Blueprint Closes Mid-Summer Flurry Of Deals
Blueprint Healthcare Real Estate Advisors certainly has kept busy this summer, announcing four transactions in the last week. Connor Doherty closed two SNF transactions for Blueprint, both located in Ohio. The larger deal consisted of two facilities and 252 total beds, selling for a combined $16.75 million, or $66,470 per bed. The regional owner/operator seller had decided to strategically divest these assets as part of their long-term strategy and handed over ownership to an Ohio-focused operator with experience in operational turnarounds. They will have to use that experience on these two facilities. Built in 1975, with regular updates, the Cincinnati facility was just 66% occupied and... Read More »Summer Sales at Senior Living Investment Brokerage
Senior Living Investment Brokerage ended July with two closings. First, a family owner that had operated a pair of Texas skilled nursing facilities for decades recently decided to sell to an independent owner/operator based in the Waco area for $9.35 million, or about $38,000 per bed. Built in 1978 and 1964, respectively, the 131-bed facility in Pasadena was 88% occupied while the 115-bed facility in Mineola was 78% occupied. Combined, the pair brought in approximately $460,000 in EBITDA on $11.95 million of revenues, so the buyer will look to improve that 4% operating margin. Matthew Alley of Senior Living Investment Brokerage handled the transaction. Mr. Punzel also closed the sale (with... Read More »
Capital One Helps Refinance Pacifica Companies’ Portfolio
In one of the largest financings of the July, Capital One provided a $77.7 million loan to Pacifica Companies to refinance nine seniors housing communities in Arizona, California, Florida, Oregon and Utah. The loan consists of $67.7 million in initial funding plus an earn-out feature, which is contingent on specific conditions. That gives Pacifica the opportunity to recapture additional equity as newly renovated units lease up. Read More »
Home Health Under New Pressure
New proposed reimbursement rules sent Kindred Healthcare and other home health stocks plunging, but it is necessary? Well, the home healthcare industry got hit with a jolt last week with proposed new reimbursement rules. The news sent Kindred Healthcare’s shares down 15%, which especially hurt since they are completing their exit from the skilled nursing business, and home health and hospice is taking on an increasingly important role at the company. What I find extremely annoying is that, on the one side, the government and elder care advocates continue to push for at-home supports and services, and just as health care providers are gearing up for it, the government seems to take away any... Read More »
CareTrust REIT Grows In Minnesota
Prelude Homes & Services has proven to be the gateway to the Minnesota senior living market for CareTrust REIT, which just exercised its option to purchase a second stand-alone memory care community in the Minneapolis-area from Prelude. Three years ago, CareTrust entered the state when it bought Prelude’s three-year old, 28-unit MC community in Woodbury for $7.2 million, or $257,140 per unit. CareTrust leased the community back to Prelude for an initial 15-year term with CPI-based escalators, two five-year renewal options, 8.25% initial cash yield and a lease coverage ratio of 1.3x. The REIT also received a purchase option on a memory care development in White Bear Lake. The Woodbury... Read More »
Dover Development Goes Back To School
Knoxville, Tennessee-based Dover Development has gone back to school on its latest senior living development projects. That is, the firm has specialized in renovating neglected historic buildings, including most recently a couple of former schools, into seniors housing. First, Dover has already begun work on renovating an 80-year old (and unoccupied for 25 years) former high school in South Knoxville. After purchasing the school for $1,000 from the city of Knoxville, Dover embarked on $9.5 million ($158,300 per unit) renovation of the building, which will include 60 units of assisted living and memory care by its expected 2018 opening. Dover didn’t stop there in Knoxville. The company is... Read More »
What Happens When You Weight A Cap Rate By Beds?
Partly due to historical precedent, we have always presented our cap rate analysis on an unweighted average basis, meaning that the cap rate for a portfolio of facilities would carry the same weight as that of a single 80-bed facility. For those who believe that portfolios will usually command a lower cap rate, then a weighted average would be the most accurate method to determine what is really happening in the market. Even a 200-bed facility acquisition, because of the implied increase in investment risk, should in theory be treated differently from that of a 50-bed rural facility. Consequently, a few years ago we went back and recalculated the cap rates to weight them based on the... Read More »
New York Values Shine
While the rest of the world looks upon the skilled nursing sector as a business full of risk, we thought it may be instructive to take a look at the New York market, which we all know is a world unto itself. We recently reported on a sale in New York City of a 364-bed skilled nursing facility (details appearing in this issue) for $87 million, or $239,000 per bed. While not the highest sales price, it may be the highest price per bed, a least in recent memory. In the past three years, there have been 13 sales that closed in New York with prices over $100,000 per bed, making it perhaps the most expensive state in the country, on average. But it gets better. When looking at the 18 SNFs and... Read More »
Hunt Mortgage Group Hits It Out Of The Park
Hunt Mortgage Group, a subsidiary of Hunt Companies and a commercial real estate lender, has been slowly building its seniors housing/skilled nursing business since its launch in 2015. Now, Director Jim Neil has announced the firm’s largest senior care transaction yet with a $27.6 million HUD refinance of eight skilled nursing facilities in Texas. The borrower, Senior Living Properties, significantly improved operations across the 841-bed portfolio, which consists of primarily older, rural facilities. Since taking over management in 2014, Senior Living Properties also entered the facilities in the Texas UPL program, which boosted their performance. With the refinance completed, the company... Read More »
Quarterly Results Are In
If you go by the number of transaction announced from April 1, 2017 to June 30, 2017, the second quarter may seem a bit slow, especially when compared to the recent quarterly highs of 90 deals in the second quarter of last year and of 93 deals in the fourth quarter of 2016. Keep in mind, these are preliminary numbers, as we hear of more transactions as the year goes on. M&A activity stayed virtually even in the second quarter, down 1% over the previous quarter, to 75 transactions. The quarter’s deal volume makes up 24% of the 315 deals announced within the past 12 months. Nothing too drastic there. However, based on revealed prices, approximately $9.7 billion was committed to finance... Read More »Schedule a demo
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