The Dealmakers Forum E-Newsletter, June 5, 2013 - SNF Market Stronger Than Some Think, Spectrum Retirement Communities Sold Three Assisted Living Communities in Oregon, Health Care REITs

 

Bringing You Senior Care M&A Deals and News
 

June 5, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
SNF Market Stronger Than Some Think. Despite the conclusions of a recent study, skilled nursing margins are not as bad as some people would have you think... Read More

 

Recent Senior Care M&A Deals

Long-Term Care

Acquirer

Target

Price

American Realty Capital Healthcare Trust

 3 Oregon ALFs

 $33.0 million

 AVIV REIT, Inc.

 2 Oklahoma SNFs

 $6.2 million

Regional Operator

Rose Arbor Assisted Living Facility

$16.5 million

 

Deal of the Week

In one of the largest deals of the month, Spectrum Retirement Communities sold three assisted living communities in Oregon to American Realty Capital Healthcare Trust (ARC) for a price of $33.0 million, or $154,900 per unit. The portfolio includes 177 assisted living units and 26 Alzheimer’s units, and the properties were built on average a little over 10 years ago. Occupancy was a healthy 93%, and they had a Medicaid census between 30% and 50%. The cap rate on the transaction was between 6.0% and 7.0%, so Spectrum must be happy with that result. The company has been exiting the Medicaid waiver business and is focusing on 100% private pay communities. After this sale, it has 3,200 units that are all private pay, and Spectrum is building 500 to 600 new assisted living and independent living units annually.. ARC has hired Frontier Management to operate the communities, and they are in the process of purchasing a few other properties as well. Dave Rothschild, Matthew Whitlock and Mary Christian of CBRE represented Spectrum on the sale........ 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

As we mentioned in this week’s 60 Seconds video, the sky is not falling for the skilled nursing sector. Even though margins may be tighter than two years ago, skilled nursing facilities that sold in 2012 had one of the highest net operating income levels in recent years. The average NOI per bed sold was $7,600 in 2012, or nearly 17% higher than in 2011 and just over the $7,500 per bed in 2010, the year that the average price for nursing facilities sold hit a new record of $62,500 per bed. Even with the volatility in Medicare rates, providers have found ways to make money and sell their facilities at near record average prices......Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Health Care REITs Collapse

Almost every week we have seen health care REITs reach new highs, with weekly gains sometimes topping 5% or 10%. But the party came to an end after May 22, at least for now. With a hint from the Federal Reserve that quantitative easing may be slowing, Treasury yields jumped on the belief that interest rates would finally start to rise. And rise they did, with the benchmark 10-year Treasury note jumping by more than 50 basis points from its low. Investors reacted by dumping dividend-yielding stocks, such as REITs, and in less than a week’s time the average health care REIT stock had dropped by 15%, or we should say plunged, which is what happened in so short a time period. Investors did not differential by size, asset type or quality; they just sold and it was a bit of a bloodbath. While the health care REIT share prices did get a bit ahead of themselves prior to May 22, the plunge was an overreaction and investors will return......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 Casey Moore

Ziegler Financing Corporation closed on $37.65 million in HUD loans to refinance six skilled nursing facilities owned and operated by Extendicare Health Services in Michigan, Minnesota and Wisconsin. Including the current transaction, Ziegler has now placed more than $174 million of HUD debt on behalf of Extendicare from 2010 to today. Our guess is there may be more to come....... Watch Video

 

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.

 

TOMORROW: Interactive M&A Webcast:
Boost Your Bottom Line: Go Green!
Thursday, June 6, 2013, 1:00 pm ET            
Going green can improve your bottom line. Consumers in all age groups increasingly recognize the value in recycling waste and reducing energy use whether in their own personal lives or on a broader—even global—basis. Retrofitting existing communities and facilities has become financially sensible, as the cost of green alternatives has gone down—as has the time it takes to achieve a return on the investment. Find out more from our expert panel: Marcus Sheffer (Moderator), LEED Fellow, Energy Opportunities, Inc.; Steven Leone, Principal, Spiezle Architectural Group, Inc.; Jeffrey Perlman, President & Founder, Bright Power, Inc; Clark Reed, National Program Manager, ENERGY STAR Commercial Buildings U.S. E.P.A.; and Robert Traer, Chair, Environmental Concerns Committee, Pilgrim Place.
Go to http://www.levinassociates.com/conferences/1306-online-conference or call 800-248-1668 to register.

 

Webcast Calendar... Click here to see more