Five Star To Buy Six Senior Housing for $123M

INDIANAPOLIS-Five Star Quality Care Inc., based in Newton, MA, has closed on half of a portfolio of six assisted living facilities in Indiana from Fort Wayne, IN-based American Senior Communities LLC. Marcus & Millichap Real Estate Investment Services completed the closings for three of the properties, and anticipates closing the other three soon, with a total sale cost of about $123 million.

Five Star agreed in May to purchase agreements for the six properties. These sites include Riverwalk Village in Noblesville, IN, Forest Creek Village of Indianapolis and Covington Commons in Fort Wayne, IN.

The buyer is expected to fund the cash portion of the purchase price, equal to approximately $103.3 million, with the proceeds of a bridge loan from Senior Housing Properties Trust for up to $80 million, and by using cash on hand and drawings under a $35-million revolving secured line of credit.

Mark Myers with Marcus & Millichap tells GlobeSt.com that three of the properties have closed, and another three are expected to close soon. Myers says this sale brings his tally of transactions for the year to about $200 million, an example of how activity has continued to increase in this property type.

There’s a lot of pent-up demand being released,” Myers says. “In 2009-10, there was a lot of hesitancy. Now that’s changed, there’s even a lot of deals that have been done that have been all cash. The REITs are seeing amazing increases from the second quarter. It makes mathematical sense, rents had been structured in higher interest-rate environments, and there’s no development to speak of.”

Myers also recently arranged another Midwest portfolio sale of nine nursing homes owned by Sioux City, IA-based Careage Management in Nebraska and Iowa. Ensign Group, based out of Mission Viejo, CA paid $27.7 million in cash for the properties.

The properties include the 87-bed Beatrice Manor facility at 1800 Irving St. in Beatrice, NE, the 76-bed Careage of Clarion at 110 13th Ave. in Clarion, IA and the 65-bed Careage of Fort Dodge at 728 14th Ave. in Fort Dodge, IA.

Christopher Christensen, Ensign's president and CEO, said the company is looking to grow in the Midwest. The portfolio brings his company’s holdings to 96 healthcare facilities, three hospice companies and three home health businesses in 10 states.