MURFREESBORO, Tenn.–National Health Investors, Inc. announced today that it has signed a definitive agreement with an affiliate of Life Care Services (“LCS”) to form a joint venture (“NHI-LCS JV”) to own and operate the Timber Ridge at Talus (“Timber Ridge”) continuing care retirement community (“CCRC”). NHI-LCS JV is acquiring Timber Ridge from a joint venture between Westminster Capital and LCS for a purchase price of $133 million exclusive of closing costs which are estimated to be approximately $2.0 million. Timber Ridge is a Type A CCRC in Issaquah, WA and serves the greater Seattle area. The existing campus was originally built in 2008 and an extensive expansion project was completed in 2017 with financing provided by NHI. The community is over 95% occupied and has 401 units including 330 independent living apartments, 14 assisted living apartments, 12 memory care apartments and 45 skilled nursing beds. NHI’s total investment in the NHI-LCS JV is $125 million and will be partially funded with an $81 million first mortgage from NHI representing approximately 60% of the cost. The timing of the closing is contingent on finalizing transaction documents but is expected to close on or around January 31, 2020.
Under the Agreement:
- The NHI-LCS JV has agreed to purchase Timber Ridge from the current owner which is a joint venture between Westminster Capital and LCS. The purchase price is $133 million which excludes $2.0 million in estimated transaction costs;
- The NHI-LCS JV consists of two parts including a property company (“PropCo”) and an operating company (“OpCo”). The OpCo will be capitalized with $3.2 million initially;
- NHI will own an 80% ownership interest in PropCo and LCS will own a 20% ownership interest;
- NHI will own a 25% ownership interest in OpCo and LCS will own a 75% ownership interest;
- NHI is contributing $43.2 million to PropCo and $800,000 to OpCo for working capital. NHI has also agreed to provide financing to PropCo in an amount equal to 60% of the purchase price, or $81 million, at an interest rate of 5.75%. This financing includes the $60 million note NHI originally funded in 2015;
- LCS is contributing $10.8 million to PropCo and $2.4 million to OpCo for working capital;
- PropCo will lease the community to OpCo under a triple net lease with an initial cash yield of 6.75%. The lease has a 7-year initial term with two 5-year renewal options. The escalators will be CPI-based with a floor of 1.75% and a ceiling of 2.25%;
- NHI is providing a $5 million line of credit to OpCo for working capital needs.
NHI President and CEO Eric Mendelsohn stated, “I’m thrilled to announce this joint venture with LCS, which is highly regarded as one of the premier operators of CCRC properties in the country. Timber Ridge is a first class community in a high barrier to entry market in the Pacific Northwest and an excellent fit to the growing NHI portfolio.”
LCS is the nation’s second largest senior living operator and a leading provider of high-quality senior lifestyle products and services, serving thousands of seniors across the nation. Committed to service, the LCS Family of Companies focuses on development, operations management, marketing and sales management, and strategic planning for Continuing Care/Life Plan and rental communities, rental independent living, assisted living, and memory care communities nationwide. Based in Des Moines, Iowa, the LCS Family of Companies provides a full-service real estate private equity enterprise, insurance, national purchasing consulting services and in-home care. In the field of senior living, Experience is Everything.
Incorporated in 1991, National Health Investors, Inc. (NYSE: NHI) is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI’s portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals.
About Westminster Capital
Westminster Capital manages real estate investment strategies on behalf of private wealth capital through commercial property investments across the United States in Industrial/Distribution, Apartments, Medical Office and Senior Living properties. Founded in 1988, the firm is headquartered in Lake Forest, Illinois.