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SYDNEY-GPT Group has entered the U.S. seniors housing market by acquiring a 95% interest in 19 assets in the New England region of the United States. The locally headquartered listed property company paid $438 million for the 1,982-unit portfolio and an additional $3.5 million for a 20% stake in the manager of the portfolio, Benchmark Assisted Living, which will acquire the remaining 5% of the real estate assets.
The acquisition, 100% funded with debt, was made on behalf of the GPT Wholesale Office Fund. The investment is expected to achieve an initial yield of 7.1% pre-costs (6.8% post costs). GPT chief executive Nic Lyons calls the acquisition a major milestone in the company's efforts to develop a business model that will deliver growth of 4%- to 5% per annum over the medium to longer term.
"This acquisition not only gives us access to stable income flows through traditional property ownership but (also) access to management fee income and future opportunities in a sector (that) is forecast to achieve strong growth in line with an aging and affluent population," he says.
The 1.46 million-sf portfolio is concentrated in Connecticut, where 12 of the properties are located, but also includes assets in Massachusetts and Rhode Island. Each property has between 56 units and 182 units and was constructed within the last eight years. Average occupancy is 92%.
Approximately 80% of the units in the portfolio are for assisted living and Alzheimer's assisted living. The individual sales prices for each of the assets ranged from $11.3 million and $34 million each. GPT says the properties' combined value is about $18 million more than the purchase price.
The New England region is considered one of the strongest markets for seniors housing. It is home to 26% of the U.S. population aged 75 plus and has high barriers to entry, with rents and occupancy higher than the national average.
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