What Happens When You Weight A Cap Rate By Beds?
Partly due to historical precedent, we have always presented our cap rate analysis on an unweighted average basis, meaning that the cap rate for a portfolio of facilities would carry the same weight as that of a single 80-bed facility. For those who believe that portfolios will usually command a lower cap rate, then a weighted average would be the most accurate method to determine what is really happening in the market. Even a 200-bed facility acquisition, because of the implied increase in investment risk, should in theory be treated differently from that of a 50-bed rural facility. Consequently, a few years ago we went back and recalculated the cap rates to weight them based on the... Read More »
REITs Remained Active In May
A couple of REITs announced transactions at the end of May: a small one in North Dakota and one large deal abroad. First, North Dakota-based Edgewood Real Estate Investment Trust announced it plans to acquire a financially distressed senior living community in the town of Dickinson (western North Dakota). The seller was First International Bank and Trust, which foreclosed on the community in 2015. Dickinson State University owns the land the community sits on, and will continue to do so. Edgewood will lease the community to its operating subsidiary, Edgewood Healthcare, upon closing. Then across the pond, Omega Healthcare Investors vastly increased its holdings in the United Kingdom,... Read More »Two Assisted Living Sales Close in Florida
Brad Clousing of Senior Living Investment Brokerage is starting strong this year, selling three assisted living communities in two transactions for a combined $23 million. Partnering with Patrick Burke, Mr. Clousing first sold a 37-unit assisted living community in Martinsville, Virginia, a transaction that was a long time coming. In July 2015, the same selling partners sold the adjacent 300-bed skilled nursing facility for $28.5 million, or $95,000 per bed, in a sale/leaseback transaction to Omega Healthcare Investors. The long-term lease came with an initial yield of 9.25%. Awaiting TPA approval, the assisted living community eventually sold to Omega as well at a price of $7.5 million,... Read More »
Closing in Cordele
The sole assisted living community in Cordele, Georgia, sold to Omega Healthcare Investors when its Florida-based partnership owner decided to exit the Georgia market. Built in 1987 and 1996, the community features 38 personal care and eight independent living units, and has historically been well occupied, currently standing at 93%. Its 20% operating margin on approximately $1.4 million of revenues could be improved, and the buyer, with Fellowship Senior Living (its existing South Georgia operating partner), is planning on $500,000 in capital improvements. The purchase price comes in at $2.5 million, or $54,348 per unit, with a 12% cap rate. Brad Clousing and Patrick Burke of Senior... Read More »Schedule a demo
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