The Dealmakers Forum E-Newsletter, April 17, 2013 - CNAs vs. Football, REITs Stumble, Is Occupancy Rising

 

Bringing You Senior Care M&A Deals and News
 

April 17, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
CNAs vs. Football. Football players may get more concussions, but at least they are paid more for their injuries. The number of unfilled CNA jobs is only going to grow.... Read More

 

Recent Senior Care M&A Deals

Long-Term Care

Acquirer

Target

Price

 Preservation Partners and Clifford Beers Housing

 Banning Villa Apartments

 $10.5 million

 Senior Management Advisors and Valstone Partners

 Assisted Living Facility in FL

 $2 million

 Leisureworld

 Senior Living Portfolio

 $254 million

 Avamere Family of Companies

 Six Transitional Care Facilities - CO, ID, OR, WA

 N/A

 Eurazeo PME

 Ideal Residences

 $81.875 million

 

Stock Market Update

With the 2% drop in the market on “tax day,” not to mention the bombing attack in Boston, the market has not been too kind this week. Just ask a gold-bug friend what they thought of the 15%, two-day collapse in gold prices. We have maintained that seniors housing stocks were reaching the limits of proper valuations, and it appears that investors agree. Brookdale Senior Living, Capital Senior Living and Five Star are all off 10% to 13% from their recent 52-week highs, while Emeritus is off 21%. The housing market has improved, but elderly income is still hampered by the Fed’s near-zero interest rate policy. The valuations got ahead of performance, but the performance will get there…eventually. Skilled nursing has not seen the same increase in valuation of the past 18 months, but they too are off their highs by a similar range. But The Ensign Group has dropped the least, by just 6%......... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

REITs Stumble

For the first time in a while, we can forget our mantra that REIT stocks are hitting new highs. Even though Ventas did just that on Monday before the market collapsed, it appears that the sector may also be hitting a valuation wall. Citigroup just cut its rating on Ventas to Hold based on valuation, and all of the REITs have dropped from their recent highs, but by different amounts. The Big Three plus Senior Housing Properties Trust are down just 1% to 2% from their recent highs, while most of the rest of the group is off 4% to 5% from their highs just reached in the past week or so. One could say the difference between the two groups reflects a “flight” to quality, meaning investors are less worried about the big guys because of their diverse asset base. But they also may be saying the smaller REITs got more ahead of themselves from a fundamental valuation perspective. We think both may be at work.......Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Is Occupancy Rising?

Some mixed signals came out from the recently released NIC MAP occupancy numbers for the first quarter of 2013 in seniors housing. While it was the first time since the second quarter of 2010 there was not a sequential increase in occupancy for the combined IL and AL market, overall occupancy at 89.1% was 80 basis points higher than in the first quarter of 2012, which is certainly some progress. It turns out that IL occupancy was up 20 basis points sequentially while AL was down 20 basis points. Rent growth, based on the “asking” rent, was up by 2.3% year over year, but absorption of new units compressed ever so slightly from the year-ago quarter and the fourth quarter of 2012. In a few weeks we will hear from the public companies and see how their numbers match up, and what that may or may not do to share prices......... 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

Does size matter? It certainly did in the skilled nursing acquisition market last year. There was a perfect correlation between the average price paid per bed and the number of beds in a skilled nursing facility. Those facilities with less than 80 beds sold for an average of $37,400 per bed, increasing to $51,200 per bed for 80 to 119 beds, $64,800 per bed for 120 to 179 beds and $70,700 per bed for 180 beds and larger. Part of the driving factor for some of the larger facilities was an assisted living component, which if it was built in the past 15 years or so would come with a much higher value than a typical nursing bed, assuming a decent market. In some past years, however, the largest nursing facilities witnessed a drop-off in value as some buyers don’t like having that many beds to fill, especially in a Medicare-driven market which entails much higher patient turnover....... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Beech Street Does Senior Housing the Right Way
Few mortgage lenders offer as extensive a selection of seniors housing financing communities for independent living, assisted living, and skilled nursing communities as Beech Street Capital. And even fewer are capable of executing those solutions with as much competence and certainty. Our seniors housing experts tailor each transaction to meet the needs of our borrowers, drawing on Fannie Mae, FHA, and non-agency sources. This unique combination of selection, speed, and service explains why Beech Street has catapulted into the front ranks of lenders in just three short years. It is also why the company earned the #3 spot for Fannie Mae volume in 2012 and why its FHA business has grown so rapidly.  Beech Street has all the flexibility you would expect from a privately owned, entrepreneurial company with the experienced, knowledgeable, and well-connected team to match. Borrowers depend on Beech Street to come up with solutions that really work for them. http://www.beechstcap.com/thank-you-seniors

 

 

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 May 31st 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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