AdventHealth, a faith-based, not-for-profit health system headquartered in Altamonte Springs, Florida, divested its wholly-owned skilled nursing portfolio in central and west Florida as part of a strategic exit from the sector. The portfolio included seven high barrier-to-entry locations with 833 total licensed beds. Nearly all facilities were four and five-star CMS rated, with two assets constructed in 2018 and 2019. Locations were strategically situated within the health system’s footprint including some hospital-adjacent sites that allowed for specialized care for higher acuity patients. The portfolio also boasted high referral volume, quality payor mix and high overall census, and operating margin upside following Florida’s Medicaid reimbursement rate increase.
All of this allowed Blueprint Healthcare Real Estate Advisors, which was chosen by AdventHealth to lead the sale process, to generate a competitive bidding environment among multiple prospective buyers. The prevailing bidder was New York-based Infinite Healthcare along with its local operating subsidiary, Solaris Healthcare, which was selected for its patient-centric approach delivering quality care and its ability to transact and successfully transition the regional portfolio despite industry and financing headwinds. Blueprint also advised the buyer through the challenging capital market environment to structure a strategic financing outcome with multiple lenders to successfully fund and close the transaction. Michael Segal and Ben Firestone handled the deal.
Earlier in the second quarter, Blueprint also revealed that it advised AdventHealth in its sale of its Texas and Kansas skilled nursing facilities to CareTrust REIT for around $17 million, or $60,000 per bed. CareTrust’s initial investment in the facilities, inclusive of capex commitments and transaction costs, was approximately $17.2 million.
The deal included AdventHealth Care Center Burleson, a 178-bed skilled nursing facility built in 1988 that was 48% occupied, and AdventHealth Care Center Overland Park, a 102-bed facility built in 1989 that was 61% occupied. Austin, Texas-based operator Momentum Skilled Services will operate Burleson going forward, and for the Kansas property CareTrust entered into a new tenant relationship with an affiliate of Summit Healthcare Management, LLC, a new Kansas-based skilled nursing operator owned by Ben Bryant, an experienced operator of skilled nursing and seniors housing facilities in the Midwest.
CareTrust funded the deal with cash, which probably helped the REIT’s bid. Initial annual cash rent for the facilities will be approximately $1.63 million. The initial term of Momentum’s master lease with CareTrust was also extended by four years in connection with the transaction. The lease with Summit Healthcare provides for an initial term of fifteen years with two, five-year renewal options and includes annual, CPI-based escalators. Blueprint’s Michael Segal and Ben Firestone worked on the deal.
