Capital Healthcare Investments (CHI), a wholly-owned subsidiary of MTGE Investment Corp., a publicly traded hybrid REIT, has purchased a portfolio of nine skilled nursing facilities in Virginia with about 1,050 beds. The transaction almost doubles the size of CHI’s portfolio, which now includes 14 skilled nursing facilities and six mostly assisted living/memory care communities. The purchase price was $130 million, or close to $124,000 per bed. Why the high price? The average age is just 15 years and the occupancy is in the low 90s. Five of the nine properties were built in the past 10 years.

The facilities will be leased back to the seller under a 15-year lease with two five-year renewals and 2.5% annual lease escalators. The lease coverage is about 1.4x after a management fee and a capex reserve. CHI hopes to complete another $150 million of investments this year and to grow to a 50/50 mix between skilled nursing and seniors housing. Houlihan Lokey represented the seller in this transaction.