RED funds Avanti’s growth
Avanti Senior Living, which is developing five senior living communities in the Southeast (three in Texas and two in Louisiana) turned to RED Capital Partners to help fuel its construction pipeline, receiving a second $13.8 million balance sheet construction loan to build a 90-unit assisted living/memory care community in Flower Mound, Texas. The community will feature 50 units of assisted living and 40 units devoted to memory care, and represents Avanti’s third project to break ground under its joint venture with an affiliate of real estate fund manager, Iron Point Partners. Last December, RED also arranged a $13.5 million balance sheet construction loan for Avanti to construct a 90-unit... Read More »High-quality IL properties drive prices
In 2014, we saw record-high average prices paid for seniors housing communities (which includes both assisted living and independent living). One observation was that those records were largely driven by a higher number of quality, well-run (and thus, high-priced) independent living communities coming onto the market, presumably by owners who wondered if there will ever be a better time to sell. One tell-tale sign of the high-quality independent living sales driving up average prices was the average net-operating income per unit when compared to that of purely assisted living. Based on 2014 sales, the average net-operating income per unit for independent living communities was $17,100,... Read More »Seniors Housing Weekly Update – Another Holiday Sale For Fortress
June 23, 2015. 60 Seconds with Steve Monroe. New Senior Investment Group pays $640 million for 28 Holiday Retirement Communities… It has been eight years since Fortress Investment Group closed on its acquisition of Holiday Retirement Corporation for $6.6 billion, or $188,500 per unit. It saw occupancy drop from around 90% to well below 80% in less than three years. There was high turnover among the staff. There were some debt extensions to give it more time. Did we mention the Great Recession hit a year after closing the deal? A lot can happen in eight years, including continued low interest rates which help keep valuations up. This week, they announced another portfolio sale, this... Read More »High-quality property opening in high-income area
One of the wealthiest neighborhoods in the country will soon open its first seniors housing community. River Oaks (in Houston, Texas), the most affluent community in the state of Texas, and among the top ten in the United States, with real estate values ranging from $1 million to over $20 million, is the home to The Village of River Oaks, a 195-unit independent living/assisted living/memory care community to be built by a joint venture between Bridgewood Property Company and Harrison Street Real Estate Capital. The property, featuring 99 IL, 68 AL and 28 MC units, will be managed by an affiliate of Bridgewood, Retirement Center Management, which manages senior living communities in Texas... Read More »Show me the money
There is probably no better measure of a seniors housing property’s quality than how much it pulls in per unit. When it comes down to it, amenities are nice, modern features are important, but cash is king. As acuity is rising in the seniors housing market, communities are taking in more cash per unit (even if the margin may be declining). And a newer, high-quality property can obviously charge more in rent than a 40-year old property. Both of these factors led to a significant rise in the average NOI per unit in 2014 (according to the Senior Care Acquisition Report), going from $12,000 in 2013 to $14,300 per unit in 2014 for assisted/independent living, a 19% increase. That is also higher... Read More »Lancaster Pollard closes 21 deals
Lancaster Pollard had a busy month in May, closing 21 seniors housing financing transactions totaling over $136 million. Most of the loans were through HUD, including four refinances for skilled nursing facilities in Georgia and Florida, two FHA 232/241(a) expansion projects for skilled nursing facilities in the Midwest, and a $23.5 million new construction loan through HUD for an assisted living/memory care community in Virginia. Five of the transactions were for note modifications of existing HUD loans, while six were either refinances or rehabilitation loans for affordable seniors housing properties. LP facilitated one term loan placement of $7.4 million for the construction of a... Read More »Health Care REIT looking North, again
In its existing RIDEA joint venture with Revera, Inc., Health Care REIT purchased Regal Lifestyle Communities, a Toronto-based operator of 23 independent living communities with more than 3,600 units. The joint venture, with HCN owning 75% and Revera 25%, will pay CAD$12.00 per share (a 27.1% premium), or approximately US$623 million ($173,100 per unit), for the portfolio, assuming CAD$359 million (US$ 291.9 million) of debt with a weighted average interest rate of 3.8% and an average maturity of four years. The initial cash yield is expected to be 6.1%, with HCN investing US$248.8 million in the transaction. The communities, located in Ontario (13), Quebec (7) and one each in British... Read More »Mainstreet’s move into Kansas
Where does Mainstreet go next? The developer of post-acute/assisted living facilities has already developed 19 facilities in Indiana since 2009, with five more coming in the next year. It has also constructed one facility each in Illinois and Colorado. Not much for geographical diversity. However, that will soon change, helped in large part by the company’s planned five-year, $5 billion development pipeline. One state where Mainstreet already has shovels in the ground is Kansas. For three of the projects, in Kansas City, Overland Park and Olathe, Mainstreet partnered with The Ensign Group to develop the facilities. And Mainstreet just last week broke ground on the fourth project, a 94-bed,... Read More »What’s the portfolio premium?
Historically, buyers will often pay up for a portfolio (which we have defined as three or more properties in a single transaction) as opposed to a single facility. The “portfolio premium” has to do with both quality and the number of properties. Of course, not every buyer will pay more for a facility just because it is part of a portfolio, nor is the quality always inferior at a single facility. Still, according the 20th edition of the Senior Care Acquisition Report, in 2014, assisted living portfolios were valued on average at $206,000 per unit (compared to $153,900 per unit in 2013), while other sales averaged $172,700 per unit (144,000 per unit in 2013). That represents a premium of... Read More »Seniors Housing Weekly Update – CCRCs And Employment Growth
June 16, 2015. 60 Seconds with Steve Monroe. Everyone reported that CCRCs are going to have explosive job growth in the next five years, but are they missing the boat? CCRCs And Employment Growth As you have probably figured out by now, I like numbers and statistics, but too often, people report on numbers that are released by others without stepping back and asking if they make sense. One such number received some press recently. CareerBuilder came out with various industries that were expected to have the highest rate of job growth in the next five years. Surprisingly, CCRCs came in eighth place, with an estimated growth of nearly 94,000 jobs between now and 2019, for an increase of 21%.... Read More »Schedule a demo
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