CNL Financial High on Senior Housing
03/14/2012 | by Matthew Bechard

CNL Financial Group Inc. is "returning back to its roots" in the health care sector, according to CEO Tom Sittema.

CNL Financial, a private real estate investment firm headquartered in Orlando, Fla., is currently sponsoring CNL Healthcare Trust, which intends to qualify as a non-traded REIT. Earlier this year, CNL Healthcare acquired a portfolio of five senior housing communities for $84 million. Last month, another REIT under the CNL umbrella, CNL Lifestyle Properties Inc., announced an $80 million acquisition of four assisted living communities that is expected to close in May.

Previously, the company founded a health care REIT that was liquidated for more than $5.5 billion in October 2006. Sittema said the senior housing segment is once again appealing.

"We clearly like the sector because it's in our roots. But we clearly like it because we feel like we have the demographic wind at our back," Sittema said during a video interview with REIT.com at the Akerman U.S. Real Estate Summit this month in Miami.

Statistics show that 10,000 people are turning 65 or older every day, and the 75-year-old-and-over age group is growing at four times as fast as the rate of other age cohorts, Sittema noted. He added that there's been virtually no new construction in the industry.

Along with having the benefit of expertise in the space, Sittema said that CNL has formed longstanding relationships with operators across the country.

The company has also been active raising equity and debt. Sittema said that CNL had a robust 2011 and acquired more than $1 billion in assets. He added that CNL had accessed the high-yield bond market in April 2011.

"We are very excited about that piece of financing. Today the high-end yield market is very hot," he said.

Sittema said CNL will likely avoid the market for commercial mortgage-backed securities (CMBS) this year unless it "strengthens materially from the current levels."

When it comes to new development, he said that, with the exception of one or two sectors, the need for new development across the country is limited.