Fresh off its acquisitions of Care Investment Trust and Mohawk Medical Properties REIT, health care properties owner Invesque (HLP-U-T, IVQ-U-T) expects to continue to expand its holdings of medical office space, seniors housing and “skilled nursing” facilities.
“Q4 and the beginning of 2018 have been a very active few months and we’re just getting started,” Invesque chief investment officer Adlai Chester said during the company’s fourth-quarter and year-end 2017 conference call.
“Our strategy is to build a highly diversified portfolio of income-generating health care real estate assets.”
The biggest move in 2017
Invesque’s biggest move in 2017 was its recent acquisition of Care Investment Trust from Tiptree (TIPT-Q) for US $425 million, he said. The transaction, which closed last month, is comprised of 42 properties in 11 states with more than 3,700 beds, almost all of which consist of private paid senior living.
The acquisition was the largest to date for the company, doubling its portfolio of properties. It also increased the concentration of net operating income from private pay assets to 52 per cent.
Invesque, which is based in Carmel, Ind., recently changed its name from Mainstreet Health Investments.
“We didn’t slow down after the Care acquisition. We jumped at the opportunity to expand our platform in a big, big way by adding medical office buildings into the portfolio,” Chester said.
Acquisition of Mohawk Medical REIT
That expansion came via the acquisition earlier this month of Toronto-based Mohawk Medical REIT, consisting of 14 multi-tenant medical office buildings, 11 in Canada (in Alberta and Ontario) and three in the U.S. The acquisition, for approximately $180 million, is subject to the approval of two-thirds of Mohawk REIT shareholders and approval from the Toronto Stock Exchange.
Acquiring Mohawk “is just the beginning,” said CEO Scott White. “We look to grow this platform and further enhance our relationship with Mohawk.”
White added the recent acquisitions mean Invesque is “now one of the premier health care real estate companies in North America.”
Chester said the current environment provides “ample opportunities for future growth” with an “aging population (that) continues to generate long-term needs.”
All sectors of its business have long-term viability, Chester said, adding Invesque will continue to focus on investing in quality facilities in key markets with high-quality operating partners.
“There is truly nothing more important than partnering with the right operators.” Referring to Mohawk founders and principals Sean Nakamoto and Andrew Shapack, he added “we need to be on first-name basis with all of our operators to continue to succeed in this market.”
Development, mezzanine loans and new partners
There will be ample opportunities for Invesque to deploy capital in development projects with the right to acquire those projects on completion, Chester said.
“This is an excellent way for us to build our pipeline and have a consistent flow of class-A acquisition opportunities.”
White said Invesque “love(s) the structure” of using mezzanine loans or preferred equity to do deals, “so that we can ultimately own the property.” But “we’re not in the business of doing mezz loans for mezz loans’ sake.”
Announcements about future development partnerships can be expected in the coming months.
The goal, he said, is to build a highly diversified portfolio across three broadly defined buckets – “skilled nursing,” private pay seniors housing and other strategic health care, including medical office buildings.
When the Mohawk transaction closes, Invesque’s portfolio will expand to 103 properties with more than 9,000 beds across 19 U.S. states and two provinces.