Exit the extremes
While the average price per bed for skilled nursing facilities hit a record high in 2015 (at $85,900 per bed), driven largely by a record number of transactions valued above $100,000 per bed, seniors housing (assisted and independent living combined) experienced a drop in its average price per unit. After 2014 set a record with an average of $208,200 paid per unit, the average in 2015 dropped to $189,900 per unit. What drove this decrease? Well, there were fewer high-priced sales, proportionally, in 2015. The upper quartile in 2015 was $227,900 per unit, meaning that 25% of the properties sold at prices above this level. That is well off from 2014’s record-high of $250,800 per unit.... Read More »
From Allen to Ziegler
Ziegler just closed on a $26.2 million tax-exempt bond financing for Christian Care Centers (CCC), a not-for-profit based in Texas. CCC operates two retirement communities in Texas and is in the process of completing construction of a rental community in Allen, Texas, which will have 22 independent living units, 32 assisted living units and 36 memory care units. Read More »
A Keene Eye
A week after Matt Alley of Senior Living Investment Brokerage handled the sale of a 110-bed skilled nursing facility located about 30 miles from Odessa, Texas, he struck again in the state, selling an 88-unit independent living/memory care community in the town of Keene. Built in 1988 and renovated in 2003, the community features 56 IL units and 32 units/36 beds of memory care. With the local owner/operator managing under a forbearance agreement with their lender, the community reached occupancy of 99% and a 28% operating margin. The buyer is a hospital provider headquartered in the Dallas-Fort Worth area and is owned by funds managed by an investment advisor. They paid $7.65 million, or... Read More »
Occupancy Down
NIC MAP reported their preliminary first quarter results for occupancy and rate trends. With the relatively mild winter, the normal first quarter downward trend was somewhat muted this year, with assisted living occupancy dropping just 29 basis points sequentially and year-over-year for stabilized properties in all markets. Trailing 12-month absorption as a percent of supply for assisted living was 3.9%, up from 3.2% in the fourth quarter and 3.0% in the year-ago quarter. And construction starts as a percent of supply dropped both sequentially and year-over-year. Most people seem to have interpreted this to mean that supply and demand are catching up to each other. Anecdotally, we continue... Read More »
Renovating the Old
We have talked about the difficulties of 40-year old nursing facilities, but 34-year old CCRCs can have similar problems. Such was the case with Kingswood Senior Living Community located in Kansas City, Missouri, which was built in 1982. Because of its age and lack of updates over the years, 40% of its IL units were obsolete, it had only 14 AL units and there were no memory care units on the campus. In addition, the current manager, Life Care Services, had difficulty filling the 82-bed skilled nursing facility. Nothing that $51.77 in tax-exempt bond financing can’t fix. With the help of LCS Development, a majority of the 80 unmarketable apartments were repurposed and converted into 30 new... Read More »
More in the Lone Star State
Matthew Alley of Senior Living Investment Brokerage handled the sale of a 110-bed skilled nursing facility located about 30 miles from Odessa, Texas. Built in 1996, it has 37,043 square feet on 6.1 acres, but occupancy was just 67%. Revenues and EBITDA were $4.1 million and $744,000, respectively, but the EBITDA excludes about $384,000 in payments under the UPL program in Texas, which helps to supplement Medicaid rates. The purchase price came to $5.0 million, or $45,500 per bed, with a cap rate of 14.9% excluding the UPL payments. The seller was an owner and operator in central Texas, while the buyer was an operator in the Dallas area with several facilities in the region. Read More »
The Ensign Group and National Healthcare Investors Score Big
National Healthcare Investors (NYSE: NHI) announced a major transaction with Texas-based Legend Healthcare, an existing tenant. NHI has purchased eight skilled nursing facilities with 931 beds from Legend for $118.5 million, or $127,300 per bed. These will now be leased to The Ensign Group (NASDAQ: ENSG), which is a new relationship for NHI. In addition, Legend was already leasing nine SNFs from NHI, and two of these will be sold to Ensign for $24.6 million, or $100,400 per bed, and the remaining seven will be added to the new lease between Ensign and NHI, bringing Ensign’s total additional properties it is adding in Texas to 17, with 15 leased from NHI. The initial annual lease rate for... Read More »
Stat of the Day
You should know by now that skilled nursing facilities set a new record for the average price per bed sold of $85,900 in 2015, shattering the record set in 2014. What was driving this increase was the large number of high-priced sales, with a record number of transactions priced above $100,000 per bed. Because of this, the upper quartile price of skilled nursing facilities last year was $123,000 per bed, meaning that 25% of the sales were at this price or higher. Meanwhile, the lower quartile was just $44,000 per bed, meaning that 25% sold at this price or lower. We suspect many of these were more than 40 years old. These and many more statistics can be found in our just released Senior... Read More »The Future of the 40-Year Old SNF
Nearly half of the skilled nursing facilities in the U.S. are 40 years old and older, and that is going to be a big problem? Have you ever wondered what is going to happen to all those skilled nursing facilities that were built in the 1960s and 1970s, and look it? Some are even older, although I hope most of them have had some sort of renovation over the years. These “old” nursing facilities are going to struggle over the next 10 years, if they are not already struggling today. They are usually small from a square feet per bed basis with a high Medicaid census. Many would have difficulty taking care of high acuity subacute patients. And I suspect most would not be sought after in any kind... Read More »
ROC Buys StoneRidge
In Mystic, Connecticut, a 267-unit entrance fee CCRC experienced a shift in ownership when ROC Seniors Housing Fund Manager bought out Westminster Capital’s majority stake in the community for an undisclosed price. Life Care Services will stay one as the minority owner and manager. The property was developed by LCS Development in three phases starting in 2004, featuring 267 independent living units, 12 memory care units and 40 skilled nursing beds. For this deal, Cushman & Wakefield arranged acquisition financing with Bank of America Merrill Lynch on behalf of the buyer group, and Richard Swartz, Jay Wager and Aaron Rosenzweig, with Stuart Kim and Caryn Miller, handled the... Read More »Schedule a demo
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