Ahr Ceo: New Deals With Lcb, Kensington ‘reflect A Single Strategy’ For Growth

American Healthcare REIT (NYSE: AHR) is continuing its rapid investment pace, with the company announcing an eight-community acquisition for $696 million.

The deal marks a new partnership between the Irvine, California-based real estate investment trust and Norwood, Massachusetts-based senior living provider LCB Senior Living. The move helps AHR expand its ownership presence to the East Coast. 

Thursday’s announcement follows AHR’s recent acquisition and partnership with Kensington Senior Living as part of an announced “long-term partnership” with Reston, Virginia-based senior living provider acquiring six properties for $572 million earlier this week.

The LCB Senior Living and Kensington Senior Living transactions are two “distinct” examples that “reflect a single strategy,” AHR CEO Jeff Hanson told Senior Housing News on Thursday afternoon. In both transactions, the Class A properties are “imbedded growth potential” that are in high barrier to entry markets with “premier” operating partners, Hanson added.

“The East Coast portfolio establishes a meaningful Northeast footprint and a new relationship with LCB. Kensington extends our higher-acuity platform into four of the most affluent metropolitan and densely populated markets in the country – what I refer to as ‘fortress markets’,” Hanson told SHN.

The connection between both transactions is that they are relationship-driven with both LCB and Kensington, and “underwritten to the quality of the operator,” Hanson continued. While strong demand underscored the transactions, Hanson said the opportunity centered on the unique nature of the communities in submarkets where supply is constrained and in partnerships with “operators capable of delivering” quality care and resident experience.

“We are not in a race to grow, we are in a race to deliver outsized shareholder value,” Hanson said. “That is ultimately done through operating partner selection and strategic asset management execution.”

The company has been trying “for some time” to establish a relationship with LCB and find the “right way into these East Coast markets,” American Healthcare REIT President and COO Gabe Willhite said in a news release issued Thursday morning.

“LCB is the kind of regional operator we are building AHR around: deep local knowledge, a culture that genuinely prioritizes superior resident care and the ability to develop and manage luxury communities well,” Willhite said. “Our job is to be the partner of choice for operators like that.”

The eight Class A communities include 867 units. LCB developed five of the properties and currently operates seven of the eight communities, which were built between 2020 and 2022 and are located in Connecticut, Delaware, Georgia, Massachusetts, New Jersey and Pennsylvania. Two of the communities were transitioned to LCB as manager following the closing of the transaction.

The company’s new Northeast portfolio serves “affluent suburban markets” where land availability is limited, entitlement complexity is high and construction activity is muted.

“Although capital can finance the construction of a new community, it cannot create entitled sites in Westport, Basking Ridge, suburban Boston or Philadelphia’s Main Line,” said Chief Investment Officer Stefan Oh. “We believe long-term value is created when you can combine real estate that is difficult to replicate, markets where supply is genuinely constrained, and best-in-class operating partners.”

Earlier this week, AHR also announced C-suite changes, naming Aric Chang as chief financial officer. Chang will take over for Brian Peay, who is retiring in October after 10 years of service.

The eight-community portfolio also includes a luxury community developed and operated by Holbrook Life. As part of the agreement, Holbrook Life will remain the manager of The Holbrook of Sugar Hill.

AHR initially pursued two additional communities because the sellers wanted all 10 properties handled in a single transaction, with AHR assigning the purchase agreements for the two remaining communities to another institutional investor. The undisclosed investor purchased the two properties at the same value AHR had allocated to them.

“This series of transactions is an example of disciplined capital allocation supported by strong execution,” said CEO Jeff Hanson in the news release. “We understood that only a solution for all ten communities would clear the market. Rather than either walking away from a highly strategic opportunity, or compromising our capital allocation discipline to secure it, we constructed a solution that required neither.”

These SHOP investments were included in AHR’s $1.4 billion in disclosed closings during the second quarter. Since then, AHR has completed more than $600 million in additional investments, bringing its year-to-date total to more than $2 billion.

The post AHR CEO: New Deals With LCB, Kensington ‘Reflect a Single Strategy’ for Growth appeared first on Senior Housing News.