MINOT, ND—Multifamily REIT IRET said Tuesday afternoon it had substantially closed on the sale of its medical office building portfolio to a buyer identified in SEC filings as Harrison Street Real Estate LLC. The $367.7-million purchase price for the 25 assets that traded this past Friday represented adjustments in both the pricing and size of the portfolio which was originally announced on Nov. 30. IRET's report capped an active day of selling and acquisition announcements for REITs in the healthcare space.
This past November, IRET had announced an agreement to sell its entire 1.3-million-square-foot, 28-asset healthcare portfolio, consisting of 28 healthcare properties located primarily in Minnesota and a commercial property occupied by a healthcare tenant, for $417.5 million. Prior to last Friday's closing, IRET and Harrison Street agreed to remove one property from the sale, added closing conditions to three properties and adjusted the purchase price on the remaining properties.
Over the next six months, assuming that the additional closing conditions are met, IRET expects to complete the sale of three additional properties for an aggregate sale price of approximately $32.4 million. IRET also expects to sell the one property removed from this portfolio sale in connection with its efforts to opportunistically sell its remaining commercial properties.
A previous portfolio transaction this past September saw IRET sell its entire portfolio of seniors housing communities across six states, as well as a standard multifamily community, to Edgewood Senior Living and its affiliates for a total of $236 million. Edgewood already operated 25 of the 26 seniors properties in the portfolio.
“The sale of the medical office building portfolio is a major milestone for IRET representing the final step necessary to transform us into a focused multifamily company,” says Mark O. Decker Jr., the REIT's president and CEO. ”Over the past 18 months, we have been strategically selling our senior housing, commercial, medical office and other non-core properties, and with the completion of this sale, we will have sold more than $750 million of non-core assets in this time period.” IRET made the decision to become a pure-play apartment REIT in mid-2016.
Decker adds that IRET plans to deploy the proceeds from this sale “to enhance our multifamily portfolio in the Twin Cities, Denver and other key strategic markets.” As of this past Oct.31, IRET owned interests in 89 multifamily properties totaling 13,576 apartments.
Tuesday began with Toledo, OH-based Welltower Inc. reporting an acquisition with a nearly identical dollar value. The REIT said it would pay $368 million to acquire four continuing care retirement communities managed by Sunrise Senior Living, its largest seniors housing operating partner. The seller was not disclosed.
The four properties are located in the Washington, DC, Miami and Charlottesville, VA metro areas. Sunrise operates them under triple-net leases; Welltower will acquire the landlord's ownership interest in this off-market deal and transition the communities to a RIDEA structure.
Welltower said Tuesday it had already closed on one of the communities, with the remaining three to follow in the first quarter. The SNF investment is projected to generate a nominal year-one cap rate of 7%, according to Welltower.
Also on Tuesday, Sabra Health Care REIT Inc. said it had completed the previously announced sale of 20 skilled nursing facilities leased to Genesis Healthcare Inc. and located in Kentucky, Ohio and Indiana for $103.3 million. The buyer or buyers were not disclosed; the sale closed on Dec. 22.
The 20 SNFs are part of the original 35 which Sabra put up for sale last year. The REIT said this past September that it plans to sell all 43 remaining Genesis properties in its portfolio for total proceeds of between $425 million and $475 million, in a program it's calling the “Genesis Exodus.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
