VanSickle Investments Participates in Horizon Real Estate’s purchase of Cal State University Student Housing Project “The Element”. VSI has invested in the $37M purchase of the 288 unit “The Element”. The Element is a 2004 built, student specific housing project at Cal State Univ Sacramento. This is the 19th Student housing invesmtment made by VSI.
October 16, 2012. There had been rumors that HCP, Inc. might be buying Emeritus Senior Living, but it looks like it is buying only a portion of the assets managed by the company. HCP has agreed to pay $1.73 billion for 133 senior living communities with 10,350 units, or about $167,000 per unit, which make up most of the joint venture portfolio of the former Sunwest Management properties purchased in 2010 by The Blackstone Group (80%) and Emeritus and Columbia Pacific Advisors (the remaining 20%).
The purchase two years ago was for 144 properties at $110,000 per unit. Nine additional properties that Emeritus will be purchasing from the Blackstone J/V, to be financed with $52 million of debt from HCP, may be the ones to make up most of the difference. The cap rate on the 99 stabilized properties is 6.8%, while the cap rate on the 34 non-stabilized properties (74% occupancy) is 5.7%, for a blended cap rate of 6.6%. This is aggressive pricing, but reflects the low cost of capital for REITs these days.
The deal is a huge win for Blackstone in just two short years, as well as for Emeritus, which will take in more than $140 million of proceeds from the sale and will continue to manage them under a triple net lease with HCP. As part of the agreement, Emeritus has agreed to invest $30 million in the properties, which is on top of the $40 million the J/V invested over the past two years, which we are sure was necessary. The overall portfolio occupancy has increased from 80% to 87% in two years, which is a significant change and which we believe is above budget.