Real Deals: Hong Kong company buys NC senior living facilities

dbracken@newsobserver.comJanuary 2, 2013 

As the Baby Boom generation enters retirement, much of the discussion in this country is focused on the fiscal costs associated with providing health care and Social Security benefits to a growing number of retirees.

But to many global investors, the demographic shift now occurring in the U.S. is creating investment opportunities. And the global search for solid, steady returns is leading to some unlikely real estate investments in North Carolina.

Last month, a Hong Kong-based holding company acquired 18 senior living facilities in North Carolina. Chevalier International Holdings Limited paid $124 million for the properties, according to the company. The facilities are scattered around the state and include 1,322 beds. The portfolio contains two adult care homes in the Triangle – Covington in Raleigh and the Oliver House in Wendell.

Chevalier first announced the deal back in October, but the deeds on the Triangle properties didn’t change hands until last week.

Chevalier, which is incorporated in Bermuda and trades on the Hong Kong stock exchange, owns and operates an eclectic mix of businesses around the world. It owns cold storage warehouses and more than 40 restaurants and bars in Hong Kong, operates car dealerships in China and Canada, and provides a variety of engineering and construction services.

Chevalier made its first investment in U.S. senior living in 2011, acquiring three properties in Oregon. The company didn’t return a call or email seeking comment Wednesday, but officials laid out their rationale for the North Carolina acquisitions in the October announcement.

They cited projections from North Carolina’s Office of State Budget and Management showing that the state’s population of residents older than 75 is expected to increase by 205,794, or 36 percent, from July 2012 to July 2020.

“With the growing aged population and steady rise in healthcare expenditure in the U.S., the Directors anticipate that demand for senior citizen housing is to increase and this operation will continue to generate a stable operating income and offer capital appreciation potential of those properties in the future,” the company wrote.

The North Carolina facilities generated $36.6 million in revenues in 2011, up 6 percent from the previous year, according to Chevalier. The company said it planned to enter into new lease agreements with Meridian Senior Living, the company that had been managing the facilities for the previous owner.

That investors in Hong Kong are running the numbers on senior living facilities in North Carolina and liking what they see shouldn’t be all that surprising. The state, and the Triangle in particular, have become attractive markets for real estate targeted at seniors. North Carolina continues to add residents, and its temperate climate and low cost of living make it particularly enticing to seniors.

Combine that with the country’s coming demographic tsunami, and you have a recipe for more senior living deals:

Raleigh-based Carillon Assisted Living also sold two of its facilities in Knightdale and Fuquay-Varina last week to a California investor. Griffin American Healthcare REIT II paid $31.96 million for the two facilities, according to Wake County property records.

Bracken: 919-829-4548

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