Five Star Says No Deal
As expected, Five Star Quality Care has rejected the offer by an affiliate of Senior Star to purchase the 33 owned senior living communities for $325 million. Basically, the board said the assets are not for sale, and that the company could improve the value of the shares by improving earnings. Unfortunately, just improving earnings does not result in a higher stock value in this market. Just ask management at Capital Senior Living. So if someone will offer more for the owned real estate than what the entire company is worth, based on its current stock price, what would someone pay for the owned real estate and the operating company? That may be a question that Bill and Bob Thomas may try... Read More »Finish with a bang
Shep Roylance of The JCH Group is sprinting to the finish line in 2015, announcing four closings with a fifth on its way. First, earlier this month, Mr. Roylance closed the sale of a 175-bed skilled nursing facility in Sylmar, California for $14.4 million, or $82,300 per bed, with a 12.9% cap rate. The property was originally bought by the seller, LifeHOUSE Healthcare Services, when it had 141 beds in 2007 for $9.3 million, or $66,000 per bed. The current buyer, Independence Healthcare Management, also purchased an additional three acres planned for future assisted living and memory care development. Next up, Mr. Roylance arranged a sale/leaseback of a 59-bed SNF in Fresno, California for... Read More »Will power
A pair of well-located, well-occupied and relatively new assisted living/memory care communities in Suffolk County, New York recently received $62.8 million in financing arranged by Aron Will of CBRE National Senior Housing. The loan, which featured a five-year fixed rate and 60 months of interest only, was placed through a life insurance company and came out to approximately $230,800 per unit. Both communities, owned by a joint venture between Harrison Street Real Estate Capital and The Engel Burman Group, had occupancy rates in the high 90s and are located in affluent towns in the New York City metro area. The 118-unit AL community in Huntington was developed by Engel Burman in 2010,... Read More »Seniors Housing Companies on the Defensive
Oh, what an end of the year. With just three publicly traded seniors housing companies, all three are under some sort of pressure to do something to increase shareholder value. First it was Brookdale Senior Living, then Capital Senior Living and now Five Star Quality Care. The owners of Senior Star have made an unsolicited offer to buy Five Star’s 33 owned communities with more than 3,100 units, with assisted living and memory care representing just over 75% of the total units and independent living the remainder. At a price of $325 million, or just over $100,000 per unit, the value to shareholders comes to more than $5.00 per share net of some mortgage debt. Five Star currently trades... Read More »Alley at work
Matthew Alley of Senior Living Investment Brokerage recently closed two transactions, both featuring potential turnaround opportunities. First, Mr. Alley handled the sale of a 62-bed skilled nursing facility in Poteet, Texas for $850,000, or $13,700 per bed. Built in 1964, the facility was just 48% occupied, and only 49 of its total beds were dually certified. On top of that, it operated at a 0.99% margin on $1.38 million of revenues. So there is room for improvement for the buyer, a private Texas-based owner/operator looking to expand in South Texas (this asset is located over 35 miles from the San Antonio area). Next, together with Toby Siefert, Mr. Alley facilitated the sale of two... Read More »Reposition then refinance
After purchasing an 84-bed/49-unit memory care community in Phoenix, Arizona in 2013, the new ownership invested significant capital to reposition the community and make it more competitive. It also helped that an experienced local operator was in the ownership group and could capture significant market share by improving both quality of care and the physical plant. The community is built in the cottage style, with seven single story buildings each with dining rooms and common areas. The concept is designed to help promote socialization and create a more “home-like” environment. Now, ownership was looking to refinance its existing debt while simultaneously funding capital improvements and... Read More »Changes to the 5-star rating system?
David Friend is a Managing Director and CTO at BDO Center for Healthcare Excellence & Innovation. He has more than 35 years of global healthcare experience and provides advice on mergers and acquisitions, strategy, clinical integration, physician engagement, and enhancing shareholder value. He received his BA from Brandeis University, his MBA from The Wharton School of The University of Pennsylvania and his PhD from The University of Connecticut. Steve Monroe I’m lucky to have here with us David Friend. He’s a managing director and chief transformational officer for BDO. David, we all know, and you’re obviously on top of all this, that the skilled nursing facilities... Read More »Merry Commissions
A year-end tribute to the seniors housing and care brokers. Twas the night before Christmas and all through the building Not a broker was stirring, not even Brad Clousing The listings were hung by Mike with care In hopes that Chris Brogdon soon would be there. Myers and Jandris were all snuggled in their beds While visions of commissions danced in their heads And Knapp in his kerchief, and Gianinni in his cap Had just settled their brains for a long winter’s nap. When out on the lawn, there arose such a clatter Bruce Gibson sprang into action to see what was the matter The PE firms were in the hunt, the REITs were still hungry It looked like it was all up to Allen McMurtry.... Read More »Trio of transactions
The Healthcare Lending group of Congressional Bank recently announced that it closed three separate transactions (with five loans) totaling $11.6 million, which all helped facilitate acquisitions for the borrowers. First, Congressional provided a $3 million bridge-to-HUD loan and a $1.5 million revolving line of credit, both with three year terms, to fund the purchase and ongoing capital needs of a 107-bed skilled nursing facility in New Bedford, Massachusetts. The buyer, a regional owner/operator, paid $3.21 million for the 40-year old facility, which was losing money and was 82% occupied. Second, Birchwood Health Care Properties received a $2.6 million bridge-to-HUD loan and a $500,000... Read More »Freddie Mac comes to Silicon Valley
On behalf of Kisco Senior Living, Jessica Wolters of JLL Capital Markets led the way in originating a $32.5 million refinance, with a 10-year fixed-rate term, provided by Freddie Mac’s Capital Markets Execution program. The community being refinanced, a 133-unit independent/assisted living community in Los Altos, California, was built in 1973 but was bought for $16 million, or $106,700 per unit (when it had 150 units), and renovated in 1998 by TransAmerica Senior Living (which was itself bought by Kisco in 2001). Considering today’s $244,400 per unit refinance, it’s clear that Kisco has significantly increased the value of the property. Read More »Schedule a demo
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