ore., a seniors housing property owned by Hong Kong investors. National Investment Center for Seniors Housing & Care Put an Industry Icon to work for you − visit www.theJCHgroup.com or call 888.916.1212 and let us help you sell or purchase a facility. Nick Stahler 714.463.1663 Nick@theJCHgroup.com Shep Roylance 805.633.4649 Shep@shepJCH.com Jim Hazzard 714.463.1677 Jim@theJCHgroup.com Michael Mooney 503.303.0355 Mike@theJCHgroup.com TURN YOUR PHONE INTO THE SENIOR HOUSING VALUATION HOTLINE. Industry Icons are Standing By.

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