If you blinked, then you may have missed Blueprint Healthcare Real Estate Advisors’ five transaction announcements in just over 24 hours during the dog days of August, bringing the firm’s 2018 closings to 43, so far. That is just 10 off of their entire 2017 total.
Chris Hyldahl, Ben Firestone, Gideon Orion and Michael Segal closed three transactions as a team, including the largest of the bunch, when they arranged the sale of nine skilled nursing facilities and 981 licensed beds to a private equity investor for over $81 million, or approximately $83,000 per bed. Formerly owned by a publicly-traded REIT and managed by a third-party operator, the facilities are the first part of a staggered closing which will include an additional four assets following HUD debt assumption. The well-capitalized, yield-driven PE buyer will retain the operator under a new triple-net lease at market terms, representing a 9.0% initial yield based on trailing EBITDAR.
From one portfolio to another, that same quartet added a final facility to its previously-announced eight-SNF sale in the Philadelphia area. Located in Chestnut Hill, the final property features 176 beds and was also deemed to be non-core by the seller. Despite being a single-asset sale, the portfolio premium still applied, which we are sure made for a happy seller. The buyer is the same growing regional owner/operator that purchased the other eight facilities.
Finally, the foursome worked on behalf of a publicly traded REIT to sell its 106-bed skilled nursing facility in rural town of Pikeville in eastern Kentucky. Built in 1970, the facility is located less than a mile from the recently expanded 250-bed Pikeville Medical Center. That referral source, in addition to its well-maintained physical plant and good local reputation, kept occupancy consistently above 90%.
However, despite over $9 million in revenues, the facility struggled with cash flow due to rapidly escalating liability insurance costs. It also was subject to a ground lease owned by a group of local investors. So, in addition to selling the facility to a growing investor/operator partnership that was entering the state, Blueprint also sourced viable insurance coverage policy proposals for the incoming operator and negotiated a buyout of the ground lease on behalf of the real estate buyer. Done deal.
Messrs. Firestone and Segal were then joined by Southeast-specialist Brooks Blackmon to sell an Arkansas skilled nursing facility with a long, unique history. Built in 1965, it was purchased in 1968 by two nurses from Europe who were working and traveling around Canada and the United States at the time. After settling in at the El Dorado facility, the pair renovated the building and expanded it in 1975, 1980 and 1994, finally adding the current Medicare unit in 1998. But after 50 years of ownership, the pair decide to sell, retaining Blueprint to orchestrate the transaction. It’s a tough act to follow, but Reliance Health Care, a large owner/operator in Arkansas, emerged as the buyer.
We hope the team of Segal, Firestone and Trent Gherardini got some site visits in for their latest transaction, involving a 120-bed skilled nursing facility in the Florida Keys. Seven years ago, the facility underwent a multi-million-dollar renovation and currently boasts a five-star rating from CMS. Its referral relationships with hospitals, not limited to the Miami-Dade and Homestead areas, also led to high per-patient day revenues and solid quality mix. However, the major specter of the skilled nursing industry, staffing challenges, led to relatively low occupancy levels. Positioning it as a value-add opportunity in a high-barrier-to-entry market, the Blueprint team sold the facility to a partnership between an investor and an operator both making their debuts in the state. Blueprint also arranged the capital stack with interim debt to fund the acquisition.
