Sabra purchases stake in $1.62b senior housing JV

Sabra has entered into definitive agreements to acquire a 49 percent equity interest in entities that collectively own 183 senior housing communities. The transaction values the portfolio at $1.62 billion and Sabra’s 49 percent minority interest investment at $371.0 million.

Selling the stake are joint venture partners Enlivant and TPG Real Estate, the real estate platform of TPG.

A large-scale national portfolio named The Enlivant Joint Ventures owns 183 senior housing communities, totaling 8,280 units and geographically diversified across 20 states.

Enlivant’s communities are located in markets that exhibit stable demographics and limited new supply and are nearly 100 percent private pay.

The portfolio is currently 82 percent occupied, up from 60 percent in 2013 when Enlivant began managing the communities.

Sabra is making this investment with the expectation that, subject to the performance of the joint ventures, Sabra will ultimately own the entire 183-asset portfolio, and accordingly the joint venture agreements include an option for Sabra to acquire the remaining majority interest in Enlivant Joint Ventures over the next three years.

Assisted living/memory care demand is needs driven and has proven resilient through various market cycles. The growing U.S. senior population and increasing senior housing penetration rate should provide sustained long-term demand tailwinds.

The overall occupancy rate for seniors housing for the nation’s largest 31 metropolitan areas was 88.8 percent in the second quarter 2017, down 50 basis points from the first quarter, according to the NIC Map Data Service.

This placed occupancy 190 basis points above its cyclical low of 86.9 percent during the first quarter of 2010 and 140 basis points below its most recent high of 90.2 percent in the fourth quarter of 2014. The quarterly decrease in occupancy stemmed from an increase in inventory of nearly 6,600 units, which outpaced a change in net absorption of 3,000 units. The increase in inventory was the most in a single quarter since NIC began reporting the data in 2006.

Of NIC’s 31 primary markets, seven saw improvements in occupancy in the past 12 months: Baltimore, New York, Philadelphia, New York, Houston, Dallas and San Antonio.

Roughly 30 percent of this growth occurred in seven metro areas: Dallas, Chicago, Minneapolis, Atlanta, Houston, Miami and Boston. Dallas and Minneapolis alone accounted for 12 percent of all new seniors housing inventory in the past 12 months. Relative to each metropolitan area’s own inventory, there were seven geographic areas that experienced gains in inventory of more than 10 percent over the course of the year. They included New Orleans; Salt Lake City; Albuquerque, N.M.; Austin, Texas; Melbourne, Fla.; Jacksonville, Fla.; and El Paso, Texas.