Aviv REIT has acquired two assisted living facilities (ALFs) and one post-acute and long-term care skilled nursing facility (SNF) for USD82.0 million.
It has also acquired two parcels of land and the entitlements for the construction of two new ALFs and a 50 unit addition to one of the existing ALFs for USD12.2 million.
All are located in Massachusetts.
The acquisition includes a 126 unit ALF and a 72 unit SNF located in West Yarmouth, MA, which is in the centre of Cape Cod, and a 93 unit ALF located in Weston, MA, an affluent suburb of Boston. The new construction projects include two ALFs in West Yarmouth and an ALF in Brewster, MA, also located on Cape Cod.
The properties will be triple-net leased to existing Aviv operator Maplewood Senior Living, an operator of 12 facilities in three states, all of which are triple-net leased from Aviv.
The acquisition has an initial cash yield of 8.0 per cent, which increases to 8.5 per cent in year two, with CPI-based annual escalators thereafter, and an initial lease term of 10 years.
The new construction projects have an initial cash yield of 9.0 per cent upon completion, with CPI-based annual escalators, and an initial lease term of 10 years.
The total expected cost for the new construction projects is USD69.7 million, inclusive of the USD12.2 million paid for the land parcels and entitlements, with construction expected to take place from the end of 2014 to the end of 2016.
"This deal demonstrates our ability to opportunistically acquire high-quality senior housing properties at attractive valuations, complementing our primary investment strategy of acquiring post-acute and long-term care skilled nursing facilities," says Craig M Bernfield, chairman and chief executive officer of Aviv. "We further diversified our high-quality portfolio, adding best-in-class private pay healthcare properties in desirable northeast markets, and further enhanced our tenant diversification by materially growing our relationship with Maplewood.”