The Dealmakers Forum E-Newsletter, November 6, 2013 - Third Quarter Earnings Off To Bad Start, Tryko Partners, LLC Recently Acquired a Skilled Nursing Facility in Danvers, Massachusetts

 

Bringing You Senior Care M&A Deals and News
 

November 6, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Third Quarter Earnings Off To Bad Start. Capital Senior Living disappoints investors, sending shares down. Read More

 

Recent Senior Care M&A Deals

Long-Term Care

 

 

Acquirer

Target

Price

HealthLease Properties Real Estate

Investment Trust

Willows at Hamburg

$14.123 million

Trilogy Real Estate of Porter, LLC

Avalon Springs Health Campus

$11.470 million

Chartwell Retirement Residences

Cedarbrooke Chateau

$27 million

Ventas

26 Holiday Retirement communities

$790 million

Capital Senior Living Corporation

McKnight Terrace

N/A

Not disclosed

Midtown Manor

$5.7 million

Sentio Healthcare Properties, Inc.

Woodbury Mews

$38.1 million

Regional Owner/Operator

2 assisted living communities

$2.85 million

 

Deal of the Week

New Jersey-based Tryko Partners, LLC recently acquired a 159-bed skilled nursing facility in Danvers, Massachusetts. Built in 1972, this facility has occupancy of 84% with a 91% Medicaid census. One of the problems is that of the 65 patient rooms, 37 are triples which limits the marketability to the private pay and subacute market. The facility was just below breakeven on $10.3 million in revenues in 2012, but a few years ago was producing over $700,000 in cash flow. Tryko paid approximately $4.0 million, or $25,200 per bed, but plans on investing up to $2.0 million in improvements. This will include converting a section of the building into a 30-bed subacute unit, reducing the number of triple rooms, adding a 1,500 square foot gym and developing a specialized Alzheimer’s program. This will take Tryko’s basis up to about $38,000 per bed, which is still cheap for Massachusetts, especially if it can fill the 30-bed subacute unit. The company is expecting it will take up to two years to bring the overall census to the low-90% or mid-90% level, with a Medicare census approaching 13%. At that time, EBITDA should be at least $1.0 million, but the real target is $1.5 million to $2.0 million as they change the reputation of the facility in the local market. The low end would still be a good deal for them, and not too difficult to hit, but the high end would certainly be a home run. Marcus & Millichap represented the seller...... 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

Cushman & Wakefield’s Senior Housing Capital Markets Group has arranged $44.6 million in construction financing for two new senior living communities that will be built in Connecticut. The debt financing is from M&T Bank with joint venture equity from Prudential Real Estate Investors. Both properties are being developed by Massachusetts-based LCB Senior Living, and the first one, where construction started in August, is in South Windsor and will have a total of 80 units of independent living, assisted living and memory care. It is expected to open in the fall of 2014. The second property will have a similar unit mix with 74 units in Avon and is expected to open in late 2014.....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

With all the new construction going on, developers, investors and lenders should be paying attention to the cost per square foot to build compared with the acquisition cost. It is hard to find a new development where the all-in cost is under $150 per square foot, and that does not include the start-up marketing costs. But in the seniors housing acquisition market, in 2012 just over 50% of the sales came at prices below $150 per square foot, with 36% below $100 per square foot. Now, there are a lot of B properties in that group together with some C buildings, but even with some significant renovations the cost basis still would be relatively low. But as always, it’s location, location...Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

IPO of the Week

With the stock market continuing to hit new highs, the IPO market has taken off. And while we may not see many seniors housing IPOs, one of the major brokers priced its IPO last week, on Halloween no less. Marcus & Millichap (NYSE: MMI), which had filed to sell 6 million shares at a range of $14.00 to $16.00 per share, had to settle for $12.00 a share. Perhaps they wanted to give investors a little initial return, as the price did tick up to a high of $14.74 per share on the first day of trading. Of the total shares offered, about 45% came from selling shareholders, which is usually a no-no in the IPO market. But one can hardly begrudge George Marcus, who founded the company in 1971, for selling a little less than 1.4 million shares. After all, he is keeping 25.9 million shares. The company has done well, to say the least, growing adjusted EBITDA from $18.7 million in 2010 to $29.5 million in 2011 to $59.7 million in 2012. Perhaps it was all those deals that Mark Myers has been closing these last few years. The question now is, will stock options be part of the compensation package at the firm?.....Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

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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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