Westlake Village-based LTC Properties Inc., a real estate investment trust that invests in senior housing and health care properties, has completed modifications of its 35-property Brookdale Senior Living Inc. portfolio – a series of transactions that have resulted in the net proceeds of $23 million and an anticipated net gain of $17 million related to property sales.
The arrangement spanned eight states and totaled nearly 1,500 units.
“LTC committed to successfully position the previous Brookdale portfolio by re-leasing some properties and selling others,” Wendy Simpson, chief executive and chairman of LTC Properties, said in a statement. “We are pleased to have reached a favorable outcome.”
Of the 35 properties impacted, 17 communities across four states – Colorado, Texas, Kansas and Ohio – were re-leased to Brookdale totaling 738 units. The new master lease, which began at the start of the month, will last six years with an initial annual rent of $9.3 million.
Five communities in Oklahoma, with a total of 184 units, were transferred back in November and are now being operated by Oxford Senior Living, an existing LTC operator. Oxford Senior Living agreed to a three-year term with the possibility of one four-year extension at an initial annual rent of $960,000.
Also at the start of the month, five communities in North Carolina spanning 210 units were transferred and are now being operated by Navion Senior Solutions, a new operator to LTC. Navion signed a six-year lease at an initial annual rent of $3.3 million.
Lastly, eight communities across three states, including four in Florida, three in South Carolina and one in Oklahoma, with a total of 341 units, were sold for $28 million. From these sales alone, LTC received $23.2 million in net transaction costs and seller financing proceeds and expects to see a net gain of $17 million.
“Importantly, rent from the previous portfolio has been fully replaced, and we’ve generated sales proceeds to pay down a portion of our debt, which was incurred to pre-fund accretive investments earlier this year,” Simpson said.
According to LTC, the stated transactions reduce LTC’s revenue from Brookdale by 40%.
LTC specializes in the investment of senior housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending.
The company’s current investment portfolio includes 200 properties in 27 states with 30 operating partners. Based on its gross real estate investments, LTC’s investment portfolio is comprised of approximately 50% housing for seniors and 50% skilled nursing homes.