Skilled Nursing M&A In 2015
After the record-setting valuations in 2014, the skilled nursing acquisition market is already off to a strong start. After the skilled nursing market hit a record for the average price per bed for the second year in a row last year, I wasn’t too sure what to expect for 2015. So far, I have not been disappointed, as buying interest continues to be relatively strong, especially at the higher price points. In 2014, there were 19 transactions with a price above $100,000 per bed. So far this year, there have been four sales with a range between $132,000 and $189,000 per bed. On the lower end of the scale, there have been just three transactions below $40,000 per bed, which either means the... Read More »Average IL cap rate falls 80 basis points
The average cap rate largely depends on the properties that sold. Even in a year when valuations rise and cost of capital remains low, cap rates may actually rise because the communities sold were of lesser quality. That factor has played a key role in determining the average cap rate for independent living communities in the last two years. In 2013, there were more low-quality, small properties that sold, which drove the average cap rate for the year up 20 basis points to 8.2%. However, there were more quality independent living communities sold in 2014, which helped decrease the average cap rate by 80 basis points to 7.4%. What most likely happened is that owners of these prime... Read More »MOB to Senior Living?
Monarch Senior Living is trying something new in seniors housing development. The company acquired a vacant 17,800 square-foot medical office building (MOB) in La Jolla, California for $7.115 million, which it plans to convert into a 26-unit/44-bed memory care community. Monarch will own the community with Menlo Park, California-based real estate equity sponsor HG Capital, and will also manage it upon completion. To fund both the purchase and the repurposing of the building, Aaron Beck of NorthMarq Capital arranged a five-year $9.96 million first mortgage loan for Monarch. The financing featured interest-only payments, a floating rate and minimal recourse so as to give the joint venture... Read More »Another Holiday portfolio sells to a REIT
So goes another large portfolio of Holiday Retirement properties, with NorthStar Realty Finance’s acquisition of 32 independent living communities from affiliates of Harvest Facility Holdings, itself an affiliate of Holiday. The acquisition marks another step towards Holiday’s owner Fortress Investment Group’s goal of transforming Holiday into an operating company. In fact, since October 2013, Holiday has sold over 200 properties totaling about $5.1 billion. In that time, nearly all of those assets were sold to REITs, such as New Senior Investment Group, Sabra Health Care REIT, National Health Investors and Ventas, and that is no different in the most-recent transaction. NorthStar Realty... Read More »County conversion
In what turned out to be a multi-year saga, the former director of development for Elderwood Senior Care (which was acquired in 2013 by Post-Acute Partners, a New York City-based health care services company), David Tosetto, is finally set to open a 150-unit assisted living community in Lockport, New York. In 2007, Niagara County closed the Mount View Health Facility, a 172-bed nursing facility, with the intention of replacing it with a new assisted living community, which was later determined to be financially infeasible. So in 2012, Mr. Tosetto, offered to purchase the facility for $550,000 and convert it into a 150-bed assisted living community. The sale closed in 2013, and Tosetto... Read More »Developer investing in Kansas City area
Four years ago, Hunt Midwest, a real estate developer with a focus on industrial, commercial, retail, mission critical, multifamily, residential and senior living, invested $32 million to build four assisted living/memory care communities in the Kansas City metro area, all to be managed by Principal Senior Living Group under the “Benton House” brand. The final community of that investment just opened in Tiffany Springs, Missouri, but Hunt Midwest isn’t stopping there. The developer has already broken ground on two communities in Raymore and Blue Springs that will open later this year. Plus, there are two more set to break ground in Lenexa and Kansas City, which will bring the total for... Read More »Growing slow and steady
Big Rock Partners (BRP) certainly does its research when scouting for sites to develop seniors housing. We wrote a few months ago that BRP was building a $70 million, 225-unit senior living community in Celebration, Florida, a planned community developed by the Walt Disney Company in the 1990s. Intended as a family community, Disney had never zoned land for seniors housing (and there is none around for 15 miles), so as residents in Celebration are aging, an unmet need grew. Plus, Richard Ackerman, founder of BRP, secured an exclusive right to build seniors housing for eight years, including an option to build on an adjacent 20 acres. BRP plans to soon break ground on that project and open... Read More »The Ventas Spin-off Has People Talking
Here are differing opinions as to what motivated Ventas to spin out most of its skilled nursing portfolio. There has been a lot of talk about the recent announcement by Ventas to spin out most of its skilled nursing properties into a new publicly traded REIT. In our April newsletter issue, we stated that it was a smart move for Ventas, and a great move for Ray Lewis, who will become CEO of the new spin out. But tongues have been wagging in terms of whether this was a defensive move on the part of Ventas, meaning that management has decided that the skilled nursing business is not something they want to focus on, at least not with small operators in their portfolio. Or, was it an offensive... Read More »Average skilled nursing facility cap rate falls
A couple of weeks ago, we discussed the fall in the average skilled nursing facility cap rate by 60 basis points to 12.4% (according to the 2015 Senior Care Acquisition Report, just recently published). For assisted living, we saw an even larger fall of roughly 90 basis points to 7.75%. The downward trend is not surprising, as AL cap rates have steadily declined since the Great Recession, but the extent of the fall was. In this market of higher and higher valuations plus abundant (and cheap) capital, buyers are looking to pay more for quality assisted living communities, even if that means pricing out operating risk somewhat, because margins aren’t changing all that much, at least not that... Read More »KeyBank provides $635 million Fannie Mae credit facility
KeyBank provoked some conversation at the recent NIC Conference after announcing that it would provide a $635.6 million Fannie Mae credit facility to subsidiaries of Senior Housing Realty Trust, a Maryland-based REIT owned by an affiliate of Senior Resource Group and its institutional partners. The facility came with a 10-year term (with 10 years of interest only) and a fixed rate, plus the option for releases, additions, substitutions and the capacity to expand with additional fixed or floating debt. KeyBank will also be able to provide flexible financing solutions ranging from balance sheet to permanent mortgage loans. The 12 properties that are being refinanced with this facility are... Read More »Schedule a demo
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