The Dealmakers Forum E-Newsletter, April 3, 2013 - Senior Care M&A Market Bucks Trend, Health Care REITs Seem to Continue Upward, Average Multiple of Revenues Paid in the Skilled Nursing Acquisition Market

 

Bringing You Senior Care M&A Deals and News
 

April 3, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Senior Care M&A Market Bucks Trend. While the global M&A market was subdued in the first quarter, seniors housing and care was as active as last year..... Read More

 

Recent Senior Care M&A Deals

LONG-TERM CARE

Acquirer

Target

Price

HealthLease Properties REIT

13 Senior Housing and Care Properties

$141.7 million

Brookdale Senior Living

2 Property Portfolio in WA

$56.1 million

LCB Senior Living and Grosvenor Fund Managment

Arbors of Bedford

$35 million

 

Deal of the Week: MBK Senior Living

Six weeks ago we profiled a purchase by MBK Senior Living, but this time it is a sale. Taking advantage of a strong market, MBK will at times sell properties to provide its parent company with a tidy gain as well as funds for reinvestment. In the current sale, MBK sold two properties in Spokane, Washington to Brookdale Senior Living for $56.1 million, and when the value of some excess land is removed, the net price was about $200,000 per unit. These properties were built between 1999 and 2003 and have a combined occupancy close to 92%. There is a combination of assisted living and memory care units, plus 20 independent living units in one of the communities. Financial details have not been disclosed, but based on occupancy levels and monthly unit rates, we assume revenues this year will be at least $12.0 million with an estimated operating margin close to 33%. This acquisition makes perfect sense for Brookdale, which already owned two communities in the Spokane market, so it will almost have a dominating position in that market. CBRE represented MBK in the sale........ Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Stock of the Week: Ventas

While the publicly traded senior care operating company stocks appear to have plateaued, at least for the time being, the health care REITs continue upward. They all hit 52-week highs in March, and last week we profiled Omega Healthcare Investors with above average returns as investors were attracted to the high dividend yield (6.4%). This week it is Ventas, which is at the opposite end with the lowest yield (3.6%) of the group, but with insatiable investor demand. Ventas hit a new high this week of $74.29, is up 5% since March 1 and up more than 1.3% since April 1 with a 35% one-year return. With its low cost of capital and high quality properties, it has been an engine of growth, despite what a recent Forbes article has reported about certain financial metrics, which seems to have been ignored by the investing public.......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

During the 1990s, year in and year out, the average multiple of revenues paid in the skilled nursing acquisition market was 1.0x. This began to change after 2001 when it dropped down to 0.73x in both 2003 and 2004. In 2012’s surprisingly strong M&A market for skilled nursing facilities, the multiple went back up to 1.0x for the first time in more than 10 years (it was actually 0.97x).We have always maintained that this multiple weighs the relative risk of buying each dollar of revenue, and when the multiple drops, buyers are saying that they are unsure of that revenue, or at least the profitability of each dollar of revenue. When the multiple is on the rise, the opposite should be true. And the increase in 2012 was substantial, from 0.77x in 2011, marking the sharpest jump ever. That is a stat worth noting...... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

JUST PUBLISHED - The Senior Care Acquisition Report, 18th Edition - Save $50 Instantly
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 $50 savings offer - order The 2013 Senior Care Acquisition Report by April 30th and save $50 instantly! Now that’s a recession resistant deal. Go to http://www.levinassociates.com/landing/scar18order or call 800-248-1668 to order today!

 

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