Lenders and Investors Need To See
With so much capital flooding the senior care space, lenders and investors need a better appreciation of what it is they are funding. People like to say that the seniors housing and care industry is driven by demographics, but for the past few years it has been driven by cheap and abundant capital. But to buy it or build it “because I can,” while maybe rational in the moment, does not make long-term sense and usually leads to future problems. So here is my recommendation. For every new lender or investor you have, ask them to do an 8-hour shift in one of your buildings, and I mean doing the dirty work, not just shadowing an employee. First of all, they will have a new appreciation for how... Read More »
The Sabra-Genesis Sales Keep On Coming
Many of Blueprint Healthcare Real Estate Advisors’ closings this year have featured a publicly traded REIT divesting skilled nursing facilities (a theme in the past year), which was yet again the impetus for its latest deal. Christopher Hyldahl, Ben Firestone, Gideon Orion and Michael Segal worked on behalf of Sabra Health Care REIT to sell a portfolio of 12 skilled nursing facilities in New Hampshire (7) and Florida (5). The deal is part of Sabra’s strategy to reduce its exposure to Genesis Healthcare. Another tranche of 20 properties in Indiana, Kentucky and Ohio sold earlier this year (also handled by Blueprint) for $103.3 million, or about $55,400 per bed. Now, Sabra has thrown off 12... Read More »
Cash Flow Pushes Up Seniors Housing Prices
Many buyers prize a community’s cash flow over many other factors when looking for relatively safe investments that can provide returns to their capital providers. The past three years haven’t reached the record set in 2014 of $14,200 per unit, but in a year where the average price per unit for seniors housing (independent and assisted living) increased, it makes sense that NOI per unit would increase in turn. Driving the NOI per unit up to the $14,200 per unit mark was the assisted living sector, which accounted for 23 of the top 25 recorded values, and very high NOI per unit results, per the latest Senior Care Acquisition Report. The improved existing cash flow seems to have outweighed... Read More »
Greystone Closes Sale in Sunny Southern California
Mike Garbers and Cody Tremper of Greystone Real Estate Advisors headed to Palm Springs, California for their latest sale, representing a publicly traded REIT in the disposition. Built nearly 20 years ago, the property featured four 15-unit assisted living cottages and two 15-unit memory care cottages, for a total of 90 units. It had a history of strong occupancy, which the new owner, an operator with local market presence, will hope to build on. The purchase price was not disclosed. Read More »
Griffin-American Shows Its Strength In The Show-Me State
After a busy Spring growing its medical office building portfolio, Griffin-American Healthcare REIT IV jumped back into the senior care M&A market to acquire eight skilled nursing facilities in Missouri, at a price of $88.2 million, or $79,300 per bed. The portfolio, comprising 1,112 licensed beds, is well performing and will be leased under a 15-year absolute net lease with two 10-year renewal options and CPI-based rent escalators with a floor of 2% and a cap of 3%. Griffin-American also diversifies its geography and asset class with the deal. Its last senior care deal was on the small side (a $22.6 million acquisition of two Wisconsin properties announced in March 2018), but 2017 was... Read More »
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 »Schedule a demo
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