Doom and Gloom for SNFs?
Skilled nursing facilities are closing at an alarming rate, so should we be worried about a shortage of beds in 10 years? There have been a lot of reports in the media recently about skilled nursing facilities closing down, just shutting their doors, and this is not just in rural areas. Low Medicaid rates have been blamed for this, and in many states, reimbursement levels have not even come close to keeping up with wage inflation, not to mention other costs. And this is 10 years into our economic recovery. Imagine what will happen during the next recession when state tax receipts decline. But there is something else going on as well. Skilled nursing occupancy rates have been trending down... Read More »
Harrison Street Exits Oregon Assets
The Springs Living successfully recapitalized its exiting equity partner, Harrison Street Real Estate Capital, in a couple of senior living communities with the help of a bank loan secured by Aron Will, Austin Sacco and Adam Mincberg of CBRE National Senior Housing. Originally acquired as part of larger $65 million four-property portfolio in 2012, these two properties are located within the Portland, Oregon MSA. With an average age of about 15 years, they currently feature a total of 145 independent living, 82 assisted living and 41 memory care units. The Springs (TSL) and Harrison Street had invested a significant amount of capital into the properties to make them the top competitors in... Read More »
Two Sales Closed by the Knapp Group
Knapp Group Seniors Housing Advisors of Marcus & Millichap closed a couple of sales around the Great Lakes. First, Jim and Justin Knapp teamed up to represent a local owner in their sale of an assisted living community in southeast Michigan, exactly 11 years after helping them initially acquire it. Built in 1987 and recently receiving significant upgrades, the 50-unit community was well occupied (over 90%) and operated at a 20.5% margin. With the new improvements, that margin should only improve. Another local owner/operator paid $6.5 million, or $130,000 per unit (at an 8.4% cap rate), for the property. Then Justin Knapp was the lead advisor in the sale of a 55-unit assisted... Read More »
Lending in Leominster
KeyBank Real Estate Capital arranged a first mortgage through Fannie Mae on behalf of a Sunrise Senior Living property in Leominster, Massachusetts. Originally built in 1996 with 48 assisted living units, the property added 23 memory care units in 1999 and converted 10 existing AL units into nine MC units in 2013. In that most recent project, the owner also added a common room and dining room to the community. Now, to refinance existing debt, Carolyn Nazdin of KeyBank arranged a non-recourse $12.2 million loan, with a 10-year interest-only term. Read More »Recent Senior Care M&A Deals, Week Ending April 5, 2019
Check out our recent senior care M&A deals! Long-Term Care AcquirerTargetPrice CareTrust REIT, Inc.Skilled nursing portfolio$211 million Private equity groupVista Gardens$22.8 million Strawberry Fields REIT LLCThe Waters of White Hall$6.85 million Regional owner/operatorRosewood Care Center of Galesburg$3.3 million Avamere Family of CompaniesMountain Ridge Assisted... Read More »
The Most-Active Acquirers of 2019, So Far
This may sound familiar, but CareTrust REIT and The Ensign Group have been the two most prolific acquirers of senior care assets so far this year, with four announced acquisitions each since January 1. This comes at a time with public operators and REITs are very publicly trimming their portfolios of either non-performing or non-core businesses. But, this isn’t simply a 2019 trend for CareTrust and Ensign, which announced 18 and 17 acquisitions, respectively, from 2017 to 2018. Neither company has shied away from a turnaround opportunity either, but they are clearly doing something well, as both are trading near their historical high share prices. CareTrust made the biggest splash in April... Read More »
HUD Has a Portfolio Sale
It is not often that we see a portfolio sale coming from HUD, or any sale for that matter, since it has always experienced a very low default rate. But given the difficulties other lenders and landlords have had with the skilled nursing sector the past few years, it should not come as a surprise. HUD is offering for sale a portfolio of 12 skilled nursing facilities and one supportive living facility in Illinois and Missouri. Six of the locations are in the Chicago MSA, three in the St. Louis MSA, two in the Peoria MSA, one in the Rockford, Illinois MSA, and one in the Davenport/ Moline/Rock Island, Iowa MSA. The licensed capacity of the portfolio is 1,662 beds, but the actual operating... Read More »
Older, Struggling SNFs Had More Weight In 2018 Market
We have historically presented our cap rate analysis on an unweighted average basis, weighting the cap rate for a 60-bed skilled nursing facility and a portfolio of 20 facilities the same in our Skilled Nursing Acquisition & Investment Report (which you can still order here). Many buyers believe that a portfolio should command a lower cap rate than a single-asset sale, but that often depends on the quality of the portfolio and whether there are any stinkers in the portfolio. A weighted average cap rate thus removes this bias. What this has shown is that over time since we started separating out these two averages is that there has been very little difference between the two cap rate... Read More »
Monarch Advisors Sources Acquisition Financing for SLIB Deal
Jason Punzel, Brad Goodsell and Vince Viverito of Senior Living Investment Brokerage sold a 71-unit memory care community in Vista, California for $22.8 million, or about $321,000 per unit. Helping to push up that price was first, the location in the high-barrier-to-entry market of San Diego County, and second, its solid operations with a 29% margin on $5.85 million of revenues and an 88% occupancy rate. It was built in the last 10 years too, which helps. The single-asset, local owner decided to exit the industry, prompting the sale to a private equity group located in Colorado that owns several other senior living properties and some commercial assets around the country. SLIB’s affiliated... Read More »
Moving on in Milwaukee
Ray Giannini and John Klement of Marcus & Millichap helped the private owner of an assisted living community in Wisconsin exit the industry with its sale. Located minutes from downtown Milwaukee, Wisconsin in the town of Oak Creek, this 20-year old community has 36 private units, each with a bathroom and kitchenette. Occupancy was nearly full but mostly featured Wisconsin waiver residents, limiting the community’s potential cash flow. Aided by $500,000 of seller financing with a slightly-above-conventional interest rate, the buyer, a Chicago-based land entity, paid $3.8 million, or $105,600 per unit, at an approximate 9% cap rate. Read More »Schedule a demo
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