The Dealmakers Forum E-Newsletter, August 6, 2014 - A High-End Retirement Community in Arizona is Sold to a REIT, Lancaster Pollard Arranges Expansion Financings, Per-Bed and Per-Unit Weighted Average Cap Rates

 

Bringing You Senior Care M&A Deals and News
 

August 6, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
NorthStar Realty Wins Griffin-American Healthcare REIT bid.  NorthStar Realty has agreed to pay $4.0 billion for Griffin-American Healthcare REIT II............ Read More   

 

Recent Senior Care M&A Deals
Home Health & Hospice    
Acquirer Target Price
Generational Equity Caregiver Services N/A
Amity Hospice N/A
Long-Term Care    
Regional owner/operator 2 retirement communities $15.6 million
Publicly traded REIT 3 skilled nursing facilities $34.6 million
Global Healthcare REIT, Inc. Meadowview Nursing Home $3 million
Titan SenQuest 2 retirement communities N/A
2 assisted living communities $75 million
Omega Healthcare Investors, Inc. Skilled nursing facility $8.2 million
Titan SenQuest Sentinel Pointe $10.3 million
Chicago Investor
Mountain Crest Nursing
and Rehab Center
$20 million
Transitions Healthcare Baldock Hills Senior Living $14 million

 

Deal of the Week

In Scottsdale, Arizona, one of the large REITs purchased a 216-unit community for what we estimate to be just over $350,000 per unit from a private equity fund that purchased the property in 2006 for about $319,000 per unit. It will be folded into an existing RIDEA structure. At the time of the last sale, this community was considered to be the premier rental community in Scottsdale, but the timing of that purchase was not so great with the recession starting two years later. In the eight years since the last sale, the unit mix has changed slightly, with 178 independent living and 38 assisted living units, converting 14 of the IL units to assisted living. We have estimated first year revenues and EBITDA to be approximately $11.0 million and $4.9 million, respectively, which would be a roughly 6.4% cap rate. Occupancy has hovered around 90%, so if that can be nudged up, we would be looking at another $300,000 or more of revenue with minimal expense. Lisa Widmier of VantAge Pointe Capital Management represented the seller............. Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Expansion Financings of the Week

With occupancy rates increasing, providers are in a great position to add on to existing properties to meet the growing demand, and perhaps stave off competition that may think about building a new community. Kass Matt of Lancaster Pollard directed the financing of two Ohio properties. The first was a $5.6 million HUD 232/241(a) loan, with a low interest rate and a 40-year term, for Oakleaf Village, a 145-unit assisted living community that is adding 40 memory care units. The second was a $3.5 million loan to finance an expansion project for a 5-Star rated CCRC, Mason Christian Village. The loan, which has a fixed-rate and a 40-year term, will provide low cost funds for the project, designed to add 20 new private occupancy skilled nursing units to the campus............Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Stat of the Week

For more than 20 years, when we have calculated the average prices paid for skilled nursing and seniors housing each year, the averages have been on a per-bed and per-unit weighted basis. But our cap rate statistics have not been weighted in the same way. We are in the process of going back to 2000 to see what difference there was when weighting the cap rates by beds or units. On a preliminary basis, in 2013 it appears that on a weighted average basis, assisted living sales had an average cap rate that was about 50 basis points lower than a non-weighted basis (8.2% vs. 8.7%), while independent living was 70 basis points lower (7.5% vs. 8.2%). The results for skilled nursing were very similar, with the bed-weighted average coming to 12.4% compared with 13.0% when not weighted. The most significant finding is that when the markets strengthen, the spread between the two widens (such as in 2013), but in difficult markets with either higher capital costs or lack of liquidity, the gap narrows and in some years reverses itself. These weighted cap rates will now be included in our annual statistics in future editions of The Senior Care Acquisition Report.  ............Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

 

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