November 25, 2015
Mike Hargrave

CS Capital Invests in Boston Post-Acute Real Estate

CS Capital on behalf of the Alaska Permanent Fund has recently acquired two Boston area acute rehabilitation hospitals. Both the Braintree Rehabilitation Hospital in Braintree, MA and the New England Rehabilitation Hospital in Woburn, MA were acquired by CS Capital from a joint venture of Harrison Street Realty Capital and the Sanders Trust. Mindy Berman of JLL represented the seller in this transaction. The hospitals comprise 334 licensed beds and are operated by HealthSouth (NYSE: HLS). CS Capital paid $114,500 or $342,814 per bed. On a per square foot basis, we track the trade at $489 per SF. This is generally in line with recent acute rehab trades on a per SF basis. The cap rate was not disclosed on the transaction. The properties also traded in early 2014 for $88 Million (from Seniors Housing Properties Trust to Harrison Street/Sanders Trust) so the price grew a total of 30% or CAGR of 14%. We doubt that property level lease payments (NOI) has grown that fast so the implication is that the cap rate between the 2 transactions compressed considerably.