A real estate investment trust (REIT) that owns more than 80 behavioral health sites could go private in a staggering $14 billion deal.
STOR Capital Corp. (NYSE: STOR) in Scottsdale, Arizona, announced that it has signed a private deal with Singapore-based global institutional investor GIC and alternative asset manager at Chicago Blue All Capital, the real estate arm of Oak Street.
STORE Capital Corp. owns. 3,012 properties in 49 states and 579 customers, as of June 30, according to a second-quarter earnings statement filed with the Securities and Exchange Commission. STORE focuses on operating real estate for the individual tenant.
The company owns 89 behavioral health sites representing about 3.2% of the $908 million base rent and interest, according to Investor’s last presentation.
Five years ago, owned STORE Capital 36 properties Which represents 1.9% of the company’s base rent and interest.
STORE Capital focuses on real estate investments in services such as restaurants, early childhood education and health clubs – 64% of its portfolio; manufacturing – 21% of its portfolio; and service retail such as care agents, farm supply and outsourced supply stores – 15% of its portfolio.
“This opportunity is an endorsement by two leading real estate investors with significant access to capital, for the strength of our platform, our experienced leadership team, and our disciplined investment approach,” said Mary Vidio, President and CEO of Store Capital, in a statement. New release.
The deal is expected to expire in the first quarter of 2023, according to the statement.
While a small portion of the STORE Capital portfolio, REITs like STORE represent compelling potential partners for the behavioral health sector as it grows and continues to mature as an industry. It also shows the amount of private capital available to investors.
“There is a lot of capital and margins looking to buy out such public companies and turn them into private companies,” Andrew Dick, a healthcare attorney and shareholder at the law firm of Holl Rinder in Indianapolis, said in an interview.
Pitchbook Report It is estimated that the global private capital market contains about $3.2 trillion in dry powder, or investment potential assets; $1.24 trillion of that amount was owned by private equity firms as of the end of the second quarter.
Specifically for private equity, a larger share of capital in the second quarter of 2022 was in large funds of more than $1 billion, according to the report.
“The implication of this is that private equity investors will be pursuing big goals of putting this money to work,” the report said. “This is likely to lead them to the public markets in search of attractive candidates to purchase private products, especially since prices have fallen due to a bear market.”
REIT’s interest in blasphemy in behavioral health
REITs are a potential source of new capital and development opportunities for the behavioral health sector. Several REITs with significant investments in the senior and skilled nursing sectors have taken an interest in this sector.
The CEO of CareTrust REIT Inc. said: (Nasdaq: CTRE), Dave Sedgwick, during the company’s first-quarter earnings, Behavioral Health presents Possibly the best use of underperforming assets.
Behavioral health is An increasingly attractive place Healthcare and life sciences commercial real estate investment. About 38% of respondents to a survey conducted by CBRE Group Inc. (NYSE: CBRE) of Dallas, said that behavioral health facilities fit their 2022 investment criteria.
“It appears that healthcare facility owners are, in some cases, looking for capital partners to take real estate risk off the table,” Dick said. “So they go to companies like STORE Capital.”