SNF, Medical Office Assets on Chopping Block as Invesque Continues Seniors Housing Strategy

As Invesque (TSE: IVQ.U) continues its move toward a primarily private-pay, seniors housing portfolio, the company announced it is down to only four skilled nursing operator relationships across 17 properties.

The Canadian-listed company with U.S. headquarters in Indiana announced its latest SNF divestitures during the third quarter, according to CEO Scott White: the $25 million sale of two skilled nursing facilities in Nebraska to former operator Hillcrest Health Services, representing a $168,000 price per bed.

The price was “very favorable” compared to average price per bed for other SNFs at $100,000 per bed, Invesque Chief Investment Officer Adlai Chester said during an earnings call on Wednesday.

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“This transaction further illustrates that real estate quality matters, and our portfolio is one of the youngest in the industry based on effective age,” added Chester.

The sale represents a “meaningful decrease” from two years ago, he said.

Five years ago, more than 75% of the company’s pro forma NOI came from its skilled nursing assets. As of Q4 2021, about 60% of pro forma NOI came from private-pay senior housing assets. Invesque sold more than $210 million in assets in 2021, with more than $100 million coming in Q4.

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Invesque also sold a medical office building in Orlando, Florida, for $9.85 million, the company reported, along with nine of its 10 office buildings in Canada for $73.6 million.

“Each of these dispositions is strategic and helps move the needle toward becoming a predominantly private-pay, seniors housing company, which is what we set out to accomplish starting in 2021,” said White.

Invesque has 77 properties as of Sept. 30, a decrease from 102 properties at Dec. 31, 2021. SNFs now represent just over 22% of Invesque’s total assets.

After quarter end, Invesque signed off on the sale of yet another medical building – Brantford Medical Center in Ontario, Canada – for $5.8 million.

The deal is set to close in November, while Invesque’s three remaining medical office buildings in the U.S. are set to sell in the first half of 2023, the company reported.

“Managing medical office properties is labor intensive. I’m very happy that our team can focus more of its efforts on our core investments,” Chester said of the divestitures.

Invesque reported $49.7 million in revenue during the quarter, an increase compared to $49.4 million in Q3 2021. The company saw a net loss of $13.5 million for the quarter, higher than its $5.1 million loss during the same quarter in 2021.

Its Commonwealth Senior Living portfolio, along with other seniors housing operators, saw lingering impacts of Covid-19 remain at a minimum as these types of communities saw occupancy at or near pre-pandemic levels, Chester added.

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