Colony Capital (NYSE: CLNY) intends to sell its wellness infrastructure portfolio in 2021, CEO Mark Ganzi confirmed Thursday. The real estate in the portfolio is valued at $3.3 billion and includes 118 senior housing properties and 83 skilled nursing facilities, in addition to medical office and hospital assets.
In March 2021, Bloomerg reported that Fortress Investment Group (NYSE: FIG) — which owns independent living giant Holiday Retirement — is one potential buyer.
Boca Raton, Florida-based Colony has $46 billion in assets under management overall, and has been selling off its real estate portfolios as part of a push toward digital infrastructure.
But, the company is not in any rush to dispose of its health care assets, particularly considering the portfolio’s recent performance. Among its largest senior housing operating partners are Senior Lifestyle Corp. and Frontier Management. Millers, Wellington Healthcare, Citadel Care Centers and Consulate are among its primary skilled nursing operators.
“The combination of government support and getting our health care facilities fully vaccinated and getting new move-ins in this quarter, we’ve seen a significant rebound in performance,” Ganzi said during the company’s Q1 2021 earnings call. “So we’re being very thoughtful about how we enter into strategic discussions on that asset.”
Despite Ganzi’s bullishness, occupancy in Colony’s senior housing and skilled nursing communities did decline in the first quarter of the year, according to the company’s filings with the Securities and Exchange Commission (SEC).
Occupancy in the 53 senior housing operating assets fell to 69.4%, compared to 72.8% the prior quarter, and occupancy in the 65 triple-net lease senior housing properties fell to 70.8%, from 76.1% the prior quarter. Skilled nursing occupancy came in at 68.2% for the first quarter of 2021, versus 70.5% in Q4 2020.
From a financial standpoint, net operating income in the senior housing operating portfolio was down 38.5% year-over-year in the first quarter on a same-store basis, but NOI was up 7.9% for the senior housing triple-net assets and 0.9% for the skilled nursing assets.
Other publicly traded senior housing and care owners also reported occupancy declines to start 2021, but have noted significant positive momentum as vaccinations have been completed.
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Colony’s leaders “like what we see so far in the second quarter,” Ganzi said, noting also that “we’re going to continue to see improving metrics across every facet of that business.”
Still, the portfolio is in the midst of a strategic review and interest from potential buyers has been “robust.”
“We continue to have an intention of monetizing that asset this year. That is the intention,” Ganzi said. “So, all the work and effort that we are putting in place right now from an operations perspective and from a strategic review perspective give us confidence that we’ll be able to get that done.”