The Dealmakers Forum E-Newsletter, March 6, 2013 - Record Prices for Assisted Living, The Ensign Group has Just Closed on a Skilled Nursing Facility in Texas, Five Star Quality Care Stock

 

Bringing You Senior Care M&A Deals and News
 

March 6, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Record Prices for Assisted Living. Assisted living per-unit prices hit record, skilled nursing per-bed prices nearly hit record..... Read More

 

Recent Senior Care M&A Deals

Home Health Care

Acquirer

Target

Price

 Epic Health Services, Inc.

 Freedom Home Healthcare

 Merger

Long-Term Care

Acquirer

Target

Price

 TPG

 Assisted Living Concepts, Inc.

 $458.5 million

Adcare Property Holding, Inc.

Two Skilled Nursing Facilities

$28 million

James Carmichael

Jewish Federation Towers

N/A

 

Financing of the Week

Sometimes it is just time to redevelop a property, especially if it was your first retirement community that opened its doors in 1949. Such was the case for American Baptist Homes of the West (ABHOW) and it’s The Terraces at Los Altos in California. The last major updates on the campus occurred in the late 1980s, and today it has 87 independent and assisted living units plus 65 skilled nursing beds, not the sort of configuration you want. Of the 137,000 existing square feet, all but 21,000 will be demolished, and ABHOW had already begun work on the first phase of the redevelopment with its own funds. With a new $71.25 million fixed rate bond issue, it will be able to complete the project, which will now include 135 independent and assisted living apartments, 16 memory care units and 30 skilled nursing beds. The new buildings will comprise 180,000 square feet and align the services offered with what the market demands. The financing, which was arranged by Ziegler, comes to about $394,000 per unit/bed and $396 per square foot...... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Deal of the Week: The Ensign Group

The Ensign Group has just closed on a skilled nursing facility in Texas. The 150-bed was originally built in 1963 with a major renovation completed in 2001. Even though occupancy was only 65%, it was reasonably profitable because of the larger than average size. Revenues were about $5.6 million and with a 12% operating margin, the performance was actually not too bad. The purchase price was $4.5 million, or $30,000 per be. Located in Amarillo, ENSG should be able to improve on the 7% Medicare census, which will send the cash flow higher. This is what Ensign does, as most of its acquisitions involve underperforming or low-occupancy buildings that they turn around. When they are already turning a decent profit, it just makes the process all that easier. Matthew Alley and Ryan Saul of Senior Living Investment Brokerage handled the transaction...... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Stock of the Month: Five Star Quality Care

The best performing seniors housing stock in February was Five Star Quality Care with a 12% jump, other than Assisted Living Concepts which surged because of the acquisition deal. Five Star is still the only company trading in single digits, so it doesn’t take much for a significant price move. But its focus on growing the private pay seniors housing side of the business is slowly paying off. The Ensign Group jumped 10% in February, leading the way for the skilled nursing companies. Its turnaround acquisition strategy (see above) is paying off, but we will probably see much larger gains in a year or two...... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

In the Headlines

Sometimes bad news can go viral. Last week, an 87-year old woman at an independent living community operated by Brookdale Senior Living in California passed out. A staff member called 911, which was protocol, but a nurse would not administer CPR, despite the 911 dispatcher practically begging her to do so or find someone who would. Again, following protocol, and although she was a nurse, she said policy was to wait for the EMS to arrive. Now, was she really worried about getting fired if she did not follow Brookdale’s rules? Doubtful, but we will never know. While the media is blasting this nurse, what is not being asked is what kind of condition this woman would have been in had she been resuscitated, whether CPR would have collapsed her lungs, cracked her ribs or anything else? And let’s not forget the always present threat of litigation if the nurse had done something wrong while administering CPR. This is part of the national dialogue about end-of-life care, and legal liability for that care, that we are not quite having yet. We should. Even after a featured story on March 4 on ABC’s Good Morning America, Brookdale’s shares rose 2%....... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Upcoming Interactive M&A Webcast:
Development Strategies: Expand, Build or Buy?
Thursday, March 14, 2013, 1:00 pm ET            
Who’s building what…and where? Is new construction financing available or are providers more likely to purchase existing communities/facilities outright? Or are they choosing instead to grow their businesses through small expansion projects? Find out from our expert panel: Brian Schiff (Moderator), SVP - Planning and Financial Services, Greystone Communities; Nick Gesue, Chief Credit Officer, Lancaster Pollard; Leslie Moldow, Managing Principal, Perkins Eastman; Suzanne Hodge Pugh, President, Aldersgate United Methodist Retirement Community, Inc.; and Mark Streicher, Principal, Sawgrass Partners.

Go to http://www.levinassociates.com/conferences/1303-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