Senior Housing Properties Sells 2 Massachusetts Hospitals for $90M

Senior Housing Properties has closed its sale of two Massachusetts rehabilitation hospitals for $90 million to a JV of affiliates of The Sanders Trust and Harrison Street Real Estate Capital.

Senior Housing Properties Trust, of Newton, Mass., has closed its sale of two Massachusetts rehabilitation hospitals for $90 million to a joint venture of affiliates of The Sanders Trust L.L.C., of Birmingham, Ala., and Harrison Street Real Estate Capital L.L.C., of Chicago. The seller expects to recognize a gain of more than $30 million on the sale, which closed on Dec. 31.

The two properties are New England Rehabilitation Hospital (210 beds) in Woburn, Mass., and Braintree Rehabilitation Hospital (187 beds) in Braintree, Mass. The hospitals had been acquired by SHPT in 2002, and their real estate assets were leased to Five Star Quality Care Inc. also of Newton, Mass.

With the sale, Five Star transferred its operating rights and obligations to entities affiliated with Reliant Hospital Partners L.L.C., a private company based in Richardson, Texas, which will operate the hospitals. Of Reliant’s nine other hospitals, eight are in Texas and one is in Dayton, Ohio, so the purchase appears to break new ground for them.

The announcement by the seller noted that “a large majority of the revenues” at the two hospitals come via Medicare and that with this sale, only 2 percent of the REIT’s total revenues “are derived from the ownership of healthcare facilities where Medicare and Medicaid represent a majority of revenues.”

“With this sale, our decade-plus plan, to reduce [our] exposure to possible future reductions in government-funded Medicare and Medicaid programs, is nearly complete,” David Hegarty, the REIT’s president & chief operating officer, said in a release. “Now, 98 percent of SNH’s revenues have limited exposure to government funding. We are pleased that we were able to complete the sale of these two hospitals ahead of our expected timeframe of mid-year 2014.”