Invesque (TSX: IVQ) sold seven skilled nursing facilities in Illinois for $101.3 million to an unnamed buyer as it continues its push towards focusing on private pay seniors housing, the company said on Monday.
The company’s CEO and chairman, Scott White, spoke to Skilled Nursing News on the company’s latest move amid its ongoing business strategy to concentrate its portfolio on senior housing.
“Years ago, the idea was to build a highly diversified portfolio of cash generating health care oriented real estate assets across different types of assets – skilled nursing, seniors housing, medical office building, and maybe even other asset classes,” White said.
However, he said, “We weren’t able to grow fast enough to execute on that strategy,” and the company decided to reduce its exposure to SNFs as well as medical office buildings.
The latest transaction marks a “pivotal moment” for Invesque, White also said in a press release, adding, “Our strategy has evolved to focus on private-pay seniors housing, and this transaction represents a substantial leap in that direction.”
And while Illinois has been noted for an oversaturation of SNFs with low occupancy levels, White told SNN that Invesque’s sale of the recent SNFs had little to do with broader market conditions and more to do with the company’s business strategy to restructure its portfolio.
“We had announced that we were going to exit skilled nursing probably a year or two ago. So any recent problems in the market or anything is sort of irrelevant to us. We just couldn’t continue to grow a portfolio and build a business – you don’t have enough capital to grow everything – so we decided to focus,” White said.
The majority of Invesque’s SNF assets have been sold, with around a handful or so remaining, while most of the medical office buildings have also been sold within the last year or so, with only two MOBs remaining in its portfolio, White said.
The latest divested SNFs were previously part of a net lease with Symphony Care Network. The deal, also shared during its fourth quarter earnings call, closed on June 1.
The undisclosed buyer has other assets in Illinois and is familiar with market conditions in the state, White said.
SymCare will continue to lease one additional facility from Invesque, which the company also expects to sell in the next 30 days. There was a minor delay in sale of this eighth SNF due to “logistical” reasons, White said.
“It is my full expectation and the buyer’s expectation that it’ll sell later this month,” he said.
Following the sale of these SNFs, the proportion of net operating income from SNFs will represent approximately 20% of Invesque’s NOI on a pro forma basis, the company said.
Invesque has been reducing its exposure and concentration to SymCare through strategic acquisitions in recent years, and after July 1 will have net zero contribution from SymCare as a result of the current and pending sale.
The Canadian-listed company’s portfolio of properties leased to SymCare was acquired as part of Invesque’s initial public offering in 2016, with SymCare representing approximately 75% of Invesque’s NOI prior. Invesque made additions in 2019, and divested some assets in 2021.
The Indiana-based company’s portfolio includes investments primarily in independent living, assisted living, and memory care, which are operated under long-term leases and joint venture arrangements. Invesque’s assets also include investments in owner-occupied seniors housing properties in which the company owns the real estate, the licensed operations, and provides management services through Commonwealth Senior Living, a Delaware-based limited liability company.
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