Senior Housing Properties Trust has formed a joint venture with a sovereign institutional investor to own 11 Fan Pier and 50 Northern Avenue in Boston, MA.
The investor will contribute approximately $261 million for a 45% equity interest in the new venture, and SNH will own the remaining 55% equity interest.
The investment amount is based on a property valuation of $1.2 billion, less $620 million of existing secured debt on the property.
The property included in the joint venture was acquired by SNH in May 2014 for $1.125 billion and consists of two 15 story, class A LEED Gold Certified life-science buildings with structured parking located in Boston’s Seaport District.
The two buildings are 95% leased to Vertex Pharmaceuticals, Inc. through 2028 and include 1.1 million rentable square feet of lab, corporate office and street level retail space.
SNH expects to use the cash proceeds from this transaction to repay a portion of the amounts outstanding under its revolving credit facility.
David Hegarty, President and Chief Operating Officer of SNH, made the following statement about today’s announcement: “We are pleased to announce SNH’s first joint venture transaction to own property. This transaction highlights the increased value of these two well located, well leased buildings since we acquired them less than three years ago. This transaction also reduces our investment portfolio’s concentration in this property and reduces our overall leverage.”
SNH will continue to control this property because its partner in this joint venture is a passive financial investor. Accordingly, SNH expects to consolidate the operating results of this venture in its financial statements and expects to account for the investor’s minority equity interest in the venture as a non-controlling interest for financial reporting purposes. SNH is also subject to a confidentiality agreement and cannot disclose the identity of the investor that formed this joint venture with SNH.
Eastdil Secured acted as SNH’s advisor and Sullivan & Worcester LLP provided legal counsel to SNH in this transaction.
Senior Housing Properties Trust is a real estate investment trust, or REIT, which owns senior living communities, medical office buildings and wellness centers throughout the United States. SNH is managed by the operating subsidiary of The RMR Group Inc., an alternative asset management company that is headquartered in Newton, MA.