Mainstreet Buys Big
Mainstreet just closed a large acquisition of 11 skilled nursing facilities with 2,477 beds in the Chicago, Illinois market for $302.5 million, or $122,100 per bed. It will be leasing them back to the seller, Symphony Post Acute Care, at an initial lease rate of 8.0%. While the purchase price was not disclosed, Chicagoland SNFs can be very expensive, so we assume the price came in above $100,000 per bed, making it one of the largest SNF portfolio sales of the year so far. Heavenrich & Company represented the seller in the transaction. Read More »CCRCs to Become LPCs?
Leading Age announced this week that they are proposing a new name for CCRCs: Life Plan Communities. What is it about all these name changes? First we have Health Care REIT becoming Welltower, followed by ALFA becoming Argentum. Now Leading Age, which already changed its name several years ago, has proposed that the industry adopt a new name for CCRCs, coming up with “Life Plan Communities.” A lot of people have had a desire to get away from the alphabet soup acronyms that are so common (ALFA, ASHA, AHCA, AAHSA), but these acronyms do make it easier at times. Will the new name become LPCs? That sounds a bit clinical to me, but who... Read More »Chartwell expands up North
The Canadian seniors housing REIT, Chartwell Retirement Residences, which owns and manages over 180 senior living properties in Canada, added five retirement communities with 616 units to its portfolio. They were opened between 2008 and 2013 and had an average occupancy of 89.1%. Four of the properties also have an assisted living component, with 93 total units. Chartwell paid USD$192.89 million, or $313,100 per unit, for the properties, which includes a total of $39.7 million in assumed mortgage debt on two of the communities. A portion of the price will be Chartwell issuing to one of the vendors $11.4 million of Exchangeable Class B Units of Chartwell Master Care LP. There were five... Read More »Welltower builds up
When Welltower announced its Q3:15 earnings, they revealed a host of seniors housing transactions closed in that period, totaling $361 million in investments. The largest purchase was for three seniors housing properties in Colorado (2) and Utah (1), with a combined 461 units. Welltower paid $155 million, or $336,200 per unit, for the properties, which are all managed by the company’s new operating partner, Leasure Care. There is a new master lease with a corporate guarantee, 6.0% initial yield and 3.0% annual escalators. The properties are expected to have a 1.1x stabilized lease coverage ratio after management fee. For the other third quarter acquisitions, prices ranged from $15 million... Read More »Mainstreet breaks ground in Fort Worth
Construction has recently started on Mainstreet’s latest transitional care facility. The Next Generation® property, which will cost $19.3 million, or $205,300 per bed, to build, will feature 94 beds of both transitional care (short-stay rehab and therapy) and assisted living. Typical Mainstreet properties feature a 70-30 skilled nursing-to-assisted living breakdown, so we have to assume the same for the newest San Antonio property. The project is expected to be finished by October 2016 and marks the entrance of Mainstreet in the state of Texas. Dover Construction Company is the contractor for the project, while Evansville, Indiana-based Old National Bank provided construction... Read More »Immigration and Seniors Housing Labor Woes
Bringing in low-skill, low-wage immigrants for seniors housing may not be the answer. There have been calls to ease immigration in order to bring caregivers into the U.S. to fill low-skill jobs in seniors housing. As you know, this is a need that will be growing for the next 30 years or more, so the demand for labor is not the issue. But here’s the flip side of this. There are about 6 million workers in the U.S. with part-time jobs looking for full-time jobs. There are also, by one count, at least 600,000 people who have stopped looking for jobs. But that seems low to me. The point is, there are plenty of people who want full-time work in this country. And there are plenty of people who... Read More »Construct with HUD
With all the construction going on today in the seniors housing and care industry, how are these developers financing their projects? Once you get past the longer lines and list of regulations, HUD has a few attractive options. Walker & Dunlop is one lender that has worked with HUD a good amount recently to fund new construction and expansion projects for borrowers across the country. One such example is a $5 million construction/permanent loan through HUD’s 232 program for TDK Companies to build a 36-unit assisted living/memory care community on its existing 82-unit AL campus is Murfreesboro, Tennessee. Primarily a build-and-hold multifamily developer, TDK forayed into the seniors... Read More »Average SNF cap rate falls below 12%
Although in the four quarters ending Q3:15 the average assisted living cap rate rose slightly (5 basis points) and the average independent living fell by just 20 basis points, we saw a much bigger shift in the average skilled nursing facility cap rate, which fell 60 basis points from 12.4% in 2014 to 11.8% in the four quarters ending Q3:15. That is the lowest average SNF cap rate we have seen in any four-quarter period. Conversely, and understandably, the average price per bed for SNF transactions increased by $3,300, for a 4.3% change. So as the quality of facilities sold increases, driven largely by a higher Medicare census, or at least potential for it, and cost of borrowing remains... Read More »Slumping Ventas
Investors did not like what they heard about Ventas for the third quarter, despite an earnings beat. So, when we first heard that Ventas was announcing that third quarter earnings were going to exceed estimates, we thought, ho-hum, so what else is new, they always beat estimates. The press release was glowing about all the accomplishments during the quarter. They revised guidelines for the full year slightly upward. I didn’t get a chance to listen in live to the earnings call, but I did notice how the share price dropped by 5%. What, on an earnings beat? And then it dropped a little more. It was the revenue miss and concerns about growth that sent investors to the exits. Since then, there... Read More »HUD’s top lenders
We will be profiling the top 10 HUD LEAN lenders in the coming issue of The SeniorCare Investor, but here is a little snapshot. We already mentioned last week that Lancaster Pollard finished well ahead of the pack, with 65 transactions totaling $531 million. Coming in second place, dollar-wise, was Housing & Healthcare Finance. The Chevy Chase, Maryland-based firm closed 22 transactions, for a total of $264.2 million. Loan sizes ranged from as low as $3.96 million up to $28.78 million. Coming in third was Capital Funding, which actually closed 28 loans (second place) totaling $257.8 million. Good job to all. Read More »Schedule a demo
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