A month ago, we learned of a couple of large divestments by New Senior Investment Group, in a move to bring its share price up to where management believes it should be, by increasing the share of its independent living portfolio, decreasing its Holiday Retirement exposure, and reducing its concentration in the three states of Florida, Texas and California. We have also just learned that Cody Tremper and Mike Garbers of Greystone represented SNR in the transaction.
Spread out across Central Florida, the portfolio consists of nine properties and were all formerly operated by Holiday Retirement. However, operations have dropped off since Holiday stopped having live-in managers at its communities, a policy implemented in 2016. The portfolio is a majority assisted living (54% of the 1,140 total units), with 34% independent living and 12% memory care, and range in size from a 58-unit AL/MC community to a 285-unit IL/AL/MC property. And while there is in-place cash flow (an NOI margin of 16.4% on approximately $34 million of revenues), there is plenty of opportunity to add value and to improve on the 82% occupancy. Griffin-American Healthcare REIT IV purchased the properties for $109.5 million, or $96,050 per unit, and has hired Meridian Senior Living to take over operations.
With this deal, SNR improves its same store revenue per occupied room by 2.5% to $3,085, same store occupancy by 60 basis points to 86.8% and its same store NOI margin by 190 basis points to 34.5%. And SNR will repay about $178 million of existing debt with a weighted average interest rate of 4.6% with the proceeds of this sale and of another simultaneous announced sale of six triple-net leased properties for $186 million. While Griffin-American gave itself plenty of margin to increase value, on a per-unit basis, over the next few years. Sounds like a win-win transaction.
