The Hyper Focus On Occupancy
Why do investors, lenders and analysts focus so much on occupancy in seniors housing? Operating margin became much less important over the years compared with the absolute level of cash flow earned. This makes sense since a property’s value is derived from the cash flow, not the margin, and increased value from increased cash flow, not a better margin. The one caveat is that as the operating margin increases, the absolute level of cash flow should also increase, but not always. Getting back to occupancy, we follow it closely because trends in occupancy can tell us so much about a company and the markets where it operates. In today’s environment, everyone seems to be blaming consistently... Read More »Rehabilitation & Physical Therapy: M&A in the Changing Post-Acute Landscape
The rehabilitation and physical therapy M&A market has so far flown under the radar, even though the apparent need will only grow. Publicly traded companies are buying up inpatient rehab facilities, and private equity firms are building physical therapy platforms in major metro areas. But, the market is still very fragmented, which offers opportunities to investors. For those interested in this market, we will be hosting a webinar called “Rehabilitation & Physical Therapy: M&A in the Changing Post-Acute Landscape” at 1PM on August 17th. Our editor, Lisa Phillips, and panelists Luis de la Prida of Spectrum Healthcare Consulting, Jay Shiland of MTS Partners, Lou Ann Soika of... Read More »
KeyBank Arranges Acquisition Financing For New Tulsa Community
Three years after it opened in Tulsa, Oklahoma, an 86-unit assisted living/memory care community sold to an undisclosed buyer. To fund the purchase, Monique Bimler of KeyBank Real Estate Capital arranged a $13 million, or $149,400 per unit, Freddie Mac loan, with a 10-year term and 30-year amortization schedule. Legend Senior Living had developed the community (its third in the Tulsa MSA) in 2014 with 68 AL and 18 MC units. The total development cost was about $13 million, so assuming the refinance was valued at around 70% loan-to-cost, Legend certainly added value to the community, most likely to over $200,000 per unit. Amenities like a theater, private dining room, massage/therapy room... Read More »Recent Senior Care M&A Deals, Week Ending August 4, 2017
Check out our recent senior care M&A transactions! Long-Term Care AcquirerTargetPrice CareTrust REIT, Inc.Memory Care Cottages in White Bear Lake$7.5 million Granite Investment GroupTabor Crest II$7 million Ohio-based owner/operatorMilcrest Nursing Center$2 million Allaire Healthcare GroupMorris View Healthcare... Read More »
Allaire Health Group Leases County-Owned SNF
Joshua Jandris, Mark Myers and Charles Hilding of IPA Seniors Housing represented Morris County (New Jersey) in leasing its 283-bed skilled nursing facility in Morristown. The four-story facility had been struggling, losing as much as $3.8 million in annual EBITDA per year. It didn’t help that the county outsourced all aspects of operations. The facility is also on the older side (built in 1973 and 1993) and features a roughly 60% Medicaid census. The financial strain put on the county prompted officials to look for a solution. After a lengthy search, IPA arranged for Allaire Healthcare Group to lease the facility from the county under a 15-year term, with 2.0% annual escalators and $2.25... Read More »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 »Schedule a demo
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