Health Care Deal News: Spotlight on Long-Term Care - January 2012

Health Care REIT (NYSE: HCN) is paying $69.2 million to buy Belmont Village Senior Living from Texas-based Belmont Village, LP. The target community provides independent living, assisted living and care for Alzheimer’s patients.

In another REIT-related deal, Senior Housing Properties Trust (NYSE: SNH) is acquiring Tiffany Court, a 57-unit assisted living facility located in Walnut Creek, California for $11.3 million. Built in 1996 on 1.1 acres, Tiffany Court was 95% occupied at the time of sale; it is currently licensed for 66 beds. The facility was originally developed, owned and operated by a husband and wife team who now want to cash out on their investment. The price to revenue and price to EBITDA multiples are 3.86x and 12.2x, respectively. SNH has leased the facility to operator Five Star Quality Care (NYSE: FVE). Marcus & Millichap represented the seller.

TL Management is acquiring Villa Mercy, a 142-bed skilled nursing facility, from Mercy Medical, Inc. for $9.55 million. Villa Mercy has 117 skilled nursing beds and 25 inpatient rehab beds. Built in 1986 on 13 acres, it was 65% occupied at the time of sale. The deal is valued at 0.83x revenue and 9.2x EBITDA. The sales price was $10.55 million, but included about $1.0 million in receivables, which was deducted to arrive at a net purchase price. The seller, a nonprofit focusing on its PACE, home health and hospice business, will lease back an office building from the buyer for a few years. Senior Living Investment Brokerage handled the deal.

A Midwest SNF operator is buying Posada del Sol Health Care, a 149-bed skilled nursing facility in Tucson, Arizona, from Pima County Health Systems. The purchase price is $7.8 million. Built in 1969 on 5.7 acres with an addition in 1978, Posada del Sol was 86% occupied at the time of sale. The price to revenue multiple is 0.47x; the price to EBITDA multiple, 6.0x. While not quite at bankruptcy levels, these multiples are on the low side. This may be due to the fact that the County took over this facility to serve patients who had a difficult time being placed elsewhere. About 50% of the census has behavioral health problems, 18% have basic care and 17% have bariatric, ventilator or respiratory problems. The County had special contractual relationships for certain payments which may not carry over to the buyer, so there is some uncertainty over the financial targets going forward. Marcus & Millichap represented the seller in this deal.

Though it bought a home health business this month, The Ensign Group did not neglect its core business.  The company made two deals in the Long-Term Care sector. In the first, it bought Rosewood Rehabilitation Center, a 99-bed skilled nursing facility in Reno, Nevada, for $7,225,000. Although occupancy at Rosewood had been 90% in 2009-10, it slipped to 69% by the time of sale. The deal is priced at 0.76x revenue and 6.9x EBITDA. This acquisition expands ENSG’s footprint in the Nevada market. The facility is to be run by the buyer’s Northern Pioneer Healthcare subsidiary. In its second transaction, ENSG acquired Rose Court Senior Living, an 82-unit assisted living facility in Phoenix, Arizona in foreclosure proceedings for $3,225,000...Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today