SNH Begins $900M Sell-Off With Three-Building Skilled Nursing Deal

A week after announcing plans to sell all of its standalone skilled nursing assets as part of a larger portfolio reshuffle, Senior Housing Properties Trust (NYSE: SNH) pulled off a three-SNF sale in California.

The real estate investment trust (REIT) sold three buildings in Van Nuys, LaSalette, and Thousand Oaks, Calif., with a total of 276 beds. Along with a two-story, 15,000-square-foot medical office building in Thornton, Colo., the total portfolio had a sale price of $24.1 million.

“The sales were part of SNH’s previously announced disposition plan to sell up to $900 million of assets in connection with the restructuring of its business arrangements with Five Star Senior Living Inc.,” the Newton, Mass.-based company wrote in a Thursday statement announcing the transaction.


As of the company’s first-quarter earnings call last Thursday, the company had entered agreements to sell 20 of the 38 standalone SNFs still in its portfolio, with three already sold before the start of the second quarter.

“We’re marketing and selling all of our standalone skilled nursing, and are very far along in the process of that,” president and COO Jennifer Francis said during the discussion. “Some of these are really underperforming and struggling assets.”

The SNF asset disposition is part of a larger plan to overhaul its portfolio and relationship with Five Star, which operates more than 250 senior living campuses and freestanding SNFs. Back in April, the REIT announced a plan to raise its ownership stake in the Newton, Mass.-based Five Star from 8% to 34% by the start of 2020, while also converting its master leases with its Five Star-operated properties to a RIDEA structure.


Freestanding skilled nursing assets had historically only generated about 3% of SNH’s total annual revenue.

Executives at the REIT were confident last week that the properties would attract strong market interest and soon be off of SNH’s books.

“We are conducting broker interviews over the next few days, and then we’ll hit the market with them,” Francis said. “We’re not in discussions with any buyers right now, though we have a lot of excited brokers because they know that the market is good for these assets.”

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