A holding from the Morningside portfolio
WASHINGTON, DC–An affiliate of HCP has closed on a 526-unit assisted living portfolio located in the Mid-Atlantic that had not one, not two but three major challenges associated with its sale.
The portfolio, called the Morningside House Mid-Atlantic Portfolio, traded for $186.25 million or $354,424 per unit — nearly a year after going under contract.
The seller, a joint venture between Morningside House Senior Living and Harrison Street Real Estate Capital, put the portfolio on the market last year well aware that it was facing an uphill climb. It was during a period when senior housing REITs were not in active buy mode, for starters. Worse, the portfolio's operator was shutting down, explained CBRE's Lisa Widmier, who along with Matthew Whitlock represented the seller.
A new operator, in short, needed to be found that could form a good working relationship with the buyer, she told GlobeSt.com.As it turned out these first two challenges were addressed fairly quickly. HCP Inc. liked the portfolio and Senior Lifestyle came on board to serve as operator. The portfolio went under contract in Q3 of 2015.
The third challenge, though, seemingly the simplest, took the longest to resolve. The portfolio included a cross-collateralized HUD loan and it was HUD's long debt assumption approval process that kept the deal hanging for so long.
Not surprisingly, the limbo caused a “meaningful” decline in the portfolio's performance, according to Widmier — she declined to say by how much. HCP could have re-traded the portfolio but opted not to, she added. “As far as buyers go, they get a gold star.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
