CNL Lifestyle exits senior housing with portfolio sale

A large nontraded real estate investment trust, CNL Lifestyle Properties Inc., said Tuesday it had reached an agreement to sell its portfolio of senior housing assets to the publicly traded Senior Housing Properties Trust for $790 million.
The transaction is close to one-third the value of CNL Lifestyle Properties’ $2.53 billion portfolio. The projected net cash to the REIT, which also invests in ski and mountain resorts, marinas and amusement parks, is expected to be $486 million after repayment of $286 million in debt.
“The sale of the senior housing portfolio is entirely consistent with CNL Lifestyle Properties’ strategic initiatives to enhance the overall performance of the REIT and provide eventual liquidity for its stockholders,” said company spokesman Monty Hagler.
The sale is expected to close by May 1, and CNL Lifestyle said it expects to record a gain over book value. The sale will mark the REIT’s exit from the senior housing sector, the company said in a filing with the Securities and Exchange Commission.
After paying debt, the sale’s proceeds may be used to retire additional debt, make a special distribution to shareholders or make strategic expenditures to enhance certain properties in the REIT’s portfolio.
CNL Lifestyle in September signaled it was seeking a potential liquidity event. The sale of the senior properties focuses the REIT on the lifestyle sector before a potential listing of shares or sale of the portfolio.
One adviser was pleased with the transaction.
“Overall we see it as good news in that they are moving towards liquidation and then listing the REIT’s remaining assets sometime in 2015,” said Larry Solomon, director of investments and financial planning at OptiFour Integrated Wealth Management.
CNL Lifestyle was among a group of nontraded REITs launched a decade ago that were sold to investors for $10 per share and which saw a sharp decline in value after the credit crisis. The REIT was incorporated in 2003 and focused on buying “lifestyle” real estate such as ski resorts and golf courses, which struggled during and after the recession. At the end of last year, CNL Lifestyle’s estimated net asset value was $6.85 per share.