Commonwealth Senior Dwelling is on the cusp of getting a brand new proprietor.
Well being care actual property firm Invesque (TSX: IVQ.U and IVQ) has reached a definitive settlement to promote its curiosity within the Commonwealth administration firm and in 20 Commonwealth properties. That is on the heels of Invesque promoting seven different Commonwealth senior dwelling communities, the corporate introduced in an Oct. 17 press launch.
The Commonwealth staff is happy about these modifications and believes that they may profit all events concerned, Commonwealth CEO and President Earl Parker instructed Senior Housing Information.
Invesque CEO Adlai Chester conveyed related sentiments in emailed feedback to SHN, and he emphasised {that a} discount in leverage was the “main driver” for the deal from the Invesque perspective.
After the discharge of $222 million in mortgage debt and $58.6 million in most well-liked fairness and another changes, Invesque will use the proceeds of the Commonwealth administration firm and 20-property sale partly to cut back borrowings below its credit score facility with KeyBank.
If all lately introduced transactions shut as anticipated, Invesque’s leverage can be beneath 50%, representing greater than a 30% discount since June 30.
“For the final 18 months, Invesque has been laser centered on bettering our stability sheet, and this proposed transaction is in-line with that technique,” Chester instructed SHN.
He and Parker declined to reveal the id of the possible purchaser, however confirmed {that a} single entity is lined as much as purchase the 20 properties in addition to the Commonwealth administration firm.
The CEOs additionally declined to share the acquisition worth. The pricing is above Commonwealth’s depreciated ebook worth, based on Invesque’s press launch.
“The gross sales worth was sufficient sufficient to perform our targets as an organization,” Chester instructed SHN.
Invesque initially acquired the Commonwealth administration firm and 20 communities for $340 million in 2019, and subsequently continued to develop the portfolio.
The seven Commonwealth communities that already traded in a separate current transaction included three in Maryland, three in Virginia and one in Tennessee. That deal got here in at $65.4 million, which equates to $184,000 per unit. Invesque used the proceeds to repay property-level mortgage debt and scale back its KeyBank borrowings by $6.1 million, whereas retaining $7.8 million to protect liquidity.
The customer of the seven communities has not been disclosed, however the administration of these belongings transitioned to an operator affiliated with the brand new proprietor, efficient as of the deal closing on Oct. 15.
Bettering the monetary outcomes of the seven-property portfolio and paving the best way for this sale was one of many notable accomplishments of Commonwealth’s partnership with Invesque, Parker instructed SHN.
He and Chester each are bullish on the way forward for senior housing. At its founding, Invesque was primarily invested in expert nursing however has been on a years-long journey to eliminate SNF belongings and rebalance the portfolio towards private-pay senior housing. Actually, Invesque bought a talented nursing facility in Illinois as lately as Sept. 23. Following that $16.5 million sale, Invesque now owns solely two SNFs.
The Commonwealth sale doesn’t sign any change in Invesque’s concentrate on senior housing.
“Put up this transaction, and different beforehand introduced transactions, Invesque can be a low levered seniors housing firm with a core portfolio of robust money flowing belongings,” Chester mentioned.
Parker instructed SHN he’s additionally optimistic in regards to the future for senior housing, citing demographic tailwinds, the slowdown in new improvement, and enhancements in staffing challenges, together with much less intense upward wage pressures.
Commonwealth’s future
The plan is for Commonwealth to proceed working the 20 communities which can be poised to alter palms from Invesque to the brand new proprietor.
“The communication with the customer is that they’re excited by what we do and never on the lookout for any vital change in technique or staff,” Parker instructed SHN.
Commonwealth operates 13 communities along with the 20 communities concerned within the Invesque deal. Charlottesville, Virginia-based Commonwealth has a concentrated footprint in Virginia and Maryland, and likewise operates in Pennsylvania, Connecticut and Michigan.
Even after the current seven-community exit, Commonwealth’s total resident capability is barely about 50 residents decrease than it was right now in 2023, on account of some bigger communities being added, Parker famous.
Attaining this stage of scale is likely one of the foremost legacies of the Invesque period, he mentioned. Commonwealth operated 24 communities when Invesque acquired the administration firm in 2019, and the portfolio shortly expanded to 34 communities.
“It gave us the impetus to leap up a stage in portfolio dimension,” Parker mentioned, of becoming a member of up with Invesque.
Massive-picture, Commonwealth stays centered on bettering resident and affiliate satisfaction and monetary outcomes, based on Parker. Extra particularly, a high precedence is the rollout of a brand new wellness program.
This system, referred to as Journeys, is being piloted at eight communities and leverages the TSOLife know-how platform that Commonwealth makes use of.
“It’s for our residents and associates; constructing personalised, custom-made life-style and care based mostly round what’s necessary to them, and their particular person needs, wants and needs,” Parker mentioned. “That encompasses all facets of resident care, eating, programming and coordination of outdoor companies.”
Such a transfer to prioritize wellness and a extra personalised expertise aligns with business developments. Different suppliers, together with Juniper Communities, Mather, and Perception Dwelling – amongst many others – are additionally implementing fashions with these traits.
Finally, the target is to extend size of keep whereas additionally elevating the resident expertise, Parker mentioned. Commonwealth hopes to launch Journeys throughout the corporate’s entire portfolio in Q1 of 2025.
Total, Parker mentioned that the shift in possession, constructive business tailwinds, and initiatives like Journeys have the Commonwealth staff feeling upbeat.
“We’re enthusiastic about this,” he mentioned.
