CNL Financial Group

A specialist in sponsoring non-tradable REITs, CNL Financial Group has taken three of its investments "full circle" in the past decade.

Sharon Yester

By Keat Foong, Executive Editor

A specialist in sponsoring non-tradable REITs, CNL Financial Group has taken three of its investments “full circle” in the past decade. Companies that executed an exit strategy included CNL Hotels & Resorts, which was bought in April 2007 by a fund managed by Morgan Stanley Real Estate and Ashford Hospitality Trust in a transaction valued at more than $6.6 billion. And CNL Retirement Properties Inc. was transferred to ownership by Health Care Property Investors Inc. in October 2006 for $5.3 billion.

Building on the success, CNL currently manages four non-tradable REITs: CNL Lifestyle Properties Inc., CNL Healthcare Trust Inc., Global Growth Trust Inc. and Global Income Trust Inc. Fifty seven seniors housing properties, mostly assisted living, are owned by CNL Lifestyle Trust and CNL Healthcare Trust. In addition, Global Growth Trust has three apartment communities totaling some 900 units under development. The properties, the first of which will initiate tenant intake in June, are located in Charleston, S.C., Charlotte, N.C. and Tampa, Fla.

CNL Healthcare Trust is seeking to acquire assisted living and Alzheimers care housing, as well as some independent living and medical office properties, says Sharon A. Yester, head of asset management at CNL Financial. Seniors housing properties owned by CNL are located across the nation. The investment firm favors properties that are well positioned in the region, and it seeks to partner with operators that have developed and managed the communities. “Seniors are very discerning,” says Yester, in explaining the company’s predisposition towards picking up newer properties.

CNL Healthcare Trust announced its first asset acquisition in February, with the purchase of five seniors housing communities from affiliates of Primrose Retirement Communities LLC for about $84 million. The properties, totaling 394 seniors housing units, were built between 2004 and 2007, and were located in Casper, Wyo., Grand Island, Neb., Billings, Mont., Marion, Ohio, and Mansfield, Ohio. Primrose will continue to operate the 95-percent occupied communities under a long-term triple net lease.

“Seniors housing fundamentals are extremely strong. Many people are turning 65,” says Yester. Yester says CNL’s non-tradable REIT trusts have been successful closing deals at cap rates of 8 to 10 caps. CNL will consider cap rates in the mid- to high 7 percent range depending on the opportunity. Yester says that CNL REITs realize dividends of about 7 percent, in addition to  upside gains when the trusts are liquidated.

Watch a video interview with Sharon Yester here.