The Dealmakers Forum E-Newsletter, June 26, 2013 - Senior Care M&A Market Holds Steady, REIT Stocks

 

Bringing You Senior Care M&A Deals and News
 

June 26, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Senior Care M&A Market Holds Steady. With the end-of-month deals still to come, it is looking like transaction volume this year will match last year's, but dollar volume is way behind so far... Read More

 

Recent Senior Care M&A Deals

Long-Term Care

Acquirer

Target

Price

HealthLease Properties REIT

Wellbrooke of Westfield

$20.33 million

Swiss Prime Site

Tertianum

$469.8 million

eQ Care

1 ALF in Finland

$9.38 million

Griffin-American Healthcare REIT II

4 SNFs in PA, MA and OR

$35.6 million

 

Financing of the Week

Many owners go to HUD for new construction financing, but you still need equity to get the deal done, and that is not always easy to get, at least in sufficient quantities. Herbert J. Sims recently raised $6.2 million in subordinated debt for a client, Cathcart Group, LLC, which was loaned to an affiliate which then invested the proceeds as equity into the new development’s owner. Cathcart is building an 88-unit assisted living community in West Virginia and had already secured $10.6 million of HUD construction financing. The total financing comes to about $190,000 per unit, and the subordinated debt will allow the developer plenty of time to fill the community once built. Sims raised the $6.2 million from its high net worth customer base.... 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 most people know, the vast majority of skilled nursing facilities in the country were built more than 20 years ago, with the period 1965 to 1985 experiencing the largest growth after the enactment of Medicaid and Medicare in the mid-1960s. That is why when “newer” nursing facilities come on the market, there is heightened interest among the buyers. Call it scarcity value, but the newer facilities are also better designed and tend to be larger based on total square feet per bed. In 2012, those skilled nursing facilities that were built prior to 1992 sold for an average price of about $53,000 per bed, while those built since 1992 enjoyed a 40% premium at about $74,900 per bed. Unfortunately, there are many more of the former than the later...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

In April we reported that Benchmark Senior Living was the stalking horse bidder for a distressed senior living community in Massachusetts with 138 market rate units and 30 income restricted units with rents below $1,200 per month. This community, with not-for-profit sponsorship, opened in 2007 and quickly ran into census issues. The stalking horse bid was $30 million, or $217,000 per unit excluding the 30 apartments, and apparently no one else showed up to compete with Benchmark. But Benchmark will be paying up to an additional $5.0 million more if it can get approvals for building new units, which it should. This is the company’s second entrance-fee CCRC acquisition, and shows the strategic importance of being the stalking horse bidder. Our guess is that the relatively high price kept other bidders away...Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

REITs Continue to Sink

As interest rates continued to rise, health care REIT stock continued to sink, with most of them trading down more than 20% below their recent 52-week highs. The concern, or course, is that this will put a chill in the seniors housing M&A market as the REIT cost of capital goes up and their desire to sell new shares at these much lower prices wanes. It appears that the market has overreacted in terms of punishing REIT values, but the weekly increases in share price that we all got accustomed to during the first four months of 2013 appear to be a thing of the past...Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Turmoil at Holiday Retirement Corporation?

What a shock. Just two months after signing on to replace Jack Callison as CEO of Holiday Retirement Corporation, Ed Lange is gone. Poof. We were actually kind of surprised that Callison left anyway, since three years after hitting bottom with a huge plunge in occupancy the company was back on track with census almost were it was when Holiday was sold to Fortress Investment Group. Did Lange see something he didn’t like, a fight with someone at Fortress or, and hopefully not, a sudden health issue? We just don’t know yet, but the replacement is apparently someone in-house on an interim basis.  ..Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Wells Fargo Capital Finance

You need a lender who can deliver every step of the way
 

Healthcare is your business. Providing financing to healthcare companies so they can run smoothly and efficiently is ours. With the Healthcare Finance team at Wells Fargo Capital Finance, you get the proven reliability of a leader, along with the knowledge and experience you want. Plus, our financing can provide cash flow to keep the business running efficiently, or extra capital to help the business grow. To help maintain the well-being of your business, let’s start a conversation today. Call us at 1-877-770-1222 or visit us online at wellsfargocapitalfinance.com/healthcare-finance.php.

 

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