Cash Is King For Skilled Nursing Targets
When buyers value a skilled nursing facility, or any senior living property, it is always the absolute level of cash flow (NOI) that matters, not the operating margin or expense ratio. Buyers are purchasing a stream of net cash flow, and that net cash flow is going to provide the returns to capital providers. As long as cap rates remain stable, which they certainly have in the skilled nursing sector, when cash flow increases, the prices paid increase. From 2008 to 2015, the average cash flow per bed of SNFs sold increased by 63% (peaking in 2015 at $9,600 per bed), and this was driving the five straight years of record average prices for skilled nursing facilities, according to the 23rd... Read More »
Capital One Refinances Newly Expanded Assisted Living Community
After acquiring and expanding a 59-unit assisted living/memory care community in Nacogdoches, Texas, the time had come for its owners to refinance, with the help of Capital One. Originally built with 36 assisted living units in 1996, the community was previously owned by RWS Healthcare, a portfolio company of private equity firm Windward Health Partners. But in May 2015, Prevarian Senior Living stepped in to buy the property for an estimated $130,000 per unit, and hired Civitas Senior Living to operate it. The community was about 93% occupied at the time but there was additional land for expansion, which Prevarian took advantage of to build 23 more units, including an 11-unit/16-bed memory... Read More »
Ziegler Closes Big Bond Financing For To-Be-Built CCRC
A large CCRC is being built in Durham, New Hampshire thanks to a $110.48 million bond financing closed by Ziegler. There is clear interest in the development (and the marketing team must have done its job well), as once the community began accepting pre-sale deposits on January 15, 2018, it took just over a month to sell out with a 67-person wait list. Not too shabby. The community will feature 150 independent living units, 24 assisted living units, 24 memory care units and 24 skilled nursing beds on an 11-acre campus. Ziegler was engaged as placement agent for $52.98 million in Series A permanent bonds and $45.4 million in Series B temporary bonds issued through the New Hampshire Health... Read More »
Innovation and Seniors Housing
Everyone talks about the disruption factor coming to seniors housing, but nobody knows what it is. Can we innovate before it comes? So, I have been attending the Senior Living Innovation Forum this week, a “smallish,” invite only conference with about 250 attendees. The point of it is to bring in industry insiders and some outsiders to get into the down and dirty about the future of seniors housing in this country. My session, with four top CEOs on the panel, will be taking a deep dive into the future, where they think the industry will be in 2030, what a potential disruptor could be and whether it will come from outside the industry or inside. Will the disruption be service oriented or... Read More »
KeyBank Closes Two Fannie and Freddie Financings
Charlie Shoop of KeyBank Real Estate Capital has been hard at work arranging two financings from two different agencies. First, through Freddie Mac, Mr. Shoop originated a $26 million loan to facilitate the acquisition of a 175-unit independent living community in Dallas, Texas. The floating-rate loan came with a seven-year term, four-year interest only period and 30-year amortization schedule. Its recipient was Chicago Pacific Founders, which purchased the nine-year old community from Capitol Seniors Housing (CSH) for an undisclosed price. CSH had originally bought the property in 2016 when it was around 95% occupied and operating well. At the time, CSH had plans to invest in some capital... Read More »
Blueprint Sells Jewish Senior Care Community in Ohio
Jacob Gehl, Connor Doherty and Giancarlo Riso of Blueprint Healthcare Real Estate Advisors represented a not-for-profit senior care community in the Cincinnati, Ohio suburb of Mason in its sale to another not-for-profit entity. After first opening in 1997, the 267-bed/unit property was operated by the Jewish Home of Cincinnati and offers a full continuum of care, including independent living, assisted living, memory care and skilled nursing. However, in order to invest in new programs and services to serve Cincinnati’s Jewish seniors in the future, its Board of Trustees elected to sell. Blueprint found an Indiana-based not-for-profit buyer, which will hire CarDon & Associates to manage... Read More »
CBRE Finances Change of Ownership at California Community
Just over a year after opening, a 130-unit senior living community in Folsom, California (Sacramento MSA) has already stabilized, leaving one of its partners to look for an exit. A joint venture between developer Tenfold (formerly Shamrock Holdings), operator Artēgan and a global investment manager originally opened the community in February 2017 and oversaw an impressive lease-up, topping 90% occupancy. Featuring independent living, assisted living and memory care services, the community offered a continuum of care approach unique to its local market, which surely helped fill units. But the global investment manager partner sought an exit, and AEW Capital Management took its place. Aron... Read More »
Ensign Makes Another Arizona Acquisition
Despite its stated strategy to own more of the real estate in its portfolio of over 230 healthcare properties, The Ensign Group shunned its recent practice and acquired just the operations of a 140-bed skilled nursing facility in Sun City West, Arizona. Reporting 87% occupancy at the time of the sale, the facility will be operated by Ensign’s Arizona-based subsidiary, Bandera Healthcare, while Ensign acquired the operations subject to a long-term lease. The deal brings The Ensign Group’s portfolio to 184 skilled nursing operations, 22 of which include assisted living services, and 51 AL/independent living operations. Of that total, Ensign currently owns the real estate at 67 of the 235... Read More »
The Price of Profitability in Skilled Nursing
For the fifth year in a row, there has been a perfect correlation between the average price per bed and the expense ratio of those skilled nursing facilities sold, according to the 23rd Edition of The Senior Care Acquisition Report. This makes perfect sense but does not always happen when you have skilled nursing facilities in good markets that are mismanaged, usually on the expense side, but often combined with low Medicare utilization. Even though the operating margin (the inverse of the expense ratio) is important and can impact value in the acquisition market, it is the absolute level of cash produced at the facility that is always the most important factor. If there is a low expense... Read More »
Grandbridge Goes Green, Again
Utilizing Fannie Mae’s Green Rewards financing product, Richard Thomas and Meredith Davis of Grandbridge Seniors Housing and Healthcare Finance Group arranged a $25.5 million acquisition loan to fund the purchase of a 93-unit assisted living/memory care community in Alpharetta, Georgia. Focus Healthcare Partners’ dedicated senior housing fund was the borrower and will retain The Arbor Company as the community’s operator. This type of transaction seems to have become a recent specialty of Grandbridge’s, as the firm so far in 2018 has closed nearly $300 million in financings through Fannie Mae’s Green Rewards program, across 13 properties, which is the most among Fannie Mae DUS lenders... Read More »Schedule a demo
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