Controversy Among The REITs
Opinions and controversy are all part of the game, but sometimes it can go too far. Some people think I speak my mind a little too frequently, but after 30 years in the seniors housing and care sector, it is hard not to have a lot of opinions. I have always thought that with so much news out there, and so much rehashed news, people want to hear what someone really thinks. It may not be popular, but if it based on experience and a lot of thought, well, then maybe it is worth something. Controversial? Sometimes, at least I hope so. But perhaps not as controversial as the current spat among some healthcare REITs about their decisions to spin off their skilled nursing portfolios, or not. For... Read More »
Five years on…
A 94-unit senior living community in Covington, Louisiana changed hands five years after its last sale, more than doubling in value in the time. Granted, the community added a 24-unit memory care wing in 2014, which helped push the value. Nevertheless, after purchasing the community for $11 million, or $142,857 per unit, Arcadia Communities brought occupancy up from 91% to 99% in five years (even with the expansion) and nearly doubled the EBITDA. Now, the regional operator is selling the community to a national private equity firm for $22.2 million, or $236,170 per unit, with a 7% cap rate. Evans Senior Investments handled the transaction. Read More »
Garbers of Greystone
With some of the largest units in the region, a 211-unit assisted living/memory care community in Bedford, Ohio sold to Pritok Capital for $6.5 million, or $30,805 per unit. The community was not purpose-built for assisted living, which caused some operational challenges and thus resulted in a lower price. But, the 198 AL units average 564 square feet and the 13 MC units average 664 square feet (on the high side for the region). The community was built in 1988 and sits on 20 acres in the Cleveland area. Mike Garbers of Greystone Real Estate Advisors represented the seller, a public healthcare REIT, in the transaction, for which Joel Gordon of MB Financial served as lender. Read More »Bucking the trend
Certainly one of the oddities of the over 70 statistics we provide in The Senior Care Acquisition Report was the relationship between the seniors housing (independent living, assisted living and memory care) cap rate and the 10-year treasury rate. One would expect that in a strong economy, the seniors housing cap rate would fall, while the 10-year treasury rate would rise, making the spread between the two smaller, and vice versa for a weak economy. However, as the seniors housing market has improved and cap rates have accordingly dropped from 7.7% in 2014 to 7.6% in 2015, the average 10-year treasury rate fell 40 basis points to 2.1%. The spread between the two rates thus increased from... Read More »
Pay up for profit potential
For the first time in five years, there wasn’t a perfect correlation between the average cap rate and the average price per unit in seniors housing (which includes independent living, assisted living and memory care), but it was close, according to the 21st Edition of The Senior Care Acquisition Report. This was an interesting year, however, where we saw a decrease in the average price paid per unit, and a decrease in the average cap rate. Accordingly, there were some interesting results. First, the two lowest cap rates both experienced decreases in their average price paid per unit (from $310,000 to $242,000 for 6% and $222,000 to $186,800 for 7%). Then there was an increase in the... Read More »
New bonds for North Carolina CCRCs
A not-for-profit owner of three CCRCs, totaling almost 1,000 units in North Carolina, recently refinanced all of its Series 2005 fixed rate bonds with the help of Ziegler. The United Methodist Retirement Homes (UMRH) has partnered with Life Care Services since 2000 to operate its three campuses, which include 622 independent living units, 108 assisted living units and 202 skilled nursing beds. To refinance the outstanding bonds, Ziegler closed a $34.485 million tax-exempt, fixed-rate bond issue, with an aggregate yield-to-maturity of 3.47%. That produces net present value savings of $8.91 million (or 22.47% of the principal amount of the refunded bonds). Davenport & Company served as a... Read More »
A Punzel pair
Jason Punzel of Senior Living Investment Brokerage must be racking up airline miles, having crisscrossed the country to close a pair of deals on the West Coast then in the Heartland. In Oroville, California, Mr. Punzel sold a 36-unit memory care community, which was built in 2002 and underwent a renovation/expansion in 2008, for $5.95 million, or $165,278 per unit, with a 9.0% cap rate. There is an additional 2.5 acres available for expansion, but the local owner/operator seller was retiring from the business. Another local owner/operator, with two other facilities in the area, stepped in as the buyer. Mr. Punzel also sold two assisted living communities in South Dakota for $1.978 million,... Read More »
Welltower Building A Manhattan Tower
Welltower and Hines will be developing Welltower’s first urban high rise senior care community in Manhattan. I, for one, can’t wait to take a tour of Hines and Welltower’s high rise assisted living and memory care development right in the middle of midtown Manhattan. And while I’m at it, I could visit Maplewood Senior Living’s similar development a little more than a mile north on the Upper East side of Manhattan. The Welltower community will be 15 stories tall, which is unusual for seniors housing, but not for me. The CCRC I am most familiar with from personal experience has 25 stories and is located in Florida in a considerably less urban environment. Height was never an issue,... Read More »
Walker & Dunlop & HUD
With the recent changes to HUD’s LEAN program, we wondered how long it would take to see a real impact on transaction volume with the agency. Well, Walker & Dunlop may not have closed an actual HUD transaction, but it did position itself well to do so in the future. For approximately $45 million, the company acquired the commercial mortgage servicing rights associated with a $3.8 billion servicing portfolio from Oppenheimer Multifamily Housing & Healthcare Finance, Inc., a subsidiary of Oppenheimer Holdings Inc. The portfolio consists of over 480 multifamily and healthcare HUD loans, and makes Walker & Dunlop the largest HUD multifamily/healthcare servicer in the country. The... Read More »
A graceful exit
Grace Healthcare has made a clean break from both the Arizona and California markets, selling three skilled nursing facilities for a combined $14.7 million. There were two California facilities located about 10 miles from each other in the San Francisco area, which sold for $8.24 million, or $64,600 per bed. Sold to a California-based investor and leased to an operator with a California presence, they included a 50-year old 49-bed facility that offers dementia and rehabilitate care (with a 75% occupancy rate and 34% quality mix), and a 51-bed facility that was built in 1958 and underwent renovations in 2012 (with a 90% occupancy rate and 34% quality mix). Plus, Grace sold its 100-bed... Read More »Schedule a demo
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