San Clemente, CA-based real estate investment trust CareTrust REIT announced the first investment in its senior housing operating portfolio on Monday: the $40 million acquisition of three senior living communities in Texas.
Vancouver, WA-based Sinceri Senior Living will manage the communities, which are located in what CareTrust described as “attractive” markets, have a combined 270 assisted living and memory care units, and had occupancy of approximately 86% at the time of the transaction.
The deal, effective Monday, was funded with cash on hand.
The REIT called the acquisition “a meaningful milestone in CareTrust’s continued growth and diversification, offering direct exposure to a senior housing sector with compelling fundamentals and allowing the company to participate directly in property-level performance.”
Just last month during the firm’s third-quarter earnings call, CareTrust President and CEO Dave Sedgwick said that the REIT was looking to US senior living investments to help it “grow in the next decade like we did in our first.”
The company’s new senior housing operating portfolio, or SHOP, he said, would be one of three “engines of growth” that the REIT will rely on, along with expansion in the United Kingdom and its original focus, skilled nursing. He echoed those comments on Monday.
“With this addition, we now have three complementary avenues to grow, diversify and compound shareholder value,” the CEO said in a statement. “The opportunity set within the senior housing sector is significant, and with our balance sheet strength and operating expertise, we’re well-positioned to capitalize on that opportunity in the years ahead.”
James Callister, CareTrust’s chief investment officer, said that the REIT expects the portfolio to deliver a going-in yield of approximately 7%.
Tri Tran, senior vice president of investments at CareTrust, described Sinceri as “a respected and experienced operator” and said that the REIT looked forward to “working closely with their team to deliver an exceptional experience for residents and their families.”
In turn, Micah Gerber, Sinceri’s president of finance and investments, said that the company was “incredibly excited” to be working with the REIT. “Their deep understanding of the post-acute and seniors housing landscape, combined with their long-term investment mindset, makes them an ideal partner for our organization,” he said.
Sinceri has been undergoing a growth spurt, in April announcing several executive promotions “to further align its team with the company’s operational growth, ambitious vision, and unwavering commitment to exceptional senior living care.”
Subsequently, in August, the company assumed the management of six senior living communities owned by Murfreesboro, TN-based REIT National Health Investors, and last week, the company announced that it would be taking on the management of 19 senior living communities owned by Chicago-based REIT Ventas.
Looking ahead, Callister said that CareTrust will continue to evaluate additional acquisition opportunities in the United States and the United Kingdom. The firm entered the latter market earlier this year with the $817 million acquisition of Care REIT.