NEWTON, MA-Senior Housing Properties Trust announced that it expects to report a gain of approximately $308 million on the sale of four senior living communities.
The four communities to be sold are all currently leased to Sunrise Assisted Living, Inc. (“Sunrise”) for terms ending December 31, 2023 (plus tenant extension options through December 31, 2033).
The four senior communities contain a total of 1,179 living units/beds (excluding units owned by Sunrise and separately owned independent living condominium units). The sales price which SNH expects to receive for these four communities is $368.0 million, plus or minus customary closing adjustments, or approximately $312,129 per living unit/bed.
The total rent received by SNH for the communities to be sold during the 12 months ended September 30, 2017 (including both base and percentage rent) was approximately $14.8 million, which equates to sale price capitalization rate of approximately 4% p.a.
The four communities were purchased by SNH in 1994 for approximately $124.3 million. At that time, these communities were leased to Marriott Senior Living Services, Inc., then a wholly owned subsidiary of Marriott International, Inc. (Nasdaq: MAR). In 2003, Marriott International sold its senior living business to Sunrise, but Marriott International has remained a guarantor of the lease obligations due to SNH. SNH’s current book value of these communities is approximately $60.0 million.
David J. Hegarty, President of SNH, made the following statement at the time this news was released:
“SNH has enjoyed its long term relationship with Marriott International at these communities and its successor tenant, Sunrise. 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. 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 one of these communities located in Arlington, VA was completed on December 29, 2017 in order that SNH may spread the capital gains to be realized over two tax years. The three additional communities are located in Boca Raton, FL, Silver Springs, MD and Charlottesville, VA. SNH currently expects that these three additional sales will be completed before March 31, 2018.
Senior Housing Properties Trust is a real estate investment trust which owns senior living communities, medical office buildings, life science and biotech research and manufacturing properties, and wellness centers throughout the United States.