Financial Modeling for Seniors Housing Acquisitions Has Changed
Financial modeling for seniors housing and care is not as easy as it used to be, when revenues could be assumed to rise faster than expenses. Have you noticed that financial modeling for seniors housing and care is not as easy as it used to be? In the past, forecasters (and buyers) would model 2% increases in annual costs and 3% increases in revenues. This would build in a growing profit amount, which always looked good to lenders and investors. One of the problems with this was that annual capital expenditures were always, and I mean always, low-balled. Often it was a plug number at $300 per unit or bed, when it should have been three, four or five times that amount. The problem today is... Read More »
Seniors Housing And Affordability
New development is widely blamed for occupancy declines, but affordability may be just as culpable. Declining occupancy in seniors housing has been a major issue for the past 18 months or so, and while it took some providers way too long to admit that new development was taking its toll on census, there may be other things at work. One big one is affordability. While analysts celebrate that rents have gone up 3% despite census declines, remember that the numbers are based on asking rents. Just possibly, however, those rising asking rents are scaring some people away. I have not seen any statistical analysis on this, but I think the seniors housing sector really has to take a hard look at... Read More »
Sabra and Care Capital Properties Merger Is Passed
After some dissidents tried to torpedo the deal, shareholders decided bigger was better. Well, the vote is in, and it looks like the merger of Sabra Health Care REIT and Care Capital Properties will go through as planned. It wasn’t easy, and Sabra’s CEO Rick Matros had to deal with two dissident shareholders who controlled only about 8% of the shares between them. They came into the stock late in the game and had no intention of staying around for long. But they caused enough of a ruckus to have shareholder advisory service firm, Institutional Shareholder Services, recommend a no vote against the merger. Let’s just say, we suspect ISS knows little about the skilled nursing business, and... Read More »
Missing Out On Bad News
A vacation is a horrible thing when bad news hits the market. It is a horrible thing to go on vacation when all sorts of things are happening in the market, but such was the case last week. What I missed was the roll-out of earnings and the very disappointing occupancy numbers. For some, they were worse than the weak results posted for the second quarter by NIC. The ubiquitous villain was the tail of last winter’s flu season. But it seems the seniors housing sector is surviving on a two steps backward, one step forward cycle, and not making up much ground. What still amazes me is that the warning signs were there in abundance well over a year ago, yet too many people ignored them. Leading... Read More »
Home Health Under New Pressure
New proposed reimbursement rules sent Kindred Healthcare and other home health stocks plunging, but it is necessary? Well, the home healthcare industry got hit with a jolt last week with proposed new reimbursement rules. The news sent Kindred Healthcare’s shares down 15%, which especially hurt since they are completing their exit from the skilled nursing business, and home health and hospice is taking on an increasingly important role at the company. What I find extremely annoying is that, on the one side, the government and elder care advocates continue to push for at-home supports and services, and just as health care providers are gearing up for it, the government seems to take away any... Read More »Schedule a demo
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