Transaction teamwork
Marcus & Millichap sent a veritable army into Norwood, Ohio to arrange the sale of two skilled nursing facilities. Mark Myers, Joshua Jandris and Charles Hilding, plus Stan Folk, Joel Dumes and Steve Anevski out of M&M’s Cincinnati office and Peyton Stanforth out of the Chicago O’Hare office, represented the seller, a private family investment group, in the transaction. The lease was ending for the tenant operator, which was interested in building new facilities. So, Messrs. Myers, Jandris, Hilding and Stanforth procured the buyer, a real estate investment trust with a large presence in the region that leased the facilities to a new third-party tenant. Built 25 years ago, one of... Read More »Going up in downtown
A well operating CCRC in Buffalo, New York looking to expand needed quick financing to take advantage of building a new independent living campus on the site of a former acute care hospital in downtown Buffalo. Built in 1999 by Episcopal Church Home & Affiliates, the CCRC features 243 IL units and patio homes, as well as enriched housing and skilled nursing beds. Over the years, it has consistently enjoyed high occupancy across all levels of care under its not-for-profit management. HJ Sims has had a relationship with the CCRC since providing seed capital for its initial development in 1996, and so was a natural fit to finance this new expansion project. After site demolition and... Read More »
Age before location
Highlighting a growing issue for the country’s aging skilled nursing facility inventory, a facility’s regional advantage may not matter much for owners of facilities in high barrier-to-entry markets looking to maximize value. Surprisingly, the Northeast region, because of its higher average income, property values and barriers to entry, saw the highest average cap rate of any region in 2015, at 13.3%. This is up 70 basis points from the average in 2014 of 12.6%, and up 90 basis points from 2013, when the region averaged the lowest cap rate in the country. Conversely, the North Central region, which has seen tremendous growth in skilled nursing development (buoyed by Mainstreet’s pipeline),... Read More »
Changes at HCP, Brookdale, Genesis
Earnings season brings more than just earnings to the surface for some companies. What can I say? It has been quite a week, and we are only at Wednesday. On Monday subscribers received my initial take on HCP’s announcement about spinning out its HCR ManorCare portfolio into a new REIT. Maybe management thought it was necessary, but I really think we are going to be hearing some negative news in the future, and if so, it will make HCP’s decision look better. Just look at the performance of Genesis Health in the first quarter, which sent its share price plummeting by 20% yesterday. One problem is that with the HCR portfolio representing more than 25% of HCP’s revenues, with it gone,... Read More »
Closing by Clousing
With the help of Brad Clousing of Senior Living Investment Brokerage, Sabal Financial sold its 41-unit assisted living community in Cumming, Georgia. Previously, Sabal had purchased the note on the non-performing property in a large portfolio sale from Synovus Bank, but has subsequently foreclosed on the asset. The community was built in 1997 and managed by Oaks Senior Living, which is owned by the Salabarria family. Under Oaks management, the community actually was performing well, with a 23% operating margin and 80% occupancy, despite the ownership change and bankruptcy. The purchase price came to $3.3 million, or $80,488 per unit, with an 8% cap rate. The buyer, a Midwest-based regional... Read More »
Arbor Acquisition
Aron Will is at it again. Through a national bank, Mr. Will of CBRE secured a $38.9 million five-year bridge loan, with three years of interest only and a sub-200 basis point spread over 30-day LIBOR, for an institutional client. The financing went towards funding the acquisition of The Arbor Terrace Portfolio, which includes two 101-unit assisted living/memory care communities (each with 71 AL and 30 MC units) in the Atlanta, Georgia market. Both communities opened in the fourth quarter of 2015 and are leasing well. The Arbor Company manages the portfolio. Read More »
The weight of the cap rate
In the last couple of years, we have started looking at cap rates based on the size of properties and portfolios acquired. In weighting cap rates by size, we avoid the issue of the cap rate for a 180-bed facility sale being weighted the same as the cap rate for a 60-bed facility sale. Some people believe that a weighted average cap rate is more reflective of a true cap rate average because the dollar value of the portfolios and larger facilities sold can dominate the overall market. But in the last 15 years (as long as we have been tracking it), there has largely been no significant difference between the weighted and un-weighted average cap rate, just that in peak value years, the... Read More »Bankruptcy breeds opportunity
After an exceptionally busy month for Texas M&A (details included in the upcoming issue of The SeniorCare Investor), we have one more. Highland Capital Management’s Cornerstone Healthcare Group was the stalking horse and ultimate buyer of a bankrupt not-for-profit senior care company with two senior living communities in Texas and one in Tennessee. The target, UGHS Senior Living, was actually profitable but filed for Chapter 11 bankruptcy protection in November 2015 after its not-for-profit parent University General Health System filed for bankruptcy protection in February 2015 and its creditors were seeking repayment through various UGHS subsidiaries, including UGHS Senior Living. The... Read More »Breaking barriers
If skilled nursing facilities sold on average at an all-time record high price of $85,900 per bed, then how did the average 2015 cap rate hold up to history? Well, according to the 21st Edition of The Senior Care Acquisition Report, the average cap rate for skilled nursing transactions dropped 20 basis points to 12.2%, which is the second lowest average ever (12.1% was the lowest ever at the last market peak in 2007). Traditionally, the average skilled nursing cap rate has reliably ranged between 12.0% and 13.5% for most of the past 20 years, regardless of swings in interest rates and changes in financial markets. But with two consecutive years of sub-12.5% average cap rates (2014 was... Read More »Partner in post-acute
To finance its recent acquisition of Spectrum Professional Services, an investor group led by healthcare M&A investor Beecken Petty O’Keefe and Company recently received a $110.5 million senior secured credit facility arranged by Capital One Healthcare, which served as administrative agent and lead book-runner. Spectrum is a rehabilitative therapy management consulting business catering its services to post-acute care, skilled nursing and assisted/independent living providers. It was acquired in December 2015 by a joint venture headed by Beecken Petty O’Keefe and including Sunrise Senior Living plus existing investors at Spectrum. Cain Brothers had served as Spectrum’s exclusive... Read More »Schedule a demo
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