Sabra Health Care REIT, Inc. announced that, subject to certain closing conditions, the Company along with Sienna Senior Living have agreed to acquire a high-quality Canadian senior housing portfolio for total consideration of C$307.5 million (USD $243 million).
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Sabra and Sienna have announced the pending acquisition of a portfolio of 11 high-quality senior housing communities strategically positioned across the provinces of Ontario and Saskatchewan, which will be acquired through a newly formed 50/50 joint venture. The predominantly independent living portfolio consists of mostly newer construction with an average age of six years, which positions it well to capture demand growth across the senior housing industry as Canada’s 75+ population is expected to double over the next 20 years. Importantly, this transaction will also deepen the strategic relationship between Sabra and Sienna. Sienna is a world-class owner/operator of senior housing and long-term care communities that currently manages eight Canadian independent living communities that are wholly owned by Sabra.
Talya Nevo-Hacohen, CIO of Sabra, said, “We have had a longstanding relationship with the Sienna team and after evaluating several investments over the years we are pleased to deepen our strategic relationship through the pending acquisition of a high-quality senior housing portfolio with substantial scale. The combination of Sabra and Sienna’s asset management and operating skillsets allow us the opportunity to improve performance and create value with this attractive portfolio.”
The per unit basis of this portfolio is approximately C$295,000 (USD $230,000), which is below replacement cost and attractive amidst a backdrop of escalating construction costs.
Excluding one recently constructed community in lease-up, the portfolio includes ten communities with 936 units and an estimated value of C$275 million (USD $217 million). Year-to-date as of September 30, 2021, average occupancy for these ten communities was approximately 90%. These communities are expected to have a year-one yield of roughly 6%. The lease-up community was opened in 2019 and has 112 units. Upon stabilization, this community is expected to generate a yield higher than 6%.