ORLANDO-In a joint venture with Sunrise Senior Living, CNL Lifestyle Properties has snapped up 29 senior living communities across 12 states in a transaction valued at $630 million. The acquisition marks CNL Lifestyle Properties’ entry into the senior living market and complements the REIT’s demographics-driven investment strategy.
Sunrise will operate the communities under a long-term management agreement. Goldman Sachs Lending Partners provided $435 million in financing for the deal. CNL owns 60% of the joint venture. Sunrise owns the remaining 40%.
CNL is no stranger to senior living properties. CNL Retirement Properties, another REIT sponsored and managed by CNL Financial Group, was sold for $5.3 billion in October 2006 to Health Care Property Investors. At the time, it was one of the largest healthcare real estate transactions ever completed.
Byron Carlock, president and CEO of CNL Lifestyle Properties, tells GlobeSt.com the deal came after a non-compete agreement expired. He says the new properties fill a hole in its portfolio that the REIT could not serve until now. The average age of the properties in the transaction is just under 10 years and the majority of the communities are in metropolitan areas. The properties have a combined 2,082 units.
“With this transaction we are heralding a reentry into the seniors and medical spaces,” Carlock says. “We are still raising money in CNL Lifestyle Properties until April 2011. Then we will transition into a new fund that is currently in registration. The new fund will also have a lifestyle focus with additional abilities to acquire medical and seniors related real estate.”
CNL Lifestyle Properties owns more than 120 properties in a portfolio of ski resorts, golf courses, marinas and amusement parks across the United States and Canada. But the senior living industry is an attractive play because it’s poised for significant growth during the next 20 years as baby boomers retire.
“CNL has had a substantial track record in the senior living sector, including the formation and successful sale of CNL Retirement Properties, Inc.,” said Tom Sittema, CEO of CNL Financial Group, the REIT’s sponsor and external manager. “As the nation emerges from a period of economic uncertainty, there are many opportunities in the senior living space for companies that have access to capital and a conservative management strategy, such as CNL Lifestyle Properties.”
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