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 »As cap rates rise, AL prices stay
Last week, we wrote that while the average price per unit for IL communities fell by over $30,000 from the calendar year 2014 to the four quarters ending Q2:15, the average cap rate remained at 7.4%. Meanwhile, the inverse was true for the assisted living market. The average price per unit for AL communities rose slightly from $188,700 to $189,500, just a 0.4% change, over the same period, but the average cap rate rose 15 basis points from 7.75% in 2014 to 7.9% in the four quarters ending Q2:15. This could partially be explained by the fact that the IL market can be more mercurial than the AL market, as there is a more constant and stable need for assisted living. But to explain the rise... Read More »Capital One to acquire GE Capital’s U.S. Healthcare Finance Unit
After hearing of other companies in the hunt to acquire GE Capital’s U.S. Healthcare Finance business (one of the Big Three REITs and a bank among them), Capital One announced that it signed a definitive agreement with GE Capital Corporation to acquire approximately $8.5 billion of healthcare-related loans and its Healthcare Financial Services business for a 6% premium to par value of all receivables as of June 30, 2015. The acquisition is expected to close in the fourth quarter of 2015, and Darren Alcus, President of GE Capital, Healthcare Financial Services, will become the President of Capital One’s healthcare finance business. Credit Suisse and Wells Fargo Securities acted as exclusive... Read More »Schedule a demo
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