NHI Announces Agreement to Form a Joint Venture with LCS to Buy Timber Ridge CCRC in Issaquah, WA
January 07 2020 - 6:00AM
Business Wire
National Health Investors, Inc. (NYSE:NHI) announced today that
it has signed a definitive agreement with an affiliate of Life Care
Services (“LCS”) to form a joint venture (“NHI-LCS JV”) to own and
operate the Timber Ridge at Talus (“Timber Ridge”) continuing care
retirement community (“CCRC”). NHI-LCS JV is acquiring Timber Ridge
from a joint venture between Westminster Capital and LCS for a
purchase price of $133 million exclusive of closing costs which are
estimated to be approximately $2.0 million. Timber Ridge is a Type
A CCRC in Issaquah, WA and serves the greater Seattle area. The
existing campus was originally built in 2008 and an extensive
expansion project was completed in 2017 with financing provided by
NHI. The community is over 95% occupied and has 401 units including
330 independent living apartments, 14 assisted living apartments,
12 memory care apartments and 45 skilled nursing beds. NHI’s total
investment in the NHI-LCS JV is $125 million and will be partially
funded with an $81 million first mortgage from NHI representing
approximately 60% of the cost. The timing of the closing is
contingent on finalizing transaction documents but is expected to
close on or around January 31, 2020.
Under the Agreement:
- The NHI-LCS JV has agreed to purchase
Timber Ridge from the current owner which is a joint venture
between Westminster Capital and LCS. The purchase price is $133
million which excludes $2.0 million in estimated transaction
costs;
- The NHI-LCS JV consists of two parts
including a property company (“PropCo”) and an operating company
(“OpCo”). The OpCo will be capitalized with $3.2 million
initially;
- NHI will own an 80% ownership interest
in PropCo and LCS will own a 20% ownership interest;
- NHI will own a 25% ownership interest
in OpCo and LCS will own a 75% ownership interest;
- NHI is contributing $43.2 million to
PropCo and $800,000 to OpCo for working capital. NHI has also
agreed to provide financing to PropCo in an amount equal to 60% of
the purchase price, or $81 million, at an interest rate of 5.75%.
This financing includes the $60 million note NHI originally funded
in 2015;
- LCS is contributing $10.8 million to
PropCo and $2.4 million to OpCo for working capital;
- PropCo will lease the community to OpCo
under a triple net lease with an initial cash yield of 6.75%. The
lease has a 7-year initial term with two 5-year renewal options.
The escalators will be CPI-based with a floor of 1.75% and a
ceiling of 2.25%;
- NHI is providing a $5 million line of
credit to OpCo for working capital needs.
NHI President and CEO Eric Mendelsohn stated, “I’m thrilled to
announce this joint venture with LCS, which is highly regarded as
one of the premier operators of CCRC properties in the country.
Timber Ridge is a first class community in a high barrier to entry
market in the Pacific Northwest and an excellent fit to the growing
NHI portfolio.”
About LCS
LCS is the nation’s second largest senior living operator and a
leading provider of high-quality senior lifestyle products and
services, serving thousands of seniors across the nation. Committed
to service, the LCS Family of Companies focuses on development,
operations management, marketing and sales management, and
strategic planning for Continuing Care/Life Plan and rental
communities, rental independent living, assisted living, and memory
care communities nationwide. Based in Des Moines, Iowa, the LCS
Family of Companies provides a full-service real estate private
equity enterprise, insurance, national purchasing consulting
services and in-home care. In the field of senior living,
Experience is Everything. For more information, visit
LCSnet.com.
About NHI
Incorporated in 1991, National Health Investors, Inc. (NYSE:
NHI) is a real estate investment trust specializing in
sale-leaseback, joint-venture, mortgage and mezzanine financing of
need-driven and discretionary senior housing and medical
investments. NHI’s portfolio consists of independent, assisted and
memory care communities, entrance-fee retirement communities,
skilled nursing facilities, medical office buildings and specialty
hospitals. For more information, visit www.nhireit.com.
About Westminster Capital
Westminster Capital manages real estate investment strategies on
behalf of private wealth capital through commercial property
investments across the United States in Industrial/Distribution,
Apartments, Medical Office and Senior Living properties. Founded in
1988, the firm is headquartered in Lake Forest, Illinois.
www.WestminsterCapitalllc.com
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements regarding the Company's, tenants',
operators', borrowers’ or managers' expected future financial
position, results of operations, cash flows, funds from operations,
dividend and dividend plans, financing opportunities and plans,
capital market transactions, business strategy, budgets, projected
costs, operating metrics, capital expenditures, competitive
positions, acquisitions, investment opportunities, dispositions,
acquisition integration, growth opportunities, expected lease
income, continued qualification as a real estate investment trust
(“REIT”), plans and objectives of management for future operations,
continued performance improvements, ability to service and
refinance our debt obligations, ability to finance growth
opportunities, and similar statements including, without
limitation, those containing words such as “may”, “will”,
“believes”, “anticipates”, “expects”, “intends”, “estimates”,
“plans”, and other similar expressions are forward-looking
statements. Forward-looking statements involve known and unknown
risks and uncertainties that may cause our actual results in future
periods to differ materially from those projected or contemplated
in the forward-looking statements. Such risks and uncertainties
include, among other things; the operating success of our tenants
and borrowers for collection of our lease and interest income; the
success of property development and construction activities, which
may fail to achieve the operating results we expect; the risk that
our tenants and borrowers may become subject to bankruptcy or
insolvency proceedings; risks related to governmental regulations
and payors, principally Medicare and Medicaid, and the effect that
lower reimbursement rates would have on our tenants’ and borrowers’
business; the risk that the cash flows of our tenants and borrowers
would be adversely affected by increased liability claims and
liability insurance costs; risks related to environmental laws and
the costs associated with liabilities related to hazardous
substances; the risk that we may not be fully indemnified by our
lessees and borrowers against future litigation; the success of our
future acquisitions and investments; our ability to reinvest cash
in real estate investments in a timely manner and on acceptable
terms; the potential need to incur more debt in the future, which
may not be available on terms acceptable to us; our ability to meet
covenants related to our indebtedness which impose certain
operational limitations and a breach of those covenants could
materially adversely affect our financial condition and results of
operations; the risk that the illiquidity of real estate
investments could impede our ability to respond to adverse changes
in the performance of our properties; risks associated with our
investments in unconsolidated entities, including our lack of sole
decision-making authority and our reliance on the financial
condition of other interests; our dependence on revenues derived
mainly from fixed rate investments in real estate assets, while a
portion of our debt bears interest at variable rates; the risk that
our assets may be subject to impairment charges; and our dependence
on the ability to continue to qualify for taxation as a real estate
investment trust. Many of these factors are beyond the control of
the Company and its management. The Company assumes no obligation
to update any of the foregoing or any other forward looking
statements, except as required by law, and these statements speak
only as of the date on which they are made. Investors are urged to
carefully review and consider the various disclosures made by NHI
in its periodic reports filed with the Securities and Exchange
Commission, including the risk factors and other information
disclosed in NHI’s Annual Report on Form 10-K for the most recently
ended fiscal year. Copies of these filings are available at no cost
on the SEC’s web site at http://www.sec.gov or on NHI’s web site at
http://www.nhireit.com.
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Dana HamblyDirector, Investor RelationsPhone: (615)
890-9100
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