REIT Shares Under Pressure Again
Rising interest rates are sending health care REIT shares down, but will it last? The timing could not be worse. What am I talking about? The recent rise in interest rates and its impact on REIT share values, not to mention looming acquisitions. The 10-year Treasury rate hit a low of 1.65% in February, which most people did not think was sustainable. It has now risen by a third, or 55 basis points, to 2.20%. That is a huge percentage change in rates, even though still quite low from an historical perspective and much lower than the jump in the spring of 2013 that sent REIT share prices plunging by 25%, which was a big overreaction. Easy for me to say. But with the recent rise in rates,... Read More »Valuations soar for “A” quality IL properties
The higher valuations in 2014 (according to the 2015 Senior Care Acquisition Report) should surprise no one. The average price paid per unit for “A” quality independent living communities rose 21.8% from $228,200 in 2013 to $277,900. But, the lesser quality deals didn’t hold back either. In fact, the average price paid per unit for “B” properties rose 55.8% from $99,600 in 2013 to $155,200. This goes to show that in today’s market, just about any piece of property will garner interest from a buyer, as long as it can show potential for profits. Read More »Capital One arranges HUD loan
Capital One Multifamily Finance announced today that it provided a $10.9 million fixed-rate HUD loan for an experienced owner/operator of skilled nursing facilities to refinance its 133-bed facility in Northern Illinois. Joshua Rosen, out of Capital One’s Chicago office, originated the loan, which will refinance existing debt on the property at a lower, long-term rate. The facility was built in 1962, expanded in 1985, and substantially renovated between 2005 and 2012. Also, the current owners, who purchased the facility in 2012, renovated the residents’ rooms and bathrooms since taking over, so the facility is relatively modern. It is also well occupied and well positioned in its market.... Read More »Would you buy a Certificate of Occupancy?
There is always a good amount of risk when purchasing a seniors housing community at Certificate of Occupancy. While you avoid the risks associated with development and construction costs, you are saddled with the burden of fill-up. But Capitol Seniors Housing (CSH) is up for the challenge, having recently purchased, along with its joint venture partner Harvard Management Company, a 92-unit/109-bed assisted living/memory care community in Tampa, Florida. The newly opened community was developed by a joint venture between Walt Chancey and Rookis Development Company and presold to CSH prior to breaking ground for an agreed price of $20 million, or $217,400 per unit. CSH has brought in The... Read More »Wells Fargo expands seniors housing construction financing platform
With construction heating up in the seniors housing industry, Wells Fargo is looking to position itself to help fund that growth using its balance sheet, floating rate lending platform. It started about a year ago when Wells Fargo brought in Mark Cotsakis, who had been with the bank for over 25 years, to head the newly formed Senior Housing Finance Group (SHFG), part of the Wells Fargo Commercial Real Estate Group. Since then, Mark and his team of about 18 have been hard at work, with approximately a half-billion in closings in the past year, and they are set to close another quarter-billion in the next two months, totaling some 30 transactions. The closings have ranged from $8 million to... Read More »Trilogy Health Services expands in Louisville, again
Trilogy Health Services recently announced that it is opening its 91st health campus, and its fifth in the Louisville, Kentucky area alone. Dubbed “Forest Springs Health Campus,” the community follows Trilogy’s basic prototype of 50 skilled nursing beds and 45 assisted living units, but with the addition of about 30 independent living villas. Altogether, the 115,000-square foot campus will cost approximately $13 million or $104,000 per bed. Louisville-based DMK Development was the developer of the project, having previously done 18 senior living projects with Trilogy in Kentucky, Ohio, Indiana and Michigan, and with more to come (Trilogy, as you may know, has also worked with Mainstreet in... Read More »Hotel conversion to seniors housing
When a hotel in downtown Fort Myers, Florida is lying vacant for almost 10 years, what do you do with it? Convert it to seniors housing of course! At least, that is the plan of The MacFarlane Group, a developer of residential housing in Fort Myers who is looking to make its first move into seniors housing (who isn’t these days?). The reason behind the hotel’s vacancy is rooted in a one family’s dysfunction, who, when the family patriarch passed away, couldn’t agree on what to do about the property. Meanwhile, the empty hotel took up valuable acreage in downtown Fort Myers, much to city officials’ chagrin. So, MacFarlane stepped in last year to buy the property, which it eventually did in... Read More »Brookdale May Be One Step Closer
With two new board members and some corporate governance changes, Brookdale Senior Living seems to be heading on the path of a major real estate event. What can I say, management at Brookdale Senior Living seems to be going down a path that I recommended they not take. Imagine that. Rather than have a public shareholder fight, they have added two new board members with some serious real estate experience, which is what activist investor Sandell Management wanted. The share price, however, closed early this week at its lowest level since March 6. Hmmm. We know that management and the board are supposed to make decisions to enhance shareholder value. I get it. But here is the problem. What... Read More »What’s the price for quality?
For the past few years, we have separated out the “A” properties from the “B” properties in our statistics based on a few factors (age, size and location). Not surprisingly, the average price paid for “A” assisted living properties was higher than “B” assisted living properties ($244,800 per unit versus $102,300 per unit) by a difference of $142,500. To put it in perspective, the spread in 2013 was only $87,500 ($222,400 per unit for “A” versus $134,900 per unit for “B”). But what was especially interesting was that “A” properties made up about half of the sales in 2014, compared to 2013 when “B” properties were sold three times more often than “A’s”. This means that there were... Read More »Trifecta from CBRE
Aron Will of CBRE National Senior Housing arranged a trifecta of acquisition financings totaling approximately $50 million. All three loans were floating rate bridge loans with five-year terms and between 24 and 30 months of interest only. The first was a $14.5 million loan provided by a regional bank for Capitol Seniors Housing to acquire a brand new 92-unit assisted living/memory care community in Tampa, Florida. Next, Mr. Will secured a $21 million loan with an “all-in” interest rate of approximately 2.35% for a joint venture between Sentio Healthcare Properties and Senior Living Residences to purchase a 122-unit/141-bed rental CCRC in Westfield, Massachusetts. The loan was provided by... Read More »Schedule a demo
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