The Dealmakers Forum E-Newsletter, February 27, 2013 - Assisted Living Concepts Sold, erulean Partners, LLC Purchased an Underperforming Full-Service Independent Living Community in Las Vegas

 

Bringing You Senior Care M&A Deals and News
 

February 27, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Assisted Living Concepts Sold. At long last, the board found a buyer to take the company private at $12.00 per share.... Read More

 

Recent Senior Care M&A Deals

LONG-TERM CARE

Acquirer

Target

Price

Cerulean Partners, LLC

Destinations at Eastern

$4.25 million

MBK Senior Living

Cranbrook of Greenwood Village

$19.25 million

 

Earnings Report: Kindred Healthcare

Although Kindred Healthcare beat some estimates for its fourth quarter earnings, and the LTAC division posted strong and better than expected results, the skilled nursing side of the business still needs some work. The potential Medicare cuts from the looming “sequestration” is not going to help. The SNF operating margin dropped 30 basis points from the year-ago fourth quarter to 12.1%, while the LTAC margin jumped by a full 100 basis points to 21.5%. In preparation for the reimbursement cuts, the company announced a salary freeze, but will pay the 47,000 employees who do not participate in the incentive compensation program a total of $25 million, calling it a one-time charge. But if the point is to substitute for a salary increase, it really seems like an accounting gimmick, especially because those employees will want it again next year, or a larger salary bump. Despite the DJIA increasing by nearly 100 points, investors sent Kindred’s shares down a bit....... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Expert Opinion: A Conversation with Bill Pettit

In this "Expert Opinion" interview, Bill Pettit, President and Chief Operating Officer, Merrill Gardens, discusses surviving the Great Recession, memory care, assisted living, Health Care REIT, and more... Read More

 

Deal of the Week: Cerulean Partners, LLC.

Cerulean Partners, LLC, a venture-backed private real estate investment firm, purchased an underperforming, full-service 116-unit independent living community in Las Vegas, Nevada. Built in 1985, the campus has eight residential buildings and one two-story clubhouse on 7.2 acres. Apparently, the manager hired by the receiver was an apartment manager with marching orders to fill the units, and they did, with current occupancy of about 88%. But that didn’t mean it was a very profitable census. The key in this transaction is the purchase price, which was a low $4.25 million, or just $36,600 per unit. Cerulean plans to invest another $400,000, which will still keep its basis at close to $40,000 per unit, which is quite low in this market. With the improvements and a transition to market rates, revenues should easily grow to at least $2.3 million, and with a 25% margin, that would produce EBITDA close to $575,000. We believe this to be a base case scenario and achievable relatively quickly, which would result in a value close to $7.2 million...... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Legal Woes: Golden Living

Trouble has been brewing for Golden Living (the former Beverly Enterprises), which reached a settlement with the U.S. Attorney’s Office and the state of Georgia with regard to allegations of inadequate care and “worthless” wound care services in two of its nursing facilities in the Peach State. The settlement cost the company just $613,300, and it began as a “whistleblower” lawsuit under the False Claims Act. Because the claims were settled, there has been no determination of liability and actual wrongdoing, but an independent monitor has been appointed to oversee operations at six Golden Living facilities in the Atlanta area for the next five years. That’s not the end of Golden Living’s problems, however. We have learned that the company may have asked its lender group involved in its $1.4 billion credit facility to relax certain covenants, including its secured leverage test. Golden Living also wants to raise up to $500 million in HUD financing to help pay down the credit facility, so clearing up its legal problems will help it move along in the HUD process....... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

TOMORROW: Interactive M&A Webcast:
Senior Care Merger and Acquisition Review and Outlook for 2013
Thursday, February 28, 2013, 1:00 pm ET            
In 2012, values remained relatively high across the seniors housing and care spectrum: skilled nursing facilities, assisted and independent living communities, and memory care facilities. How long will this bull market last, and what could bring an end to it? Find out from our expert panel: Stephen M. Monroe (Moderator), Managing Editor and Partner, Irving Levin Associates, Inc.; Larry Cohen, CEO of Capital Senior Living; Mike Pardoll, Senior Vice President/Investments, Marcus & Millichap; Laca Wong-Hammond, Head of Healthcare Real Estate, Healthcare Finance, Raymond James; Joel Nelson, Executive Vice President and Chief Development Officer, Life Care Services; and Matthew Ryan, Senior Vice President - Healthcare Group, Houlihan Lokey.
Go to http://www.levinassociates.com/conferences/1302b-online-conference or call 800-248-1668 to register.

 

NEW - The Senior Care Acquisition Report, 18th Edition - Preorder Today!
Deals have been made. The 2013 Senior Care Acquisition Report contains private deals in this market that are frequently too small to make it into the financial press. Take advantage of our limited 2-for-1 offer - Preorder The 2013 Senior Care Acquisition Report  by March 31st and receive The 2012 Senior Care Acquisition Report  FREE ($595 value)! Now that’s a recession resistant deal. Go to http://www.levinassociates.com/scardescription or call 800-248-1668 to preorder today!

 

Webcast Calendar... Click here to see more