King Cash
When it comes to value, it all comes down to cash flow. For the fourth year in a row, according to the 21st Edition of The Senior Care Acquisition Report, there has been a record level of net operating income per bed purchased in the skilled nursing market. This has been the primary driver of the steady rise in the average price per bed since 2011. At the last market peak in 2007, the average NOI per bed sold was $6,700 and the average price per bed was $55,200. From 2007 until 2015, the average NOI grew to $9,600 per bed, for an increase of 43%, while the average price per bed increased to $85,900, representing a 55% increase. Most nursing facilities have been trying to increase their... Read More »
Five Star and Senior Star… Again
Oh boy, here we go again. Bill and Bob Thomas have sent another letter to shareholders of Five Star Quality Care, of which they own about 3.4 million shares, or 6.8% of the company. As shareholders, they are glad that management realized that they had some valuable assets, the full value of which is not reflected in the share value. It rarely is. But, as we pointed out a few months ago when Five Star sold a few assets for a big price, and a big gain, with seven properties worth more than the market cap of the entire company, they are also subjecting themselves to a big lease payment liability, which will cut into cash flow. As shareholders, this is not making the Thomas brothers happy.... Read More »
Getting Ready For More Acquisitions
The Ensign Group has nearly doubled its bank line of credit to $450 million. The new facility will include a $300 million revolving line of credit as well as a $150 million term loan. In addition, there is a $150 million expansion option. It looks like the company is lining up the dry powder for some more acquisitions. Robinson Humphrey and Wells Fargo Securities arranged the financing. Read More »
Minnesota SNF/ALF
In another sale involving skilled nursing beds and assisted living, Ray Giannini of Marcus & Millichap sold a nursing facility in Duluth, Minnesota for $10.0 million, or about $53,000 per bed. Occupancy was solid and there were more than 180 total beds involved in the sale. Read More »
California SNF/ALF Sells
Krone Weidler of Weidler Integrated Healthcare Investment Properties, in affiliation with Marcus & Millichap, sold a skilled nursing and assisted living facility in California to a local private equity investor. Built in 1991, the property has 120 skilled nursing beds and 85 assisted living beds with occupancy that has been around 94%. The sales price was $15.6 million, or $76,100 per bed, and the buyer may have to turn the operations around a bit. Read More »
Opportunity Comes Knocking
Ken Carriero and Damien Carriero of Colliers International’s National Seniors Housing Group recently sold an 88-unit assisted living community in Florida for $4.25 million, or $48,300 per unit. The community was built in 1987 and is licensed for 135 beds. In the past, occupancy had been stabilized at just under 90%, but had declined to 46% as a result of the seller’s illness. The cap rate came in at 7.7%, and we are sure that the buyer, New York-based Center Management Group, will be able to ramp up occupancy again. Read More »Better in the long-run
Private equity group Valstone Partners is not looking back with the sale of its 42-unit assisted living/memory care community in Newport, Tennessee, barely a half year after acquiring the community as part of a portfolio transaction in December 2015. Built in 2000, the Brookdale Senior Living-operated community features 32 assisted living and 10 memory care units. It was operating decently with a 20% margin on approximately $1.62 million of revenues, with a 95% occupancy. But, the community’s size and location (rural eastern Tennessee) did not align with Valstone’s long-term strategy, prompting the sale. Mainstay Financial Group, a growing regional owner/operator, paid $3.9 million, or... Read More »
Pillar and Petersen
One of the largest owners and operators of skilled nursing facilities in Illinois, Petersen Health Care, recently went to Pillar, affiliated with Guggenheim Partners, to refinance three of its properties in the state. Evan Hom, Managing Director of Pillar’s New York office, originated a $5.44 million HUD refinance for an 90-bed facility in South Elgin, $2.28 million for a 77-bed facility in Jonesboro, and $2.16 million for a 62-bed facility in Macomb. All of the properties were built from 1967 to 1970, were well occupied at the time, and received fixed-rate, 30-year loans. Read More »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 »Schedule a demo
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