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Carlyle Beefs up Portfolio with Premiere Texas Property

Carlyle Beefs up Portfolio with Premiere Texas Property

The Carlyle Group, a giant asset manager, has expanded its seniors housing portfolio with the purchase of an independent living rental community in Fort Worth, Texas. The 203-unit Franklin Park at Cityview was purchased April 28 and has been renamed Vantage at Cityview.

The seller was USA Franklin Park, DST, a West Coast–based investor that had owned the property for about a year. The project was built by Franklin Development of San Antonio, which owns a handful of seniors housing facilities in Texas.

The sale price was not disclosed. Leisure Care, based in Seattle, is now managing the property.

“The asset is a high-quality, recently built independent living property featuring large units,” wrote Carlyle principal Thad Paul in an e-mail describing the transaction. The property also is located in an affluent area. The building has historically had occupancies above 90%.

Constructed in 2004, the community is situated on 24 acres. Amenities include a heated swimming pool, nine-hole putting green, fitness center, theater, full-service salon, transportation services, and a dining venue. The community is located in the Cityview area of southwest Fort Worth and is close to Hulen Mall, restaurants, other retail shops, and medical facilities.

Expansion plans

Carlyle plans to spend about $1 million to upgrade the property. Common areas will be refurbished, and the kitchen and dining room will be expanded.

More services and activities will be added for residents, according to Jason Childers, senior vice president at Leisure Care. The previous property manager did not specialize in buildings for seniors.

Leisure Care plans to offer a new fitness program for residents with classes and personal instruction. Food service will be expanded to include dinner, along with a wider variety of menu items.

Leisure Care also operates a travel agency. Residents can arrange personal travel, or sign up for group trips with other Leisure Care property residents, such as cruises to Alaska and the Caribbean.

Apartments at Vantage at Cityview range in size from about 700 sq. ft. to 1,200 sq. ft. Rents start at about $1,900 a month, and top out at about $2,600 a month. The property is currently about 86% occupied.

“This is an expansion for us,” notes Childers at Leisure Care. The company operates 38 seniors housing communities. Leisure Care focuses on independent living rental properties, but also manages some assisted living and memory care buildings.

Competition grows

The independent living housing market is somewhat competitive in the Dallas-Ft. Worth area. Over the past five years, the number of independent living apartments has grown by 29%, rising from 10,691 units in the first quarter of 2006 to 13,801 units in the first quarter of 2011, according to the National Investment Center for the Seniors Housing & Care Industry (NIC).

The average occupancy rate for independent living buildings in the local market is currently 82.6%. Occupancies hit a low of 80.6% in the second quarter of 2010. The market has experienced strong levels of absorption, however, says Mike Hargrave, vice president at NIC.

Coupled with the fact that only 421 new units are under construction — a number equal to about 3.1% of existing inventory — the market could bounce off recent lows, he adds.

“Ft. Worth is really coming into its own,” says Doug O’Toole, vice president at the Houston office of brokerage firm Marcus & Millichap. O’Toole sells seniors housing throughout Texas. He notes that more families are moving to Fort Worth, so seniors there can sell their houses and move to a retirement community. Regarding the Cityview property, he says, “It’s in a good location, and it’s well built. It should hold its own.”

Carlyle owns 18 seniors housing properties, a mix of independent living, assisted living, and memory care projects. The communities are clustered in the Los Angeles area, the Northeast, Mid-Atlantic, and in Texas.

“We think (the building) fits into the overall strategy very well,” says Paul of Carlyle. The firm’s multifamily investment strategy is to focus on properties that benefit from the growth of certain demographic segments, such as seniors housing that provide attractive cash-on-cash yields.

Carlyle will continue to focus on the acquisition of single properties, which currently tend to be more attractively priced than the large portfolios being bought nowadays by the big health care REITs.

Even so, emphasizes Paul, “seniors housing will continue to be a relatively small component of our entire real estate portfolio.”

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