Sabra Health Care REIT Inc., Enlivant and TPG Real Estate, the real estate platform of TPG, recently revealed that Sabra has entered into definitive agreements to acquire a 49% equity interest in entities that collectively own 183 senior housing communities managed by Enlivant. The transaction values the portfolio at $1.62 billion and Sabra’s 49% minority interest investment at $371 million.
The Enlivant Joint Ventures own 183 senior housing communities, totaling 8,280 units geographically diversified across 20 states. Enlivant’s communities are located in markets that exhibit stable demographics and limited new supply and are nearly 100% private pay. The properties are well maintained, and the majority of the portfolio consists of homogenous, purpose‐built assets, which Sabra expects to drive operating efficiencies, according to a prepared statement.
The portfolio is currently 82% occupied, up from 60% in 2013 when Enlivant began managing the communities, and Sabra believes there are opportunities for additional NOI growth as the portfolio reaches full stabilization.
According to the release, the transaction creates a strategic partnership with a highly experienced and aligned management team with long track record of driving significant operational and financial growth. Enlivant has built an industry-leading brand with an outstanding and highly scalable national operating platform. The transaction also further diversifies the Sabra portfolio by tenant and increases Sabra’s NOI derived from private pay Senior Housing
Enlivant, based in Chicago, is one of the largest senior living operators in the U.S., managing more than 220 communities nationwide and generating nearly all of its revenues from private pay residents. Enlivant is owned by private equity funds managed by TPG, which will remain the 51% majority owner in the Enlivant Joint Ventures following Sabra’s initial investment.
Following the closing of the transaction, Enlivant will continue to manage the Enlivant Joint Ventures under a new, 10-year management contract with two, sequential five-year extension options. TPG Real Estate will separately continue to own over 40 senior living communities mainly acquired in late 2016, which will continue to be managed by Enlivant.
Rick Matros, CEO and chairman, said: “The Enlivant Joint Ventures provide us with a unique opportunity to partner with an industry-leading management team while continuing our portfolio diversification strategy. The Enlivant management team has done an incredible job in turning around this portfolio since acquiring it in 2013. Jack Callison is a wonderful operator with an impeccable track record. He has led a first-class team in one of the more impressive turnarounds in the space. The same-store average daily rate, occupancy and NOI for this portfolio have increased by 18%, 20% and 65%, respectively, since the trough after TPG’s acquisition in 2013, which is a testament to the Enlivant team’s strong capabilities and expertise. The strong performance of this portfolio along with the embedded growth opportunities makes this investment an ideal catalyst to the transformation of our portfolio post-CCP merger. We are thrilled to partner with Jack and his team and look forward to having a platform that will enable Sabra to continue our growth in the senior housing space. We are excited about this investment and believe that this opportunity is a direct benefit of our merger with CCP.”