Kayne Anderson Buys 34-Property Medical Office, Senior Housing Portfolio From Welltower

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The real estate private equity arm of Kayne Anderson Capital Advisors, Kayne Anderson Real Estate, has completed an acquisition of 34 Welltower properties, including seven senior housing properties in Florida.

The portfolio consists of 27 medical office buildings located across the U.S. along with the senior housing communities. An unspecified third-party company exercised the right of first offer to buy another medical office building property. The gross sales price for all of the properties combined was about $1 billion, according to Welltower.

Kayne Anderson Real Estate will own and operate the senior housing portfolio with its operating partners, MB Real Estate and Bonita Springs, Florida-based Discovery Senior Living. Kayne previously owned all but one of the newly acquired senior housing assets, and had originally sold them to Welltower in 2015, according to Max Newland, leader of the firm’s senior housing real estate team.

The announcement came as Welltower released its second-quarter earnings Wednesday afternoon. Welltower reported normalized funds from operations (FFO) attributable to common stockholders of 86 cents per share in 2Q20, beating analysts’ expectations by three cents.

The senior housing properties, formerly part of Welltower’s senior housing operating (SHO) portfolio, were managed by Discovery Senior Living, and were sold in April. Six of the properties, which were sold in May, were held in a joint venture with an institutional partner in which Welltower kept a stake of almost 54%. Welltower sold the other SHO property — a newly developed community in which Welltower owned a 97.5% stake — in June.

Seventeen of the outpatient medical properties were sold for proceeds of $329 million, with an additional nine properties sold in July for proceeds of $173 million, according to the Toledo, Ohio-based REIT. Welltower expects to complete the final outpatient medical property sale to Kayne Anderson in the third quarter of this year. The REIT also expects the other outpatient medical property sale, pursuant to a right of first refusal, to close in the same time frame.

Chad Lavender and Ryan Maconachy of Newmark Knight Frank acted as advisors for Welltower on the sale, while Wells Fargo Bank financed the senior housing assets through its Freddie Mac Seller Servicer business. Additionally, Capital One Bank NA led financing for the medical office assets.

“This portfolio is a very compelling addition to our platform — institutional quality medical office buildings with long duration leases and seniors housing assets with strong current cash flow and near-term value enhancements through significant capital improvements,” said Kayne Anderson Real Estate Chief Investment Officer David Selznick in a press release. “We believe KA Real Estate’s operator-oriented investment platform positions us very well to continue to acquire attractive assets and create favorable risk-adjusted returns for our investors.”

“On Welltower’s end, the sale significantly enhances our liquidity profile, not only affording us increased flexibility to navigate the ongoing challenges posed by the COVID-19 pandemic, but also allows us to consider opportunistic capital deployment,” Welltower Vice Chair, CIO and COO Shankh Mitra said in a press release.

A representative for Welltower declined to comment further on the sale, but said the company would provide more information during its second-quarter earnings call.

The Covid-19 pandemic impacted Welltower’s senior housing operations and occupancy in the second quarter of 2020. The REIT reported a 79.4% average occupancy rate for its SHO portfolio in July, a marked decrease from the 85.8% occupancy rate it reported in February before the pandemic hit.

Looking ahead, Welltower believes it will shed 125 to 175 basis points of occupancy in the third quarter of 2020, as move-outs are expected to exceed move-ins. And while the REIT is seeing improvements related to the degree of its occupancy declines, the company is also not out of the woods yet, according to Chairman and CEO Tom DeRosa.

“Our seniors housing and post-acute care businesses, in particular, endured significant challenges, which resulted in steep occupancy declines and a sharp increase in expenses through April and early-May,” DeRosa stated in a press release Wednesday. “However, through June and July, we have witnessed a consistent sequential improvement in seniors housing occupancy trends. While we are encouraged by these recent data points, the path to recovery remains far from certain. Therefore, we continue to prioritize the strength of our balance sheet which will enable us to navigate through near-term uncertainty and position ourselves to deploy capital opportunistically.”

 

Source: Senior Housing News

Amazon’s First Neighborhood Health Center Will Be In Dallas-Fort Worth

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Amazon is launching a healthcare pilot with Crossover Health in Irving, offering a clinic designed to serve Amazon employees at nearby fulfillment centers and their families. 

California-based Crossover Health opened its first clinic in the area earlier this year, looking to directly contract with employers in the area and offer direct primary care services that include integrated primary care, musculoskeletal services, and behavioral health and health coaching. The direct primary care practice can be difficult to scale when it asks residents to purchase a membership on top of existing health insurance, but partnering with employers is a win for employers who want value and for the growing clinic. 

“Across the U.S., an increasing number of patients do not have easy access to a primary care physician and instead utilize emergency or urgent care options, which is not only more expensive for patients, but also overlooks important preventative care opportunities,” said Darcie Henry, Amazon’s Vice President of Human Resources via release. “We want to solve that for our employees, and the launch of these new Neighborhood Health Centers will provide a range of quality primary care services for employees across the country – further strengthening Amazon’s industry-leading benefits program, which provides comprehensive healthcare for employees starting on day one of employment.” 

According to Derek Rubino, Senior Program Manager of Workplace Health & Safety at Amazon, Amazon chose DFW because it has one of the largest populations of Amazon employees in the country.

“With large fulfillment centers in Coppell and Haslet and other sites near Dallas, Garland, and Fort Worth, it is a perfect place to try out this model,” Rubino says. “Amazon also looked at primary care usage, health of its employees, and emergency room overuse to make its decision.”

 The pilot program is launching five markets across the country, and by the end of the year, there will be six nearsite clinics to serve Amazon employees in DFW alone. Current and future Crossover locations have been chosen to serve areas where a high concentration of employees live and work. The first clinic is open to all Crossover members, but future Crossover clinics will only be for Amazon employees.

Crossover also acquired a digital health company Sherpaa, allowing it to continue to serve patients during the pandemic. The clinic even has a virtual care studio specifically designed for physicians to do virtual visits so that they don’t use an exam room. 

Rubino says Amazon chose Crossover health because of its virtual health platform, convenient access, and holistic care all under one health. Current Amazon employees can keep their primary care physicians if they want, but Crossover offers another option. Eventually, hours at Crossover will go from 7 a.m. to 11 p.m. six days a week to allow Amazon’s shift workers to access the facility,  

“The landscape is changing drastically,” says Nate Murray, Co-founder and chief revenue officer of Crossover. “I think, through the pandemic, we fell upon something that is more convenient, and even though some people are a little apprehensive [about trying virtual care], they find out that it actually was a great visit and super convenient.”

“We are proud to collaborate with Amazon to support the health and wellness of Amazon’s employees. Crossover Health believes that exceptional primary care is central to continued health and well-being,” said Dr. Scott Shreeve, CEO and co-founder of Crossover Health via release. “Now it’s more important than ever to make care available through multiple channels and across the full continuum. Our advanced primary care model will serve as vital infrastructure to deliver expanded access to care in-person and online to meet the needs of Amazon’s employees and their families.” 

 

Source: D CEO Healthcare Magazine

Partners To Bring SCL Health Anchored Facility To Candelas Community

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Mortenson Development, Inc., the development arm of top-20 U.S. builder Mortenson, just announced it will soon break ground on a new 43,732-square-foot Class A medical office building at the intersection of West 91st Place and Candelas Parkway within the rapidly growing Candelas master-planned community in Arvada, Colorado.

Mortenson has worked closely with SCL Health to deliver more than 40 projects over the last decade. This marks the first project on which Mortenson will act as a developer/owner for the nonprofit healthcare organization.

“Access to quality healthcare has never been more important, and we’re proud to be working with SCL Health to bring this primary care facility to the Candelas community,” said Taber Sweet, Director of Real Estate Development with Mortenson Development, Inc. in Denver. “Acting as a development partner on a vital healthcare project like this is one of many ways Mortenson delivers value to its clients and invests in building stronger communities here in Colorado.”

The new two-story facility, designed by Davis Partnership Architects, will provide the Candelas community with convenient access to primary care physicians. Mortenson was responsible for site planning and design services for the development, including managing all entitlements and city approvals. The project team anticipates breaking ground on the new facility later this summer, with completion anticipated in summer 2021.

“With more than 4,300 new homes currently under construction in Candelas, we recognized the growing need for access to compassionate, high-quality and effective care in this community,” said Steve Chyung, Senior Vice President with SCL Health. “This project represents an important expansion of SCL Health’s network of care. Through our work with Mortenson, we look forward to delivering a new facility that will allow us to provide comprehensive, mission-driven care solutions in the heart of Candelas.”

SCL Health provides coordinated care through eight hospitals, more than 150 physician clinics, and home health, hospice and mental health and safety-net services primarily in Colorado and Montana.

Mortenson partnered with Seavest Healthcare Properties LLC in a joint venture to develop the project. Seavest is a sector-specific investor focused on investing in medical office buildings and outpatient facilities of all types that are strategic to hospitals. Seavest has been a recognized owner and manager of these critical assets for more than 30 years.

“We are pleased to join with Mortenson to assist SCL Health to bring healthcare services to Candelas,” says Jonathan “John” Winer, Seavest Senior Managing Director and Chief Investment Officer. “Mortenson has done a terrific job of designing and planning for the project and we look forward to getting in the ground shortly.”

Associated Bank provided the construction financing loan totaling approximately $9.6 million. Since 2012, Mortenson Development, Inc. has partnered on the development of nearly 700,000-square-feet in the healthcare space.

 

Source: HREI