The Battle For Brookdale
Shareholders are taking it up a notch to raise the value of Brookdale Senior Living. In World War II we had the Battle of the Bulge, and in seniors housing, we now have the Battle for Brookdale. Sandell Management, which owns about 2 million Brookdale shares, has nominated three directors, including Tommy Sandell himself, to help the company maximize shareholder value, claiming current directors have little real estate expertise, and in one case seem in imply that one current director, who they want to replace, is too old by stating his age (77). Tell that to Jim Moore. Now, Glenview Capital Management, which has upped its ownership from 8.75 million shares three months ago to 11.59... Read More »How HCP Will Deal With Its Largest Tenant
HCP plans to sell up to 50 HCR ManorCare SNFs, but will it really work? The REIT HCP announced in February that it will try to sell up to 50 of its HCR ManorCare skilled nursing facilities to try to improve on the property level lease coverage ratio that is below 1.0x. The way it is going to work is that HCP will credit the annual lease payments in an amount equal to 7.75% of the sales proceeds. Using an example of a current 0.80x lease coverage on a facility to be sold, if it sold at a market cap rate of 12% to 12.5%, there would be no improvement in lease coverage. In fact, the coverage would decline slightly, so HCP would really not be any better off. One equity analyst did the math and... Read More »Looking for Yield in Health Care REITs
Even with the threat of rising interest rates, there are long-term benefits to investing in health care REITs. Last week, there was some noise from the Federal Reserve that they may start increasing interest rates a little sooner than most people expected. Well, that sent most health care REIT stocks tumbling, many by 4% to 5% that day. Yes, REITs have been riding high for a while, but where else can you find dependable yields in the 4.5% to 7.0% range? Is now a good time to invest in health care REITs? For a short-term investor, I would say no, because the interest rate risk is reasonably high for the remainder of the year. For long-term investors? The yield on your cost basis is only... Read More »Seniors Housing Bubble or Not?
Webinar attendees voted by nearly 3 to 1 that we are approaching a valuation bubble. More than 125 people joined us live last week for our webinar on the Seniors Housing Market: Bubble or No Bubble. Acquisition values across the spectrum all hit new records in 2014, and as you can guess, cap rates across the spectrum all declined, but not to record lows….yet. If we are approaching a bubble, most of the panelists believed that trouble would not begin until 2016 at the earliest and 2018 at the latest. And they also believed that it was more likely that an outside event would be the cause of a market decline, such as a big jump in interest rates or some economic calamity, rather than an... Read More »Genesis Healthcare Makes First Earnings Report
News of higher operating costs sends the shares of newly merged Genesis Healthcare and Skilled Healthcare down more than 20%. Welcome back to the world of public investors. I say this to George Hager and his team at Genesis Healthcare, which closed on the reverse merger with Skilled Healthcare on February 2. Just three weeks later, they reported fourth quarter operating results for both companies, and while the skilled patient day mix at Genesis increased by 60 basis points and occupancy increased 30 basis points from the year ago quarter, Skilled Healthcare’s occupancy declined 110 basis points from the fourth quarter in 2013, to just 81.1%. Sounds a little too similar to the... Read More »Schedule a demo
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