The Dealmakers Forum E-Newsletter, May 15, 2013 - Fraud Allegations Going Mainstream, Aviv REIT has Been Doing Nothing but Going Up in Price After Going Public, Oak Grove Capital Closed on a $259 Million Fannie Mae loan to Refinance Existing Mortgage Debt

 

Bringing You Senior Care M&A Deals and News
 

May 15, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Fraud Allegations Going Mainstream. With CBS giving attention to the Medicare fraud allegations against Life Care Centers of America, who knows what will happen next....... Read More

 

Recent Senior Care M&A Deals

Long-Term Care

Acquirer

Target

Price

Regional Owner

Madison Square Retirement Center

 $3.0 million

Illinois Investor

Providence Healthcare/Holland House

 $28.0 million

Health Care REIT

75% Interest in 47 Revera Inc. Properties

 $1.01 billion

American House Senior Living Communities

Sterling Woods

 $7.65 million

N/A

Stevens Point Senior Housing

 $16.1 million

 

Deal of the Week

It has been just eight months since Health Care REIT last announced a billion-dollar acquisition, and that one grew to more than $3 billion very quickly. This next one could grow over time as well. The REIT has agreed to acquire a 75% interest in 47 seniors housing communities in Canada that have been owned and operated by Revera Inc., the second largest senior living provider in Canada. Health Care REIT is paying approximately $1.01 billion for its 75% share, which equates to a $267,800 per unit value based on a 100% interest. This represents just 50% of Revera’s Canadian seniors housing portfolio, and the company also owns 79 long-term-care facilities in Canada plus it operates 40 seniors housing and skilled nursing facilities in the U.S. This acquisition will be operated using the RIDEA structure with Revera maintaining management. A portion of Revera’s U.S. portfolio was put on the market more than a year ago with no takers at the asking price, but we may see renewed interest this year. Health Care REIT is using just $697 million of cash, but has recently raised more than $1.5 billion in new cash with an equity offering. Looks like some more acquisitions on the way....... 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

All we can say is, Wow! After going public in late March at $20.00 per share, Aviv REIT has been doing nothing but going up in price. After six weeks it was up 28% and near the top of health care REIT performers so far this year. Now, it is up 17% since the end of April and more than 50% from its IPO price, topping $30.00 this week. This should put it in the lead for 2013 performance so far. And the company still has yet to pay a dividend to its new investors, although the stated annual dividend is expected to be $1.44 per share, which is about a 4.8% yield on the current price. That is at the high end for health care REITs in general, but close to the average for REITs with a heavy concentration in skilled nursing facilities. If it can continue to find attractive investments at high yields, the stock may still have room to move before settling down......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

In theory, if a one senior living community has a higher operating margin than another one, it should be worth more in the market. That is not always the case, however, because what matters from a valuation perspective is the absolute level of cash produced. But in 2012 there was a direct correlation between operating margin and average price per unit paid in seniors housing (assisted and independent living combined). Those communities with an operating margin of 35% or higher sold for an average price of $210,500 per unit. There was a significant drop to an average of $153,400 per unit for those with a margin between 30% and 35% and $110,500 per unit between 25% and 30%. At the bottom, those communities with an operating margin under 25%, the average price came to just $77,400 per unit. While not a guarantee of a high value, the statistics do tell a story. Read the rest of the story in our Senior Care Acquisition Report, 18th Edition...... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Financing of the Week

Oak Grove Capital closed on a $259 million Fannie Mae loan to refinance existing mortgage debt on 23 properties owned and operated by Brookdale Senior Living in 10 states, including Florida, New York, Kansas, Pennsylvania and Texas. The 10-year variable rate credit facility was arranged by Oak Grove Managing Director Bill Kauffman and comes in at about $145,400 per unit. The new debt was structured to accommodate differing maturities of Brookdale’s debt as well as the repayment of tax-exempt debt on a particular date..... 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, Freddie Mac, FHA, and non-agency sources. This unique combination of selection, speed, and service explains why Beech Street has catapulted into the front ranks of Fannie Mae and Freddie Mac, and a rapidly growing HUD business in just three short years. 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

 

GE Capital, Healthcare Financial Services provides tailored healthcare real estate financing solutions
 

Like a bank: We finance healthcare real estate. Unlike a bank: Healthcare financing is all we do.
 

We offer customized healthcare real estate and medical property financing solutions including first mortgages, interim financing, acquisition financing and sale leasebacks for a wide range of healthcare operators, real estate developers and investors.  In fact, during 2012 we helped organizations like yours finance over $2.6B in senior housing, skilled nursing facilities and medical properties across the U.S.
 

Stop just banking. And start building.
Learn more.

 

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