The Dealmakers Forum E-Newsletter, October 30, 2013 - Another October without the Market Spooked, Balance Sheet Lending

 

Bringing You Senior Care M&A Deals and News
 

October 30, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Another October without the Market Spooked. Unlike many Octobers past, stock market valuations are setting records, but only because of Federal Reserve easy-money policies. Read More

 

Recent Senior Care M&A Deals

Long-Term Care

Acquirer

Target

Price

URNC, LLC

St. Joseph Nursing Home Company

N/A

Texas Owner/Operator

Parkwood Place Healthcare Center

$2 million

 

Deal of the Week

There had been rumors all year that something was going on between Ventas and Holiday Retirement Corporation. Initially, Ventas and Fortress Investment Group, which controls the Holiday portfolio, could not come to terms on a purchase price for the entire company, or so went the rumors, but that they were close. It is obvious now that the lines of communication remained open. During the third quarter, Ventas did complete a deal, but for just 26 of the Holiday communities with 3,138 units. The purchase price was approximately $790 million, or $251,750 per unit. This compares with $188,600 per unit Fortress paid for the entire portfolio of 299 properties back in early 2007. This smaller group has an average occupancy rate of 94%, which is at least 300 to 400 basis points higher than the rest of Holiday’s portfolio, which may help explain the relatively high price paid by Ventas. Very few details were forthcoming, but another shoe of this portfolio may drop in the next few months. In the meantime, we have estimated revenues for the 26 properties to be just under $100 million with an approximate EBITDA of $49.5 million, which results in a 6.25% in-place cap rate. Six years ago the cap rate was 5.75%, which most people thought was too aggressive. But a few of the large REITs were right behind Fortress with offers at cap rates closer to 6.0% at the time.... 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

Balance sheet lending has been the name of the game lately, at least for construction financing. Red Capital Partners closed on a $20.6 million construction loan to fund the development of a new 75-unit assisted living and memory care community in southern California that is licensed for 90 beds. The loan amount comes to $275,000 per unit. It is southern California, after all. Apparently, it is the first purpose-built community in the Sierra Madre area in the past 10 years. It is anticipated that the five-year, non-recourse loan will be refinanced with a permanent loan by Red Mortgage Capital. The borrower is Kensington Senior Living.....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 2012, the average price per bed in the skilled nursing market was $60,400, which was just below the record $62,500 per bed set in 2010. The market can be further broken down into quartiles, and the upper quartile price in 2012 was $71,400 per bed. This means that 25% of the skilled nursing facilities were sold at this price level or higher. What is interesting is that there was almost a perfect trend line moving down from the upper quartile price to the median of $57,400 per bed and down to the lower quartile price of just $37,300 per bed, meaning that 25% of the sales were at $37,300 per bed or lower. It is these facilities at the relatively low prices that have some market participants worried about the future and whether significant capital improvements will be warranted. For rural facilities or sole-community providers, it may not matter. But for others, it will be essential...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 Brian Pollard

In this "Expert Opinion" interview, Brian Pollard, Senior Managing Director, Lancaster Pollard, discusses HUD, Fannie Mae, refinancing, debt, M&A, and more.....Watch the video

 

9th Annual Western Canadian Senior Housing Forum
Building on the success of the 2012 conference, the 9th Annual Western Canadian Senior Housing Forum will once again bring together top executives from the seniors housing market and key public policy executives in Canada to review emerging trends, challenges and opportunities. The panel of expert speakers will cover:
 

-Opportunities and Challenges
-Views from Executives of Top Seniors Housing Providers
-State of Canadian Capital markets
-Update on Recent Transactions and Trends in the Seniors Housing Product

-Expanding Platforms and Programs to Meet Evolving Lifestyle and Care Needs
-What's Next on the Horizon for Mortgage Lending to Seniors Housing in Canada
-Developer Perspectives: Building to Meet Future Housing and Service Needs

 

Don’t miss this networking opportunity.  Click Here to Register.
 

 

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