Senior care M&A activity may be tepid right now, but Senior Living Investment Brokerage ended April with a bang, announcing several skilled nursing closings and several seniors housing ones too. We’ll start with the skilled nursing sales, and you can read about the seniors housing transactions here.
Brad Clousing and Matthew Alley kicked it off with the sale of a 170-bed skilled nursing facility in Mobile, Alabama. Built in 1968 and 1982, the facility was subject to a long-term ground lease with the adjacent hospital. An entire floor with over 30 beds was out of service, but the facility was just around 60% occupied at the time of the sale and historically operated between that mark and 70%. So, the new owner may not even have to restore all of the beds, if there’s no demand. However, the facility boasted a strong payor mix and around $420,000 of cash flow on $8.64 million of revenues. Both could be improved, but most acquirers would happily take a facility with positive cash flow these days.
The seller only operated in Texas and Louisiana, and this was their only Alabama facility. So, they elected to sell to a New York-based owner/operator with other facilities in Alabama, including in the Mobile market. After paying $11 million, or $64,700 per bed, the new owner also plans to invest in some capex.
Mr. Alley followed that transaction up with a SNF sale in Terrell, Texas, working with Jeff Binder and Ryan Saul. Built in 1994, this 108-bed facility was not profitable by the end of 2020, and occupancy was below 70%. It was an operational outlier of the regionally based seller, and the only Texas facility in their portfolio. So, SLIB sold the facility to The Ensign Group, which has dozens of facilities in the state, including one 20 miles away. Given the provider’s operational success, even in the last year, Ensign’s Texas-based subsidiary Keystone Care should be able to increase occupancy and quality mix. No purchase price was disclosed.
Finally, for the SNF deals at least, Mr. Binder and Jason Punzel handled the sale of a 64-bed skilled nursing facility in North Bend, Washington. Again, the purchase price was not revealed, and the property was an operational outlier of the seller, a national private equity firm. Built in 1959 and last renovated in 2011, the facility has 36 units, split between 28 semiprivate and eight private rooms. Just 56 beds were being utilized at the time of the sale, and occupancy was 84%. There was some positive cash flow, but that could certainly be improved by the new California-based regional owner/operator.
The company owns two other SNFs in Washington and hopes to use its scale in increasing efficiencies. They will also take advantage of the rebasing of the Medicaid reimbursement rate and inflation adjustment, effective July 1. According to the new regulations, the rates will be rebased each fiscal year, and for the next three years will also account for inflation, which was not previously factored into the rates. Sounds like a good deal, no wonder the new owner is excited to expand its presence in the state.
