Excessive Use Of Ultra-High Therapy in SNFs
A recent story highlighted the dramatic rise in ultra-high therapy use in SNFs, but are there legitimate reasons for it? Two days ago, The Wall Street Journal had a front page story about the sudden increase in the percentage of patient days in skilled nursing facilities using “ultra-high” therapy, which is a maximum of 720 minutes per week. Apparently, in 2002, nursing facilities gave ultra-high therapy to patients on 7% of the days they billed to Medicare, but this increased to 54% of patient days by 2013, with the percentage increasing every year. The gist of the story was that providers have been gaming the system to get the highest reimbursement. I had hoped we were getting beyond... Read More »Greystone and Oakmont at it again
Greystone expanded its relationship yet again with Oakmont Senior Living. Having previously provided a $150 million Freddie Mac credit revolver (including an additional $23.5 million tranche provided last month) and an $18.8 million Freddie Mac loan for Oakmont’s Fresno, California property, Greystone continued its work by closing a $58.34 million Freddie Mac refinance for Oakmont’s 163-unit independent living community in Santa Rosa, California. The financing came to $358,000 per unit. This 10-year loan was funded through Freddie Mac’s Index Lock product, which enables the borrower to lock in the existing 10-year Treasury rate prior to commitment. Greystone was able to procure a fixed... Read More »HFF does double duty
Talk about a one-stop shop. In addition to closing the sale on behalf of an investment client for its 142-unit independent living community in Teaneck, New Jersey, HFF also secured a $33.23 million floating rate loan on behalf of the undisclosed buyer. The financing came to $234,000 per unit, so the price had to be $300,000 per unit, or higher. Built in 2004, the community, which features 45 one-, 94 two- and three three-bedroom units, was 97.2% occupied and is located just down the street from Holy Name Hospital. There are also a host of amenities, including a restaurant-style dining room, hair and nail salon, and tennis courts. For the buyer, HFF arranged the loan through Investors Bank... Read More »SNF cap rates fall
The average price paid for skilled nursing facilities has largely leveled off at around $75,000 per bed, coming to rest at $74,100 per bed for the four quarters ending Q2:15, down from $76,600 per unit in 2014. But while prices have stayed largely the same, the average cap rate fell 40 basis points to 12.0%, a new record low. In the past 14 years (looking at calendar years), the previous record-low came at the top of the previous bull market in 2007 at 12.1%. And the rate at which the average cap rate has fallen is also stark, falling 100 basis points from 2013’s average. But if the overall trend this year has been that the market is cooling down from an especially frothy 2014, why are cap... Read More »CareTrust bucks the trend
Since its formation in June 2014 when it was spun out from The Ensign Group as a publicly traded REIT, CareTrust REIT has largely taken part in small one- to three-property acquisitions with prices as small as $6.6 million but never larger than $18 million. Then the REIT surprised us (and others we presume) by announcing a $175 million acquisition of 14 senior care properties, valued at $139,110 per bed/unit. The portfolio, owned and operated by Liberty Nursing Centers, includes 1,102 operating skilled nursing beds and 156 assisted living and independent living units throughout the state of Ohio. Stepping in to operate these facilities will be Indiana-based Pristine Senior Living, which... Read More »Mix of financing funds project
An assisted living/memory care community to be built in North Seattle’s Bitter Lake neighborhood has plenty of supporters, financial or otherwise, wanting to help it fill up and succeed. Zenith Capital, a Seattle-based leader in alternative financing for the seniors housing industry, is planning to build a 100-unit community, with 79 units of assisted living and 21 units of memory care. To operate, Zenith brought on Village Concepts, which manages 15 senior communities in Washington with over 1,400 residents. We will have to wait and see how fill-up goes, but it certainly helps this project that the “newest” seniors housing community in the area was built in 2006, with the majority dating... Read More »The meaning of a move
So why does a successful CEO of a healthcare REIT leave to become the chief investment officer of a larger REIT? Since Justin Hutchens arrived at National Health Investors (NHI) in 2009, the REIT has posted positive returns in every year from 2010 on, including three years with total returns between 28.1% and 34.5%. And in 2010 it was the number one performing healthcare REIT. While we could joke that he yearned to return to the West Coast, the real reason had to be what his new employer, HCP, Inc., had to offer. He will be in charge of all the seniors housing and care portfolio, which is the majority of HCP and alone dwarfs the total NHI portfolio. Bottom line, it is a much bigger playing... Read More »Senior Care Market In Confused State
Stocks are gyrating wildly, sometimes for good reason and other times not so much. Okay, I have to admit that I am confused now. When Brookdale came out with poor second quarter results, its stock tanked, as it should have. But then Capital Senior Living came out with a very upbeat quarter, and its stock jumped 10%, as it should have, but then dropped by 15% over the next several days, for little reason, other than perhaps in sympathy with Brookdale shareholders. Genesis Health announced a good quarter, and its stock jumped by 10%, as it should have, and kept on rising to a 26% gain in a week when the market as a whole tanked. Hell, it didn’t even budge when China devalued its currency. ... Read More »CCRC in transition sells
As many of you will read in this month’s issue of The SeniorCare Investor, we discuss the difficulties in valuing an entrance-fee CCRC and a rental CCRC. But how do you value a CCRC that is in the middle of transitioning from entrance fee to all-rental? That was the problem facing a faith-based nonprofit looking to sell its CCRC in St. Louis, Missouri. Built in 1984, 2003 and 2013, the community features 110 independent living units, 22 assisted living units, 22 memory care units and 41 skilled nursing beds. The owner exclusively operates entrance-fee communities, but during the Great Recession, they decided to convert the St. Louis community to all-rental. However, because of the move,... Read More »Financings from Capital Funding
Capital Funding Group announced a pair of HUD loans on two sides of the country. The first, originated by Patrick McGovern, totaled nearly $5.5 million and went towards refinancing a 53-bed assisted living community in Sacramento, California. Capital Funding provided the original bridge loan in 2012 for the community and recapitalized the borrowing entity with more than $1 million in cash. The second transaction, originated by Gary Sever, totaled $14 million and refinanced a bridge loan (that CFG had also previously provided) on a 180-bed skilled nursing facility in Palatka, Florida. The bridge loan helped fund the acquisition of the facility in September 2014. Capital Funding is the sole... Read More »Schedule a demo
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