ARLINGTON, Va., CHARLOTTESVILLE, Va., BOCA RATON, Fla., and SILVER SPRINGS, Md. — Welltower 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 interested to make the necessary investments on terms acceptable to the tenant,” says David Hegarty, president of SNH. “In these circumstances, 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 transactions 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, with the REIT owning $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 transition to leases to RIDEA structures.
“These assets, located in top markets, represent both an enhancement to our Sunrise portfolio and a significant above-market return for our shareholders,” says Tom DeRosa, Welltower’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 community, which is already under construction. The name of the new investor was not disclosed.