The Dealmakers Forum E-Newsletter, December 11, 2013 - The Looming Seniors Housing Bubble, CNL Healthcare Properties Upcoming Purchase of 21 Senior Living Properties, The Westminster Funds has Been in its Joint Venture with Life Care Services

 

Bringing You Senior Care M&A Deals and News
 

December 11, 2013 Issue:

 

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
The Looming Seniors Housing Bubble. With new development shifting into high gear, plus increasing asset values, there is talk of a looming bubble for seniors housing. Read More

 

Recent Senior Care M&A Deals

Long-Term Care

 

 

Acquirer

Target

Price

CNL Healthcare Properties

12 Seniors Housing Properties

$302.3 million

Aviv REIT

4 Health Care Properties in Ohio and Indiana

$44.9 million

 

Deal of the Week

Better late than never. In October, we reported on the upcoming purchase of 21 senior living properties for $457.3 million in western states by CNL Healthcare Properties from Bonaventure Senior Living. The first tranche of 10 properties was supposed to close on October 22, followed by six more 30 days later. On December 2, CNL closed on the first 12 of the communities with 1,404 units, including 790 assisted living, 486 independent living and 128 memory care, for $302.3 million, or $215,300 per unit. Included were eight properties in Oregon, two in Idaho and one each in Montana and Nevada. The weighted average age of this tranche is about 7.3 years. Prestige Senior Living will manage the eight Oregon communities and MorningStar Senior Living will manage the other four, all under long-term agreements. As of October 31, only one community had reached 90% occupancy, and only three others had topped 80%. To be fair, eight of the properties underwent renovations in 2010 or 2011, but that should have helped the numbers by now. Now it’s  time for Prestige and MorningStar to take their shot.... 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

You need patient capital for CCRC development, and that has been what The Westminster Funds has been in its joint venture with Life Care Services. The joint venture has just arranged financing for its fifth CCRC development, and this one is expected to cost about $161 million to develop. Located in Plymouth, Minnesota, the LCS/Westminster partnership is expected to break ground soon on the 195 independent living units and 14 garden homes. Included on the campus is a health care center with skilled nursing, assisted living and memory care. The community, known as Trillium Woods, is expected to open in the summer of 2015. The construction financing is being provided by Bank of America as lead and administrative agent, together with Bankers Trust of Des Moines, Iowa and TCF Bank. The debt financing is expected to be about $105 million (65%), with a sizeable slug of about $56 million of equity (35%). You just don’t see that kind of equity put into developments too often, and that is just one reason why this joint venture has been so successful.....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

Since the Ben Bernanke bond market meltdown that started last May, health care REIT stocks have mostly been in a freefall. Since May 1, they have dropped by an average of 18.9% (not market cap weighted, which would be much worse), with the range a drop of just 3.7% by Omega Healthcare Investors, to a plunge of 30.6% by HCP, Inc. In addition to HCP, Health Care REIT and Ventas are still down by 25% or more since May 1. The best performing REITs have a higher concentration of skilled nursing assets than the other ones, including Aviv REIT (-4.6%), Sabra Health Care REIT (-12.1%) and National Health Investors (-13.2%), although with its large acquisition of Holiday Retirement Corporation properties, SNFs will decline to less than 50% of the portfolio for the first time. Coincidentally or not, the publicly traded skilled nursing stocks are also outperforming the seniors housing stocks, at least so far......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 Todd Jensen

In this "Expert Opinion" interview, Todd Jensen, Chief Investment Officer, ARC Healthcare Advisors, American Realty Capital, discusses senior housing assets, RIDEA, geography, future investments, changes, and more......Watch the video

 

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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