The Dealmakers Forum E-Newsletter, May 21, 2014 - REITs, Who Will be the Winning Bidder for Griffin-American Healthcare REIT II

 

Bringing You Senior Care M&A Deals and News
 

May 21, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Crowdfunding For Senior Care Development. A developer has reached their goal of $1.5 million of equity raised by crowdfunding, something that more people may try in the coming months............. Read More   

 

Recent Senior Care M&A Deals
Long-Term Care
   
Acquirer
Target
Price
Local owner/operator
$4.25 million
Regional owner/operator
$3.175 million

 

Deal of the Week

Some of you may remember when skilled nursing facilities built in the early 1980s were considered to be relatively new. This was especially true when they were in the market for sale in the 1990s. But it is now 20 years later, and these facilities are 30 to 35 years old. But do not be fooled, there is still strong demand. In a recent sale of three skilled nursing facilities in northwest Indiana, five solid offers were made for the portfolio, and the marketing process took 30 days from start to contract. The three were built in 1977, 1983 and 1984 with a total of 389 beds, of which 16 were assisted living beds in one facility. A large private owner/operator in Illinois was the purchaser, and they paid $17.0 million, or $43,700 per bed and $154 per square foot. Chris Hyldahl of Blueprint Healthcare Real Estate Advisors 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

Although the non-traded REITs are getting much of the press these days, the smaller publicly traded REITs are ready to deal. Aviv REIT made this clear with a new $600 million credit facility which has an accordion feature which will allow the REIT to increase it to $800 million. That can fund a lot of acquisitions. This new unsecured revolving credit facility refinanced an existing $400 million “secured” facility, which provides Aviv with added flexibility. The new credit facility comes with a rate that ranges from 170 to 225 basis points over LIBOR depending on the company’s leverage, and a maturity date of May 2018, and that can be extended for an additional year as well. We can expect a very active Aviv in the acquisition market. Bank of America served as Administrative Agent...............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 talking with various financial intermediaries, the demand for higher-quality assisted living communities is almost insatiable. Properties built in the past 10 years, with high occupancies and preferably a mix of assisted living and memory care, are often bid up to levels above the asking price, if there even is an asking price. When it involves a portfolio, demand can be even greater. So in 2013, there was a significant difference between the average price per unit for what we call the “A” assisted living properties and the “B” properties. The segregation was based on age, size and location, and while subjective to a limited degree, we believe most “institutional” buyers would agree. Last year, the average price for primarily assisted living communities that were A quality was $222,400 per unit ($240,500 per unit in the two-year period of 2011-2012), compared with $134,900 per unit for the B properties ($111,600 per unit in 2011-2012). The average cap rate for the A properties was 7.3%, or 150 basis points lower than the 8.8% for the B properties. This is why so many owners of the A properties are deciding to sell before this current bull market cycle ends.............Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Will it Happen? 

The rumors have been growing that American Realty Capital Healthcare Trust will be the winning bidder for Griffin-American Healthcare REIT II, in a deal that reportedly has been valued close to $3.7 billion. That would more than triple the size of ARC, which is rather shocking given that ARC just became publicly traded, and a few short years ago had less than $300 million in assets. We had thought Ventas would be the most likely winning bidder, partly because of its size and lower cost of capital, but also because of its experience in buying other health care REITs. Anything could happen, but if ARC wins the bid, we have to wonder at what premium?.............Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Sponsored Content:

 

ICAA Conference 2014: Moving beyond the status quo
November 13-15, 2014 at the 2014 ICAA Conference meet professionals seeking to enhance the wellness and quality of life for adults 50 and older. Highlights include full-day workshops by expert presenters as well as additional programming options that offer education and practical information to take back to your organization. Check out full-day workshops on balance, aquatics, cognitive health, and pole walking, presented by some of ICAA’s most popular presenters.
For more information, visit: www.icaa.cc/conferenceandevents/overview.htm

 

Long Term Care Summit, July 14-15, Palm Beach, Florida
The Long Term Care Summit is the premium forum bringing senior level executives and solution providers together. The Summit offers an intimate environment for a focused discussion of key new drivers shaping the senior care industry.
For more information, please contact Laurel Zevitz at l.zevitz@marcusevansch.com

 

 

Around the Web in Senior Care M&A...Click here to see more

Webcast Calendar... Click here to see more

Upcoming Conference Partnerships... Click here to see more