Senior Housing Properties Trust recently revealed that it remains on schedule to complete the restructuring of its business arrangements with its largest tenant, Five Star Senior Living Inc., or Five Star, as of January 1, 2020.
In addition, SNH revealed the completion of $207.8 million in property sales during the fourth quarter of 2019 as part of its previously announced plan to sell up to $900 million of properties in connection with the restructuring. SNH also recently completed the acquisition of a 169-unit Active Adult rental property in Plano, TX for approximately $50.3 million and obtained a new, short-term $250 million senior unsecured term loan.
Since the conference call regarding SNH’s third quarter 2019 financial results, SNH has completed the sale of approximately $149.8 million of senior living and medical office properties. The sales include:
- a portfolio of seven senior living communities with a combined 566 units located in California, Oregon, Arizona, Florida and Rhode Island for approximately $103.3 million.
- a 150-unit senior living community located in Redmond, WA for $32.5 million, and
- a 95,000 square foot medical office building located in Atlanta, GA for $14 million.
As part of this disposition plan, SNH has sold, or currently has under agreement to sell, approximately $678 million of properties. SNH also currently has an additional $231 million of properties with offers from prospective buyers. SNH expects to use the proceeds from these sales to repay debt and for general business purposes, including potential acquisitions.
Acquisition of 169-Unit, Active Adult rental property in Plano, TX:
During the fourth quarter of 2019, SNH acquired a 169-unit, Class A, Active Adult rental property built in 2016 and located in Plano, TX, a submarket of Dallas, for approximately $50.3 million. SNH funded this acquisition with proceeds from dispositions and borrowings under its $1 billion unsecured revolving credit facility. Within a 10 mile radius of this property, SNH owns two senior living facilities: the 245-unit Forum at Park Lane and the 143-unit Premier Residences of Dallas.
“SNH is excited to add this high-quality asset to our diverse portfolio of healthcare properties,” said Jennifer Francis, President and Chief Operating Officer of SNH. “The age-restricted Active Adult rental apartment segment has gained popularity with baby boomers due to their interest in the active lifestyle, wellness and socialization benefits offered in these communities without the services and care that are provided in more traditional senior living communities. We believe the addition of this Active Adult property to our portfolio will capture the evolving real estate needs of the baby boomer generation, provide additional diversification of our assets and create synergies with our existing independent and assisted living communities.”
Short-Term $250 Million Senior Unsecured Term Loan Facility:
SNH also announced that, on December 12, 2019, it obtained a new short-term $250 million senior unsecured term loan. The maturity date of the term loan is June 12, 2020, which may be extended by six months subject to the satisfaction of certain conditions, including the payment of an extension fee. SNH used the net proceeds from this term loan, together with proceeds from its property dispositions, borrowings under its revolving credit facility and cash on hand, to prepay in full its $350 million senior unsecured term loan that was scheduled to mature on January 15, 2020. The interest rate on the new term loan is LIBOR plus 125 basis points, subject to adjustment based on changes to SNH’s credit ratings.