LTC Properties Inc. announced in recent weeks that it closed the purchase of nearly half a dozen senior living communities for about $235 million.
The news comes as the Westlake Village-based real estate investment trust said this past week that it had also offloaded two of its Florida-based skilled nursing facilities for $42 million.
On Sept. 30, LTC reported a $195 million acquisition of five independent living, assisted living and memory care communities encompassing 521 units in Wisconsin – all owned and operated by St. Louis Park, Minnesota-based Lifespark.
Four days prior to that, LTC closed on a $40 million purchase of two senior housing communities in Kentucky, adding 158 units within assisted living and memory care to its portfolio. The communities were operated by Charter Senior Living, based in Naperville, Illinois.
The addition of these properties – along with the pending sales of other communities this year – is part of a larger push to strengthen LTC’s overall investment portfolio, the company said. LTC particularly has focused on growing its larger senior housing operating portfolio (SHOP), which the REIT is expecting to double in size by the end of the year, the company said during its earnings conference call in August.
“These transactions demonstrate the continued successful execution of strategically recycling capital to optimize our portfolio for growth,” said Clint Malin, LTC’s co-chief executive officer, in the Oct. 7 announcement. “By selectively divesting non-core, older skilled nursing centers at attractive cap rates, we are unlocking value through asset sales by redeploying capital to support LTC’s long-term external SHOP growth objectives.”
With the completion of its expected sales this year, LTC’s portfolio will increase to about 62% of its gross real estate investments, with the company’s SHOP investments accounting for about 19%, the company reported in its October release. Within the SHOP segment, that represents about 1,580 units across five operators – three of which are new to the company.
Also, as of the end of September, LTC closed about 80% of its projected $460 million in the acquisition pipeline for 2025, the company said. It expects to close its additional purchases by the end of the year.
“Our disciplined approach reflects LTC’s ongoing commitment to balance sheet strength and flexibility, strategic SHOP growth, and long-term shareholder value,” said Pam Kessler, LTC’s co-chief executive, in a statement. “We remain focused on strategically allocating capital to advance our growth objectives and reinforce the quality, composition and resilience of our portfolio.”
LTC’s mission comes as demand for senior housing among baby boomers soar, particularly for independent living and active adult lifestyle residences, according to the National Investment Center for Senior Housing and Care.
The senior living occupancy rate for the top 31 primary markets climbed to 88.7% in of the second quarter, the 17th straight quarter of gains, NIC data showed. Among active adult residences, the occupancy rate was over 92% during the quarter.
NIC, which has tracked such metrics since 2006, also reported that about 4,000 new senior living units will be developed over the next two years. However, for the supply of housing to outweigh the growing demand, there will need to be 100,000 new beds each year through 2040.
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