KKR Pays $112M for Senior Housing Portfolio
Two Freddie Mac loans financed this purchase.
PGIM has sold a 285-unit senior housing portfolio consisting of two assets in metro Phoenix. KKR paid $112.3 million for the collection, public records show. JLL Real Estate Capital issued two Freddie Mac loans amounting to a combined $69.9 million for this deal.
JLL Seniors Housing Capital Markets represented the seller and secured the financing for the buyer.
One of the properties, The Watermark at Morrison Ranch, comprises 115 units in Gilbert, Ariz. It traded for $52.3 million, the same source shows.
The other one is Acaya Mesa, a 170-unit asset in Mesa, Ariz. PGIM had owned the community in partnership with its developer, Ryan Cos. That asset changed hands for $60 million.
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Completed in 2019, The Watermark at Morrison Ranch features assisted living and memory care units across two stories. Amenities comprise three dining venues, a gym, a tech center, as well as a library, among others. The property occupies more than 4 acres at 3333 E. Morrison Ranch Parkway, about 29 miles southeast of downtown Phoenix.
Acaya Mesa also debuted in 2019 and consists of a three-story building which encompasses independent living, assisted living and memory care units. Amenities include a cafe, movie theatre, game room, activity room and library, to name a few. Located on nearly 8 acres at 6502 E. Brown Road, Acaya Mesa is approximately 29 miles east of downtown Phoenix and some 20 miles northeast of The Watermark at Morrison Ranch.
Senior housing cap rates compress
Senior housing cap rates continue to compress, according to the latest CBRE investor survey. Answers revealed that 67 percent of respondents said cap rates decreased 17 basis points on average between April and October.
This drop was even steeper than the one registered in April, which was down just 12 basis points. This trend in senior housing, marked by a continuous cap rate compression, indicates that asset valuation may maintain an upward trajectory.
This especially applies to independent living communities delivered between 2019 and 2021. They stand out because any newer deliveries face rising costs, which prohibit many amenities and high-quality interior finishes, according to CBRE.
Last year, one of the largest senior housing deals changed the sector’s top owners ranking. Sonida Senior Living became the eighth-largest such landlord across the U.S. after paying $1.8 billion to acquire CNL Healthcare Properties’ portfolio of 153 senior housing assets.
