Aviv REIT has acquired four properties in Ohio and Indiana for USD44.9m.
The first three properties are located on a campus in Ohio which includes an assisted living facility (ALF), a post-acute and long-term care skilled nursing facility (SNF) and a long-term acute care hospital (LTACH), plus the right to build a new LTACH.
The fourth property is a specialty hospital located in Indiana.
The ALF is triple-net leased to existing Aviv operator Maplewood Senior Living, the SNF and LTACH are triple-net leased to new Aviv operator Cardinal Care Management and the specialty hospital is triple-net leased to existing Aviv operator Physician's Hospital. These investments have a blended initial cash yield of 9.4 per cent.
The Maplewood lease for the ALF has an initial cash yield of 8.0 per cent, which increases to 9.0 per cent in year two, with two per cent fixed annual escalators thereafter, and an initial lease term of 10 years. Maplewood is now an operator of seven ALFs in Connecticut and Ohio, all of which are leased from Aviv. Maplewood has been an Aviv operator relationship since 2010 and is now Aviv's fifth largest operator, with 7.0 per cent of the company's total rent.
The Cardinal lease for the SNF and LTACH has an initial cash yield of 9.8 per cent, two per cent fixed annual escalators beginning in year three and an initial lease term of 10 years. Cardinal is now an operator of two properties in Ohio. The principals in the transaction have a 15 year relationship with Aviv and Aviv plans to pursue additional growth opportunities with Cardinal.
The Physician's lease for the specialty hospital has an initial cash yield of 10.0 per cent, annual escalators based on CPI and an initial lease term of 10 years. Physician's is now an operator of three specialty hospitals in Indiana, all of which are leased from Aviv. Aviv began its relationship with Physician's in 2012 and the company expects to pursue additional growth opportunities with Physician's.
"As we expected, we have continued to close acquisitions throughout the fourth quarter and we still expect to close additional acquisitions before the end of the year. The substantial majority of our acquisitions this year have been SNFs, but we continue to make strategic investments in other complementary healthcare properties such as the Maplewood, Cardinal and Physician's acquisitions," says Craig M Bernfield, chairman and chief executive officer of Aviv. "Maplewood has become a key, strategic relationship for us, with best-in-class properties in strong wealth demographic markets, like Fairfield County, Connecticut, and now in targeted markets in eastern Ohio. The Maplewood investments have created substantial value for our portfolio. The decision to acquire the Ohio campus was strategically designed to diversify Maplewood into another strong geographic region which we hope to develop over the next few years.
"With these acquisitions, we are pleased to have completed USD204m of investments in 2013. These transactions further diversify the portfolio and continue our focus of working with growth-oriented operators. We continue to see a strong pipeline of high-quality opportunities at attractive valuations and lease yields, with new and existing operator relationships. Our relationship-oriented strategy has provided us with consistent growth opportunities over a long period of time and we look forward to continuing this track record of disciplined growth."