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Business Observer Friday, Jun. 19, 2015 5 years ago

Record setter

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NorthStar Healthcare Income's $93 million senior housing purchase ranks as the top sale in Sarasota County's history.

BUYER: NorthStar Healthcare Income Inc. (Fountains Lake Pointe Woods Owner NT-HCI LLC), Bethesda, Md.
SELLER: Fountains Lake Pointe Woods SL LLC
PROPERTY: The Fountains at Lake Pointe Woods and The Springs at Lake Pointe Woods (3209 and 3280 Lake Pointe Blvd., Sarasota)
PRICE: $93.1 million
PREVIOUS PRICE: $28.2 million, June 2005

PLANS, DESCRIPTION:
Sarasota County has a new sales record.

NorthStar Healthcare Income Inc., a New York City real estate investment trust, purchased The Fountains at Lake Pointe Woods senior housing facility near Palmer Ranch and its associated 119-bed skilled-nursing facility, The Springs at Lake Pointe Woods, for $93.1 million, equal to $250,269 per unit.

The sale bested the county's highest sale by $16 million.

Until recently, the largest sale in the county was Westfield's purchase of Sarasota Square Mall in October 2003 for $77 million, according to the Sarasota County property appraiser.

The Fountains sale was part of NorthStar's purchase of 15 continuing care retirement communities in a portfolio from Fountains Senior Living Holdings LLC for $639.3 million. Those properties, which stretch across 11 states, contain a mixture of 2,308 independent-living, 893 assisted-living, 283 memory care and 320 skilled-nursing beds.

NorthStar declined to comment on specifics of the acquisition.

The senior housing real estate market is in its fifth year of a bull market driven by high buyer demand. Shaddrick Haston Esq., CEO of the Florida Assisted Living Association, attributes the large buyer/investor interest to the industry's resilience and stability through the economic crisis and its high occupancy rates.

“They are seeing tremendous growth, especially with the baby boomers looking to Florida,” he says.

The senior housing industry is an average of 92% occupied nationwide as of the first quarter, based on data from the nonprofit National Investment Center for Seniors Housing & Care. It also reports that annual rentals have grown by 2.4% for the same period.

At the same time, NorthStar Healthcare Income has also started buying larger portfolios recently.

David Kliewer, senior managing director with commercial real estate brokerage firm DTZ in its Tampa office, attributes much of the REIT's new aggressiveness to its hiring of James Flaherty III as CEO and president in January 2014. Flaherty previously led one of the nation's largest health real estate investment trusts, HCP Inc.

Shortly after his hiring, NorthStar Healthcare Income's parent company, NorthStar Realty Finance Corp., purchased 43 senior-housing and 37 skilled-nursing facilities for $1.05 billion. Earlier this year, NorthStar Healthcare Income and NorthStar Realty Finance bought a portfolio of 32 independent-living facilities from affiliates of Harvest Facility Holdings LP for $875 million.

“[Flaherty] used a lot of his contacts and pipeline with HCP to do new deals for NorthStar,” says Kliewer. “They're really elephant hunting right now. They are also diversifying themselves. The first purchase was skilled nursing and memory care. Then they added the independent-living portfolio.”

The Fountains at Lake Pointe Woods features a 252,608-square-foot, three-story main building and 11 other buildings, with less than 7,600 square feet of living space each, on a 10.2-acre site. The community offers independent-, assisted- and villa living options.

Next door, The Springs at Lake Pointe Woods is devoted exclusively to rehabilitation and skilled-nursing care. The 8.5-acre property contains three buildings with 68,359, 54,596 and 1,920 square feet of space, respectively.

Watermark Retirement Communities will continue to manage the communities.

NorthStar Healthcare Income mortgaged the property to CBRE Capital Markets Inc. for $55.59 million.

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