Cleveland, Ohio-based Forest City announced late last month that the firm was selling off partnership interests in three of the multifamily developer and owner/operator’s supported-living apartment communities. The sale of the communities—a total of 869 units across properties in Teaneck, N.J.; Chevy Chase, Md.; and Yonkers, N.Y.—is further evidence of Forest City’s departure from the active-adult and seniors multifamily housing, a sector that has seen occupancy and revenue fundamentals hit hard by the economy.

"This sale is part of our ongoing strategic exit as a company from the supported-living segment of the residential multifamily market," Forest City president and chief executive officer Charles A. Ratner said in a statement announcing the sale of the properties to the Classic Residence unit of the Hyatt Corp., which had been Forest City’s operating partner on the properties since their additional development. Forest City expects to receive $30 million from the sale, adding further hard capital to the company’s bottom line. "[The deal is] also another step in our efforts to capture value and generate liquidity from within our portfolio,” said Ratner. “We've had a long and productive partnership with Classic Residence by Hyatt, and we salute their continued leadership in senior living."

Forest City isn’t the only large, institutionally-minded multifamily player to be exiting the assisted-living market. New York City-based REIT NorthStar Realty Finance Corp. announced in late December the sale of a portfolio of 18 assisted-living facilities in North Carolina to an unnamed private investment group for $95 million. The 1,300-bed deal is expected to generate $36 million in cash to NorthStar after transaction costs and the repayment of $56 million of mortgage debt and accrued interest.

Observers say the departure of market-rate players from assisted living shouldn’t come as a surprise given the back to basics business necessities of the recession. Firms are even moving away from the sector during the development phase. “We are definitely seeing a trend in conversion of active adult, age restricted product into market rate projects,” says Lambertville, NJ-based Minno and Wasco Architects principal David Minno, who adds that New Jersey has recently passed legislation permitting developers to do those market rate conversions if they have yet to sell units. “The quid pro quo is that they have to add a little bit more affordable housing than they would have otherwise,” Minno says.

That seems to matter little to developers looking to exit the sector “We are working on four or five of those conversions now,” Minno says. “The active adult multifamily market is dead, dead, dead.”