Strawberry Fields REIT this week announced the acquisition of six skilled nursing facilities (SNFs) in Kentucky and Tennessee.
The purchase price was $81 million for the six facilities.
Due to rising prices going into COVID-19, and lofty expectations and valuations in the skilled nursing space, the REIT became less active in the SNF market during the pandemic but Josh Blisko, an investment advisor with Strawberry Fields, expected that to change coming out of COVID.
“COVID actually brought us an opportunity for long-term families and owners that unfortunately couldn’t make it through COVID or they realized this is not an industry that they wanted to be in anymore,” he told Skilled Nursing News. “We found the opportunity in this portfolio to streamline more controllable expenses and scalability through our current assets.”
The deal was financed using the proceeds of a recently completed 3rd Bond offering on the Tel Aviv Stock Exchange.
“This is our third bond offering over in Tel Aviv, we’ve used them before as a debt facility for acquisitions,” Blisko said. “This third issuance was for this portfolio in particular while our other issuances are across different portfolios we have acquired.”
Blisko described it as essentially bridge financing.
The acquisition is part of Strawberry Fields’ expansion in the central United States and fits geographically with the company’s facilities in Tennessee and Kentucky.
“Strawberry Fields already has presence in these submarkets throughout Tennessee and Kentucky with about half a dozen assets in the immediate vicinity,” Blisko said. “We’re well-versed in the intricacies of the market and these assets are essentially in our backyard.”
He said that the real estate investment trust was excited to gain more scale in the submarkets.
The facilities Strawberry Fields acquired include Landmark of Kuttawa, a 65-bed SNF in Kurrawa, Ky.; Agape Rehabilitation & Nursing Center, a 84-bed SNF in Johnson City, Tenn.; Waters of Sweetwater, a 90-bed nursing home in Sweetwater, Tenn.; Waters of McKenzie, a 72-bed nursing home in McKenzie, Tenn.; Waters of Memphis, a 90-bed SNF in Memphis, Tenn.; and Waters of Bristol, a 120-bed nursing home in Bristol, Tenn.
The Kentucky facility will reportedly join Landmark’s portfolio, which includes operations throughout Kentucky, and in Texas, Oklahoma, Illinois and Michigan.
Each of The Waters-branded operators at the five Tennessee facilities, have engaged Infinity Healthcare of Tennessee to provide consulting services.
Blisko said that the average census at the six facilities is currently at 79%.
“On the revenue side, we believe that we’re starting to see an uptick in census as we’re coming out of the pandemic,” he said. “From a pricing expectation, we felt very comfortable given our ability to save costs.”
Strawberry Fields owns SNFs, long-term acute care hospitals (LTACs), and assisted living facilities across the South and Midwest.
While other REITs expressed hesitancy at current pricing in the skilled nursing market during earnings calls in early August, Blisko expected Strawberry Fields’ activity to increase.
“Like always we’re out there. We love the space, we’re focused on SNFs,” he said. “Our bread and butter is definitely SNFs and we’re looking to grow the portfolio in the next 18 to 24 months as more and more portfolios come to market.”
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