Iron Will
We can’t go long without seeing another Aron Will (of CBRE) transaction, or two. The first of his latest deal duo took place in California when a joint venture between Auctus Capital Partners and Och-Ziff Capital Management acquired a 54-unit assisted living/memory care community in San Francisco. Located on an irreplaceable site, the building was originally built it 1923 as a hospital but was purchased by a Mom & Pop in the 1990s who then converted it to senior care. It has some underutilized “dead space” that the JV will convert to add significantly more assisted living and memory care units. Plus, Auctus and Och-Ziff will make some cosmetic improvements to help drive operations,... Read More »
AL cap rates sink even deeper
We have spent the last few weeks discussing the skilled nursing market, focusing particularly on the average cap rate falling to near-record lows. But what about the assisted living M&A market? We saw the average price per unit for assisted living communities rise slightly (from $188,700 in 2014 to $189,200 in 2015), and in turn the average cap rate fell by five basis points from 7.75% to 7.7%. Despite the slight decrease, this is still a continuation of the “new normal” AL market. Since the Great Recession, the average cap rate has steadily been declining, and seemed to rest at around 8.7% in 2012 and 2013. But since then, the current market has settled to an average cap rate around... Read More »
Pillar delivers
A 96-unit assisted living community in Glen Cove, New York undergoing an expansion to add a dedicated memory care wing also refinanced with HUD at the same time. The community, built in 1992 and owned by the not-for-profit National Healthplex, Inc., sought to repay existing municipal bonds, as well as to fund the conversion/rehabilitation project. Josh Hausfeld of Pillar originated a $32.5 million HUD loan, with a 40-year term. The financing was more complicated than usual, with a ground lease on the project land, a payment in-lieu of taxes (PILOT) agreement, and the existing tax-exempt bonds issued by Glen Cove Industrial Development Agency. Following the expansion, the community will... Read More »
Buyers’ SNF opportunity
The recent trends of the 10-year Treasury Rate and the average skilled nursing facility cap rates have provided a lot of flexibility for buyers in how they price their acquisitions and negotiate with lenders. After rising from its low in 2012, the average 10-year rate was slowing increasing through 2014 and then dropped a bit in 2015 to a three-year low. But, for the past four years, the 10-year Treasury rate, which has long been thought of as “risk-free,” has averaged 2.5% or lower, or more than 200 basis points lower than during the last market peak of 2006 to 2007. What is interesting to follow is the spread between the 10-year rate and the average skilled nursing cap rate. Nearly 10... Read More »
Media Bias Against SNFs Again
The New York Times is at it again, and the reporters don’t want to do some simple math. Well, well, it looks like The New York Times is at it again. Two weeks ago it had a sensationalist story about residents “held” in nursing facilities. Last weekend, they continued on the theme of the disabled being confined in nursing facilities and ready to go home. The gist of the story was that home and community based care is what the elderly and disabled want (true), and that it is cheaper to boot (not so true). In fact, they cited Washington State as claiming that they can care for seven people at home for the cost of one person in a nursing facility. Really? The Washington Medicaid daily... Read More »
Capital One strikes twice
Showing off its wide array of services, Capital One announced two transactions this week across two health care sectors. First, in seniors housing, Allison Holland originated and provided a 12-year $11 million Fannie Mae loan to refinance a 72-unit assisted living community in Homosassa, Florida (about 60 miles north of Tampa). The community was built in 2009 and features a choice of studio, one- or two-bedroom units. Ms. Holland arranged the 12-year term for the borrower to take advantage of the current low interest rates. Then, in home health care, Capital One served as administrative agent and lead bookrunner for a $65 million senior secured credit facility to finance the acquisition of... Read More »HUD grows
HUD just made things a little easier for owners of seniors housing and care properties to refinance through the HUD LEAN program. There were a couple of notable changes to the program. First, when facilitating a partner-buyout on a property and the borrower takes out a bridge loan to finance it, they can refinance that loan immediately with HUD, with certain caveats, including timelines for buyback provisions. The second notable change is a new system for determining debt seasoning. If a HUD loan is less than or equal to 60% loan-to-value (LTV), then there is no debt seasoning requirement. Between 60% LTV and 70%, there is no seasoning required as long as at least 50%of the existing bridge... Read More »Reaching the Pinnacle…deal
Avalon Health Care Group, a Utah-based senior living company with a large presence in the West, entered the Oregon market in a big way, acquiring Pinnacle Healthcare and its 10 skilled nursing facilities in the state. Located in Corvallis, Eugene, Grants Pass, Medford, Roseburg and Woodburn, the portfolio consists of 1,108 beds and will increase Avalon’s footprint to 49 centers with 5,532 beds across seven Western states. The transaction details were not disclosed, but Avalon plans to transfer the lease agreements and begin operating the facilities in early 2017. Read More »
Transaction teamwork
Marcus & Millichap sent a veritable army into Norwood, Ohio to arrange the sale of two skilled nursing facilities. Mark Myers, Joshua Jandris and Charles Hilding, plus Stan Folk, Joel Dumes and Steve Anevski out of M&M’s Cincinnati office and Peyton Stanforth out of the Chicago O’Hare office, represented the seller, a private family investment group, in the transaction. The lease was ending for the tenant operator, which was interested in building new facilities. So, Messrs. Myers, Jandris, Hilding and Stanforth procured the buyer, a real estate investment trust with a large presence in the region that leased the facilities to a new third-party tenant. Built 25 years ago, one of... Read More »Going up in downtown
A well operating CCRC in Buffalo, New York looking to expand needed quick financing to take advantage of building a new independent living campus on the site of a former acute care hospital in downtown Buffalo. Built in 1999 by Episcopal Church Home & Affiliates, the CCRC features 243 IL units and patio homes, as well as enriched housing and skilled nursing beds. Over the years, it has consistently enjoyed high occupancy across all levels of care under its not-for-profit management. HJ Sims has had a relationship with the CCRC since providing seed capital for its initial development in 1996, and so was a natural fit to finance this new expansion project. After site demolition and... Read More »Schedule a demo
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