CHICAGO—Aviv REIT, Inc., a Chicago-based trust focused on healthcare properties, has just acquired 28 healthcare properties for $305 million from Diamond Senior Living, LLC, a subsidiary of General Electric Credit Corp. of Tennessee. The acquisition includes 23 skilled nursing facilities, four assisted living facilities, one independent living facility and one office building, located in Michigan, Ohio, North Carolina, Virginia and Indiana. Laurel Health Care, a Westerville, OH-based operator, runs all of the facilities under triple net leases at an initial cash yield of 8.5% with 15 years remaining.
"It is the single biggest acquisition we have made in more than 30 years as investors in the SNF industry,” says Craig M. Bernfield, Aviv's chairman and chief executive officer. “We have renewed our long standing relationship with GE as a strategic seller and lender in this transaction, as GE is one of the most important players in our industry as an owner and lender to the sector.”
The purchases will help wrap up what has been an active year for Aviv. The company, which conducted a $304 million IPO in 2013, started the year off strong by acquiring nine post-acute and long-term care skilled nursing facilities in Kentucky and Iowa in two separate transactions for $48.5 million. A few months later, it refinanced an existing $400 million secured revolving credit facility with a new $600 million unsecured revolving credit facility. Over the summer, Aviv acquired two assisted living facilities and one post-acute and long-term care skilled nursing facility as well as some additional land for a total purchase price of $94.2 million.
And just last week, Hunt Valley, MD-based Omega Healthcare Investors agreed to buy Aviv REIT in an all-share transaction that will value Aviv at $3 billion.
"This is a strategic investment for us at a seminal moment having just announced our merger with Omega,” Bernfield adds. “The transaction demonstrates our ability to execute larger deals accretively in addition to the smaller and medium sized deals that are key to consolidation in our sector."
The company expects to use about $125 million in cash and about $180 million from its available line of credit for this purchase. After closing this acquisition, which it expects to do by the end of the year, the company will have drawn $350 million of its $600 million line of credit.
“With this acquisition, we will have completed approximately $750 million of investments this year, not including numerous other identified acquisitions we will continue to work on in 2014,” says Steven J. Insoft, Aviv's president and chief operating officer.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
