What’s the memory care premium?
What is the premium paid for memory care in today’s seniors housing acquisition market? We have noticed in the last two cycles that at the beginning of the bull markets, traditional assisted living is typically priced higher than communities with a memory care component, then the reverse is true as the bull market strengthens or hits its peak. And given the extraordinarily high values we saw in 2014, we may have already been to the mountaintop. Accordingly, buyers paid a significant premium for assisted living with a memory care component, with $215,100 per unit compared with $138,500 for traditional AL in 2014 (according to the 2015 Senior Care Acquisition Report). What is interesting is... Read More »Seniors Housing Weekly Update- Are LTACs Gaming The System?
June 9, 2015. 60 Seconds with Steve Monroe. A new study appeared that seems to indicate patient discharges are influenced by the timing of Medicare reimbursement… Yesterday, The Wall Street Journal came out with a story on how it appears that patient discharges at long-term acute care hospitals (LTACs) have been timed to reimbursement payments. Specifically, to maximize those payments. The story was based on a study that appeared in the journal Health Affairs and had been reported on previously. Apparently, what the authors of the study noticed is that when the reimbursement methodology changed, between 2005 and 2010 for full implementation, there was a significant spike in the... Read More »Love Funding Building its Bridge program
Love Funding is making a splash in the bridge-to-HUD lending arena, a space where it has not seen much action before. Helped in large part by the late-2014 acquisition of its parent company (Heartland Bank) by Midland States Bank, Love gained access to a larger and more accessible capital platform. So the program was started this spring, with eight healthcare transactions (representing $78 million) already in the pipeline. The loans are split 50-50 between skilled nursing facilities and assisted living communities and are mostly for acquisitions (4), with a couple each for cash outs and new construction. The transactions are not limited to a specific region either, with four in... Read More »Sabra Collaborates with Leo Brown
Sabra Health Care REIT is getting more skin in the game in the development world, having announced a new pipeline agreement with Leo Brown Group (LBG) to help finance up to 10 new senior housing construction projects. Under the agreement, LBG will identify and secure construction financing for senior housing projects. Of those potential projects, Sabra will then have the right, through March 31, 2017, to provide a portion of the required equity financing for up to 10 projects through a preferred equity structure. Plus, at the time of the investment, Sabra will then obtain a purchase option for the community. The total purchase price for the projects is estimated to be approximately $250... Read More »LTC and Anthem expanding in Chicagoland
With four memory care communities already open in the Chicago metro area in the last few years, a joint venture between LTC Properties and Anthem Memory Care is on track to add three more communities in the next year or so. The first project is in Burr Ridge, features 66 units of memory care and will open later this year, with a cost of approximately $12 million, or $181,800 per unit (right around average for assisted living/memory care in Illinois, which is $188,700 per unit, according to our data). Second, LTC just recently closed on 3.5 acres of land in Tinley Park, Illinois for approximately $700,000, on which they plan to construct another 66-unit memory care community. The project,... Read More »Two Nebraska senior living communities top $300,000 per unit
Griffin-American Healthcare REIT purchased two relatively new, well occupied and well run senior living communities in Nebraska owned by Dial Retirement Communities for $66 million, or $300,000 per unit, with a 6.2% cap rate. The community in Omaha was built in the early 2000s and features 75 independent living units, 24 assisted living units and 15 memory care units with an occupancy of 98%. The community in Bennington, built in 2009 and 2013, features 39 IL units, 51 AL units and 16 MC units with an occupancy of 91%. Dial Retirement will operate the communities for Griffin-American under a long-term management agreement. Mark Myers and Joshua Jandris of Marcus & Millichap represented... Read More »Portfolio of 18 SNFs gets a $100 million refinance
Subsidiaries of Orion Care Services received a $100 million term loan with an accordion feature to refinance a basket of 18 skilled nursing facilities with embedded equity and to allow for $20 million of excess cash to fund future acquisitions and development. The facilities, all located in Ohio and Michigan, totaled 1,257 beds. The loan, valued at $79,554 per bed, came with a seven-year term and 25-year amortization. Plus, a rate of LIBOR plus 250 basis points was swapped out on 70% of the loan to a 4.30% fixed rate. The five banks in the syndicate approved a 75% loan-to-value, but the loan ended up at 70% due to strong appraisal values as a result of improved property performance. Orion... Read More »Independent living prices fall
When looking at the average price per unit and average cap rates for the 12 months ending March 31, 2015, most everything stayed the same compared to the 2014 calendar year. This is contrary to the fairly consistent rise in prices and fall in cap rates over the last several years. However, two things stood out. First, the average skilled nursing cap rate fell by 20 basis points from 12.4% to 12.2%. And second, the average price per unit for assisted/independent living fell 4.5% from $208,200 to $198,800. Considering the average price paid per unit for assisted living stayed roughly the same (up $200 to $188,900 per unit), that change came largely from a drop in prices for independent... Read More »Seniors Housing Weekly Update- Survey Says Cap Rates Will Remain Stable in 2015
June 2, 2015. 60 Seconds with Steve Monroe. A recent survey concludes that cap rates will not be decreasing this year, but expectations were lower than in the previous year… Senior Living Valuation Services just released the results of its annual survey regarding cap rates. Based on 62 surveys returned, the decline in what the respondents believe cap rates will do in the next 12 months was larger than in previous years. This is surprising, because cap rates declined significantly in 2014, according to our statistics, so we would not expect a meaningful change this year. The difference is that our stats are based on actual deals, compared with what the respondents think will happen in... Read More »Owner of three Texas SNFs exits the market
We’ve heard it plenty of times in the last year, but an owner/operator is exiting the skilled nursing market with the sale of their three Texas skilled nursing facilities. The portfolio featured some assisted and independent living units, with a total of 473 beds/units. The facility in Waco is comprised of 90 skilled nursing beds, 72 assisted living units and 25 independent living units, and was 98% occupied. The facility in Richardson contained 106 skilled nursing beds and 62 assisted living units, and had a census of just 65%. Lastly, the 119-bed facility in Austin, which was solely skilled nursing, was 85% occupied. The portfolio, built from 1986 to 1988, was only operating at a 13.6%... Read More »Schedule a demo
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