Three more Popular closings
Popular Community Bank, a subsidiary of Popular, Inc. (NASDAQ: BPOP), was busy this month, closing a couple of term loans along with five separate credit facilities. Ken Mitchell, who leads the National Healthcare Financing Division of Popular, closed both an $18 million loan and a $13 million loan for Grand Healthcare System to exercise purchase options on a 179-bed skilled nursing facility in Queens, New York and a 122-bed skilled nursing facility in the Hudson Valley area of New York. Grand had been operating the facilities since 2014, both of which occupancy above 95% and strong quality mixes. Plus, the Queens facility recently opened a 14-bed unit to serve stroke patients. As for the... Read More »
Valuations Remain High Across Senior Care Spectrum
Average prices for the four quarters ended June 30 dipped a little but most remain higher than calendar year 2015. Cap rates are slowly rising. Earlier this month, we reported that the seniors housing and care M&A market, based on the number of transactions announced in the second quarter, as well as the first six months of 2016, was ahead of last year, but not by a large margin. It was the dollar amount of those transactions, however, that has declined because of the dearth of the large sales. Now we have come out with our rolling four quarters data, and the results are not surprising. The conclusion is that based on valuations, the market remains relatively strong. In the skilled... Read More »Lower Expenses, Higher Prices
One would assume that as a skilled nursing facility’s profitability increased, so should its price. And that was indeed the case in 2015, with a perfect correlation between the average price per bed and the expense rate. Facilities with an expense ratio of 90% and over sold in 2015 for an average of $46,000 per bed, while those with expense ratios between 85% and 89% sold for $75,000 per bed on average. The high end of the market, meaning those facilities with expense ratios under 85%, not surprisingly sold for the highest price, averaging $128,100 per bed in 2015. Clearly, well-operating skilled nursing facilities are very attractive to investors in search of a high return, at least when... Read More »LTC Expands with Thrive
LTC Properties (NYSE: LTC) expanded its relationship with Thrive Senior Living, acquiring and then leasing another property to the Atlanta-based operator for $14.3 million, or $204,286 per unit. Receiving its Certificate of Occupancy in May 2016, the community in Athens, Georgia was actually developed by a joint venture between Thrive, Paragon Real Estate and Summit Healthcare REIT. It features 50 assisted living and 20 memory care all-private pay units, and was added to an existing master lease agreement at an initial incremental yield of 8.0%. This expands LTC’s relationship with Thrive to three communities, with two additional development projects expected to open by the end of... Read More »
Two year turnover for CNL
Following up on Five Star Quality Care’s (NYSE: FVE) sale of seven of its 33 owned senior living communities for $112.4 million, the company put some of those funds to work in acquiring a 163-unit senior living community in Vestavia Hills, Alabama. Built in 1994 with an addition in 1997, the community has 90 independent living, 49 assisted living and 24 memory care units. The seller, CNL Lifestyle Properties, bought the property in January 2014 for $18.5 million, or $113,500 per unit, and then leased it back to an affiliate of Solomon Senior Living and Trinity Lifestyles Management. But Five Star will take over operations, in addition to changing the community’s name to Morningside... Read More »
Oceanside on Oahu
Shep Roylance and Lee Blake of The JCH Group recently traveled to Hawaii to facilitate the sale of a 152-unit senior living property in Hauula. In this community, all of the units are licensed for assisted living, but a large portion of the residents require little to no care and are basically independent living. There are also memory care, hospice, respite and adult day care services. It was built in 1997 with 90,351 square feet on 7.98 acres, and comes with a 99-year land lease. A local owner/operator paid $6.64 million, or $43,684 per unit, for the community, and Messrs. Roylance and Blake represented both the buyer and seller in the transaction. Read More »Back to Sims
A couple of years after purchasing two Rhode Island skilled nursing facilities, Athena Health Care Systems has gone to HUD to refinance the two properties, with the help of HJ Sims. Totaling 280 beds, the skilled nursing facilities combined for an occupancy in the mid-90s. This was not the first time Sims had gotten involved with these facilities. In fact, when Athena acquired them in 2013 and 2014, Sims issued both conventional bank financing and preferred equity to fund the deal. But, the bank debt was scheduled to mature in 2020 and 2021, respectively, and Athena chose to refinance through HUD to take advantage of the current low interest rate environment. So, Sims Mortgage Funding... Read More »Quantity over Quality?
What is the added cost of purchasing a portfolio of assisted living communities versus single-facilities? That is a question we try to answer in our Senior Care Acquisition Report (now in its 21st Edition). Now, there is no guarantee that a buyer will pay more for a portfolio of properties, but rather, the premium has to do with both the number of properties and the quality. For statistical purposes, we define “portfolio” sales as those sales with three or more properties. Most years, there is a sizeable difference between the average price paid for portfolios compared with smaller purchases. In 2015, we recorded one of the largest premiums in recent years of $47,600 per unit, or a 30%... Read More »
Continued Uncertainty At HCP
Lauralee Martin is out as CEO, but who will be in remains a mystery. The only thing surprising about the “sudden” announcement that Lauralee Martin stepped down as CEO of HCP, Inc. was that the effective date of her departure was also the announcement date. Now, we don’t want to read too many tea leaves into the situation, but remember that she came into the CEO position from the Board nearly three years ago in a tumultuous dumping of the previous CEO. She already had a top job at another real estate company and didn’t really need the aggravation. But she steered the REIT through another tumultuous period with, first the two lease adjustments, and then the in-process spin-off of the $6... Read More »Bridge with Love
A new 62-bed assisted living/memory care community is being developed in Ogden, Utah with the help of a $6.63 million bridge construction loan arranged by James Vanar of Love Funding. The loan, which was provided by Love’s parent company Midland States Bank, is expected to be taken out in three years by a HUD refinance. It also allows the developer, Utah-based Giza Development, to start the project sooner and begin accepting residents. Since introducing the bridge loan program in May 2015, Love has already financed over $65 million in bridge loans, not including $300 million of loans in its pipeline. Read More »Schedule a demo
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