The Assisted Living ;A Market
Cap rates are low, values are high, but the mix of buyers and sellers in the assisted living acquisition market is changing. How will that impact values going forward? The assisted living acquisition market has been vibrant for the past several years, with demand so high for some properties even the brokers representing the sellers have been surprised on occasion. But something has changed since last year, and there is some disagreement over whether we have reached a peak in the market, or not. A lot of that hinges on what happens to cap rates, and that will be influenced by what the Federal Reserve does. It is now looking like a rate hike may not be coming until next year. If that’s the... Read More »Lancaster Pollard stakes its place out West
Ever-expanding, Lancaster Pollard is opening a new office in Denver, Colorado to oversee the structuring and funding of health care project financings for hospitals and senior living providers in Colorado, Wyoming, Montana and Idaho. Joining the firm to lead this new venture is Rob McAdams, who has been involved in investment sales and debt and equity structuring for the hotel and hospitality industry since 2005, most recently serving as partner at U.S. Hotel Advisors in Denver. The firm also made news with the placement of a $1.8 million bridge loan for a 118-unit assisted living community in Reno, Nevada. After being acquired in 2013, the community improved operations significantly. Now,... Read More »Average AL price deflates
Have we already seen the mountaintop when it comes to the average price per unit for assisted living sales? After four straight four-quarter periods of an average AL price per unit above $188,500 (topping out at $191,300 per unit in the four quarters ending Q3:14), that average has fallen to $183,600 per unit in the four quarters ending Q3:15. Now, to put that in perspective, the next highest yearly average was in 2012 with $164,000 per unit, so we have by no means plummeted from the peak (no bubble has burst either). But what may be true is that prices may have started falling back to earth a bit, and perhaps the highest quality portfolio sales have, for the most part, already taken... Read More »Profitable pharmacy business sells big
We are switching gears slightly with the latest announcement from Mark Myers and Josh Jandris of Marcus & Millichap. The duo recently closed the sale of a privately owned, very profitable pharmacy company that services six New York skilled nursing facilities, five of which are in the Western part of the state and one in Long Island, with a total of 1,100 beds. Serving some of the best rated facilities in the Northeast, with good prospects to grow in the region, the pharmacy sold for $15 million. Gross revenue of the company is about $17 million, and EBITDA had historically been about $2 million, representing a price/EBITDA multiple of 7.5x. Read More »New EB-5 developer hits the ground running in California
Al Rattan, a real estate developer with over 30 years of experience building residential, commercial, industrial, office, health care and senior care properties, is jumping back into the seniors housing market with his company, Continental East Development (CED). Founded in 2009, CED has already developed a number of retail, office, and medical properties, but started to take a look at seniors housing in 2011. Having already developed and operated an independent/assisted living community in Anaheim Hills, California (before selling it at full occupancy), Mr. Rattan plans to utilize large amounts of EB-5 equity (up to 60% of the development cost) raised through his USA Continental Regional... Read More »Private investor sees potential
A pair of skilled nursing facilities in Texas that pulled in more than $12.5 million in total revenue but only retained approximately $500,000 in EBITDA (an operating margin of just 4%) presented an appetizing turnaround opportunity to buyers when it was put on the market. Owned by a public REIT and leased to a third party operator with which the REIT had a larger relationship, the properties included a 160-bed facility in Houston and a 149-bed facility in Mesquite. In addition to their low occupancy (collectively at 75%) and quality mix (at just 15%), the facilities also had age going against them, with the Houston facility built in 1970 and the Mesquite facility in 1977. However, to a... Read More »Memory care refinance
A recently built 43-unit memory care community in Vancouver, Washington refinanced with an $11.87 million Freddie Mac loan, which came out to $276,100 per unit. Developed and managed by Koelsch Senior Communities, the property is the third in Vancouver, ninth in the state of Washington and 23rd community overall in seven states for Koelsch, which was founded in 1958. Cathy Voreyer of Wells Fargo Multifamily Capital handled the transaction. Read More »Seniors Housing Occupancy Still Not Strong Enough
The third quarter showed some positive movement for seniors housing occupancy, but not positive enough, especially with construction starts. Well, well, well, what are we to make of the third quarter occupancy and construction stats that came out from NIC last week? The good news was that sequentially, occupancy at stabilized assisted living properties increased by 25 basis points to 90.5%, but was still down 68 basis points from a year ago. That means that the summer uptick that we had been hearing about may not have been as strong as many had thought. One issue we have is that the third quarter sequential occupancy growth for the top 99 MSAs was at the low end for the past seven years,... Read More »Glenview Gardens blooms
What a difference a year makes. When Kandu Capital acquired Glenview Gardens in August 2014, the 119-unit independent living community was in bad shape, with an occupancy of 56%. The property was losing money too, on just $98,000 of monthly revenues. So after spending $5.5 million, or $49,100 per unit, to purchase the community, Kandu also spent an additional $1 million to both renovate the community and convert 36 units to assisted living. Kandu’s affiliate, Bloom Senior Living, also took over operations. After a little over a year, occupancy is up to 89%, and cash flow turned positive on $193,000 of monthly revenues. Plus, seven IL units had to be taken off line during the conversion... Read More »ARC goes strategic
Before its three most recently announced deals, American Realty Capital Healthcare Trust was one of the larger buyers in the long-term care industry, averaging about $52 million per transaction since its first transaction in the sector at the end of 2012. However, it has been a different story so far in 2015, with the REIT averaging about $13 million per transaction. The three recent deals highlight this possible shift even more so, including $10.2 million, or $255,000 per unit, for a 40-unit memory care community in Brookings, Oregon, $4.8 million, or $97,450 per unit, for a 49-unit assisted living community in Richmond, Kentucky, and $6 million, or $206,900 per unit, for a 29-unit memory... Read More »Schedule a demo
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