The Dealmakers Forum E-Newsletter, April 2, 2014 - Franklin Development Properties and Harrison Street Real Estate Capital Obtained $40 million in financing for a New Community in San Antonio, Texas, Average Price Per Unit For Assisted Living Communities

 

Bringing You Senior Care M&A Deals and News
 

April 2, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
REITs Raising Capital For Deals. REIT stock prices remain depressed, but that's not stopping them from raising new capital for acquisitions.......... Read More

 

Recent Senior Care M&A Deals

Home Health Care

 

 

Acquirer

Target

Price

Roscoe Medical

Carex Health Brands

Merger

Lower Cape Fear Hospice & LifeCareCenter

Mercy Care

Merger

Porchlight VNA/Home Care

Chicopee VNA

Merger

 

Deal of the Week

Opening a smallish assisted living community 2004 in Illinois that is located 40 miles east of St. Louis seemed like a good idea, and it was. It filled quickly and provided a good return. But then an addition, expanding it to 65 units, opened in 2008, which was not good timing. It began to struggle with the onset of the recession, and the owner decided to offer contracts to new residents that would fix their monthly rate permanently. While it may have been a good marketing idea, keeping occupancy up, over time it did have an impact on margins. Occupancy today is 95%, and the 30% operating margin is lower than what it will be in a few years as the remaining 15-plus residents on that guaranteed rate contract move on. American Realty Capital paid $6.5 million for the property, equating to a current 8.2% cap rate, and has hired Meridian Senior Living to operate it. Our guess is that within a year or two the cash flow will be 20% higher, which will provide a nice return to the buyer. Patrick Byrne of Senior Living Investment Brokerage handled the transaction.......... 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

Who says construction financing is expensive? A joint venture between Franklin Development Properties and Harrison Street Real Estate Capital has recently obtained $40 million in financing for a new community in San Antonio, Texas that will have a total of 221 units, including independent living (116 units), assisted living (63 units) and memory care (42 units). The floating rate debt will have a five-year term, of which four years is interest only, and the “all-in” interest rate today is about 2.35%. We assume that will give the owners plenty of time to build and fill the community with an annual interest cost that will be less than $1.0 million. The debt comes to approximately $181,000 per unit, and Franklin Apartment Management, which currently manages 721 senior living units, will be the operator. Aron Will of CBRE Senior Housing Debt & Structured Finance arranged the financing with a regional bank...........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

After setting a record in 2013, the average price per unit for assisted living communities dipped by 8% in 2013 to $150,600. The median, however, dropped by just 1% in 2013 to $150,300 per unit. Despite these small declines, when looking at the quartile pricing, the upper quartile actually increased in 2013 to $181,400 per unit, up from $175,500 in 2012, meaning that 25% of the assisted living communities sold at prices above $181,400 per unit. In 2011, the upper quartile was $191,100 per unit, a level that will be difficult to match without a large number on newly developed, but stabilized, properties coming on the market for sale. The lower quartile in 2013 was $113,400 per unit, meaning that 25% of the assisted living communities sold at prices below this level. If you want access to all the key acquisition market statistics plus the deals in 2013, our Nineteenth Edition of The Senior Care Acquisition Report is being printed now........ Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

NEW - The Senior Care Acquisition Report, 19th Edition - Just Published!
Deals have been made. The 2014 Senior Care Acquisition Report contains private deals in this market that are frequently too small to make into financial press. Order by April 30th and get our Senior Care M&A Market Review and 2014 Outlook webcast for FREE ($147 value).Now that’s a deal! Go to http://www.levinassociates.com/landing/scar19order or call 800-248-1668 to preorder today.

 

Upcoming Interactive Webcast:

Transitional Care: Leveling Out The Bumps
Thursday, April 17, 2014, 1:00 pm ET
Transitional care—the level of care between the acute-care hospital and the patient’s discharge destination—is under fire in some quarters. Poor communication and coordination between and among professionals, patients, and caregivers can lead to serious situations, waste resources, and frustrate everyone involved. Go to http://www.levinassociates.com/conferences/1404-online-conference or call 800-248-1668 to register.

 

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