The impact of rising acuity in skilled nursing
The rise in acuity in post-acute care is certainly having its impact in the skilled nursing M&A market. Historically, the range in price per bed for skilled nursing facilities has been approximately $100,00 to $125,000 per bed, according to the 2015 Senior Care Acquisition Report. Every year, there are always sales between $10,000 and $20,000 per bed, with the occasional sale below $10,000 per bed. And there have always been sales above $100,000. But in 2014, while the low price was a typical $9,000 per bed, the high was an astounding $268,500 per bed, resulting in a spread of $259,500. There was also a record number of deals valued over $100,000 per bed, with 19 transactions, which... Read More »Medicaid Managed Care Coming To You
May 19, 2015. 60 Seconds with Steve Monroe. The skilled nursing community had better get ready for the managed care tsunami… Is now the time to talk about Medicaid managed care? When managed care first entered the skilled nursing world, it was viewed as somewhere between private pay and Medicaid, but closer to the former in terms of daily rates. But that was in its infancy, and that was not involving Medicaid managed care plans. States are getting slammed with the expansion of Medicaid enrollees, and when the federal government’s commitment to cover the additional costs begins to decrease next year, watch out. The managed care companies will be very different from state Medicaid... Read More »Occupancy and rising development
What do the occupancy numbers recently released by Brookdale Senior Living portend for the seniors housing industry? As expected, the company announced a decline in its occupancy, posting an 80 basis point drop from the previous quarter at its legacy Brookdale properties, and a sequential 110 basis point drop at its legacy Emeritus properties. When compared to the first quarter of last year, the decline is even more pronounced, with occupancy at both groups of properties falling 110 basis points and 200 basis points, respectively. Even when taking into account the expected negative effects of the Emeritus merger at the community level, an especially harsh winter and a relatively... Read More »Bourne Financial Group makes push into seniors housing
Founded in 2014 by Robert and R. Kyle Bourne, Bourne Financial Group (BFG) is set to open its first 10 assisted living communities across the country by the end of 2016, representing an investment of over $200 million. Not short on experience, BFG’s leadership, all formerly of CNL Financial Group, has over 90 years of combined of experience in seniors housing, health care, and real estate finance and investments. In their first two funds, BFG has raised over $45 million in equity, which will go towards building eight communities in various locations across the country. Typically, in a secondary market, their development costs will start around $200,000 per unit, and go up to $240,000 in... Read More »ROC’s busy 2015
It’s been a busy 2015 for ROC Seniors Housing Fund Manager, which is part of Salt Lake City-based Bridge Investment Group Advisors. So far this year, ROC has acquired 21 senior living communities in nine different states, totaling 2,247 units, coming on the heels of a 14-property, $230 million-deal announced in September 2014. Not all of the 2015 transactions had revealed prices, but the price per units ranged from $77,700 per unit for a 345-unit senior living community in Glendale, Arizona, up to $246,700 per unit for a portfolio of 4 assisted living communities in Texas. The most recent transaction, announced last week, was the purchase of 14 senior living properties (with 1,038 units of... Read More »Rollins-Nelson refinances with Capital One
Rollins-Nelson, an owner/operator of skilled nursing facilities, assisted living communities and acute-care hospitals in California, sought out Capital One Commercial Bank to refinance two of its facilities: a 342-bed SNF in Glendora and a 361-bed (262 of which are assisted living) facility in Long Beach. Shane Passarelli of Capital One led the way in providing both a $30 million senior secured term loan and a $4 million revolving line of credit, which will give Rollins-Nelson the flexibility to refinance existing debt and fund ongoing operations. The company will have access to additional liquidity during the term based on certain performance objectives. Read More »What’s the premium for a stabilized facility?
With the general rise in the average price per bed, both stabilized (which we define as having an occupancy rate at or above 85%) and non-stabilized skilled nursing facilities saw an increase in their average price per bed. But as with assisted living, it was the non-stabilized group that posted the larger increase, with a 27% in the average price per bed, compared to just a 6% increase for stabilized properties. Non-stabilized facilities on average sold for $63,900 per bed in 2014, while stabilized facilities sold for $94,100 per bed, with the overall average coming out to $76,500 per bed. The faster rise in prices for these struggling facilities shows that buyers in today’s market may... Read More »Brookdale Occupancy Declined As Expected
Brookdale Senior Living was no different from the rest of the market, posting sharp drops in first quarter occupancy. When we wrote the May issue of The SeniorCare Investor, we had to make some assumptions before Brookdale Senior Living announced its first quarter earnings. One assumption was that its occupancy rates had dropped given everything else we had heard in the market. Our assumptions were right. The legacy Emeritus properties posted a 110 basis point decline from the fourth quarter of 2014, and a whopping 200 basis point decline from a year ago. The legacy Brookdale properties dropped 80 basis points sequentially and 110 basis points from a year ago. This was not good news, but... Read More »High prices for struggling AL communities
You know we are in a strong seller’s market when even the non-stabilized properties are worth on average 68% more in 2014 than in 2013. After hovering around $85,000 per unit in 2012 and 2013, the average price paid for non-stabilized assisted living communities (which we define as having an occupancy lower than 85%) in 2014 was about $139,000 per unit, showing that buyers are worrying less about the potential of filling empty rooms. Maybe all this talk about demographics has convinced many buyers that seniors will be knocking on their door in just a matter of time. Read More »HHC Finance closes $133 million in HUD loan modifications
HHC Finance closed about $133 million in HUD loan modifications in March and another $80 million in April across 26 separate transactions, which resulted in significant overall interest rate reductions on the loans, all for skilled nursing facilities. With interest rates set to increase, some of the modifications would not have been feasible, but HHC was prepared and was able to close them. Since introducing the program just in January, that is a lot of business. Read More »Schedule a demo
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