EXPERT OPINION: A Conversation with Jeff Binder

May 7, 2013

In this "Expert Opinion" interview, Jeff Binder, Principal and Managing Director, Senior Living Investment Brokerage, discusses SNF portfolios, REITS,  buying, selling, predictions for the final quarters of 2013, and more.........

Jeff BinderWatch the video      Read the transcript

Jeff Binder, Principal & Managing Director, joined Senior Living Investment Brokerage, Inc. in January 2003. From 1991 to 2002, Jeff was a Senior Associate with a national senior housing appraisal & consulting firm. During that time, he was involved in over 1,100 senior housing appraisal assignments in 39 states.

Jeff has over $800,000,000 in senior housing transactional experience since joining the firm, which includes the successful completion of over 100 different seniors housing transactions. He has qualified for the National Achievement Award each of the past eight years, was the Chairman's Club recipient for 2006, and the President’s Club Recipient in 2007, 2009, 2010 and 2011. In all but three years since joining the company, he has been the top producer in terms of total sales. Jeff obtained a BA in Business Administration from Westminster College and an MBA in Finance from St. Louis University. He is also a Member of the Appraisal Institute.
 

 

Contact Information:
Jeff Binder
Principal & Managing Director
Senior Living Investment Brokerage, Inc.
337 West Lockwood Avenue
St. Louis, MO 63119
314‐961‐0070 P
314‐961‐0071 F
binder@slibinc.com

 
Watch the video of the interview: 
 

 

Read the interview transcript:

Steve Monroe
The senior care acquisition market had one its busiest years ever in 2012 and Senior Living Investment Brokerage handled a lot of the sales. We are here with Jeff Binder, managing director of Senior Living Investment Brokerage.

Jeff, you guys had a great couple of years the last few years. Let's talk about some of your buyers. Where do they get their financing in this market for their deals? Is there any kind of commonality there?

Jeff Binder
Absolutely, Steve. We see a lot of similarities with buyers all the way around, but we are seeing a little bit of segregation. The Class A properties that are newer—65, 70 units or plus—are really ending up on the institutional side, primarily with the REITs. Then once you get into the older buildings, maybe secondary markets and maybe under that 60-unit mark, that's where we're seeing more of a regional bank and local bank presence. And, really, it's becoming pretty clear when we take on an offering that we can almost predict which market it's going to fall into.

Steve Monroe
Well, that must be fun, do you have betting pools in the office on that?

Jeff Binder
We do, we are a pretty loose group as you know, but it is pretty easy and it's really become even more clear this year that that's the way it's headed.

Steve Monroe
The market has definitely bifurcated. On the seniors housing side, what are the buyers really looking for in the assisted living and independent living properties?

Jeff Binder
That's a great question, as well. On the institutional side, we feel like it's really a coupon-type situation, looking for the most stabilized properties that they can hold long-term, bring in a good operator. Not as much a turnaround situation. For the nicer properties that are more of a turnaround situation, we do see some of the REITs that have started funds that are more of an opportunity fund.

On the smaller properties, it's really more of a regional player looking to pick up somebody else's trash, per se. Somebody, maybe a larger operator has a property in the state that's not working for them, doesn't fit their core property offering and they're looking for opportunities. Local banks will finance those with people that have a track record they're comfortable with. So I think that's what we're seeing this year.

Steve Monroe
On the sell side, why are your selling clients getting out? Are some of them retiring? Are they recognizing prices are at a peak? What's the motivating factor here?

Jeff Binder
I think it's more that people are realizing that this might be a once-in-a-lifetime market. It’s a great opportunity to sell, there is a lot of competition from the buy side. I think almost in every offering we have this year, we're going to be able to generate significant amount of offers. We just wrapped up bidding on a SNF portfolio in New England where we had 13 offers. And then on any type of performing assisted living property anymore, you can expect near 6 to 10 offers on those, as well.

Steve Monroe
Well, that's a good segue into the skilled nursing side. Thirteen offers, that's a weird thing in a market where there's so much uncertainty in skilled nursing for reimbursement. What's attracting these buyers to skilled nursing right now?

Jeff Binder
I think there are still some great opportunities. What we're seeing is we try to pre-qualify before we go to groups, so those 13 offers really came from a pretty small pool of buyers that we pre-qualified. So what we're trying to find out is what are groups looking for? And what we're looking for, what they're looking for, rather, is that it's really about diversification. They've picked up ancillary services and product lines. So they can buy these nursing homes and it's not as much sometimes about a specific nursing home and what it's done. It's about what they can bring into that facility from an ancillary business line, whether it's pharmacy, therapy.

Steve Monroe
Yeah. Home Health/hospice.

Jeff Binder
Correct. And I'd say in most of our deals, that is one of the more underlying themes, one of the things that's made them more attractive to the offering.

Steve Monroe
How about on the sell side? What's the profile of your typical skilled nursing seller?

Jeff Binder
Mom-and-pop, I think right now. It's become highly competitive for those residents. They've seen more competition from assisted living. More and more of the larger companies have started making these therapy suites, more of a rehab center. It's just become more and more difficult to compete, but also it's become much more complicated from the documentation, the clinical side, regulations, financing—everything's become more complicated. They believe it's the time to get out for those reasons as much as it's the right time, given where interest rates are and the power of the buyer.

Steve Monroe
If I'm an owner and if I'm thinking of selling, what's the best advice you can give that owner before he actually sells?

Jeff Binder
I think the best advice that you can give a seller is really to have everything organized. In today's world, everything is heavily scrutinized. You need to have financial statements that tie to all your other documents. The occupancy reports can't say one thing or the rent rolls and not tie back to the financial statements.

You also have to have your financial records in line. Meaning, you need to be aware if there are any prepayment, any type of restrictions on the debt that you have in place that may come into play later. Whether it's a high prepayment, whether it's something that has no prepayment option. And then from a staffing and how you run the business, you shouldn't have any significant changes. You need to keep things kind of status quo and, if you do change something, it needs to be documented so that we can tie that back to the financial statements.

Steve Monroe
Well, that makes sense. I imagine there are a lot of mom-and-pops who are thinking it's pretty complicated right now, it's not going to get any easier, so that should spruce up the business.

2012 was a great year. What do you think is going to happen the rest of 2013?

Jeff Binder
Well, I think if the first quarter's any indication of what we'll see—it's hard to believe, but higher level of opportunities for people. I'd say that we're seeing a mixed bag of opportunities from turnarounds to the higher acuity assisted living in large markets, a large number of units that are performing that are really getting the attention of the REITs and the pension funds, equity groups, etc.

Steve Monroe
Good. Well, good luck. For my sake as well as yours, I hope it's a great market this year.

Jeff Binder
All right, thank you, Steve.
 

 


 

 

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