The Dealmakers Forum E-Newsletter, June 4, 2014 - Ventas buys ARC Healthcare Trust, EBITDA Averages, and more...

 

Bringing You Senior Care M&A Deals and News
 

June 4, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
REIT Deals Take Center Stage. Ventas buys ARC Healthcare Trust, and CareTrust REIT is spun out of The Ensign Group............ Read More   

 

Recent Senior Care M&A Deals
Long-Term Care
   
Acquirer
Target
Price
7 retirement communities
$146.8 million
Private REIT
2 skilled nursing facilities
$26 million
Investment group
Sunnyview Nursing & Rehab Center
$20.5 million
Large Owner
$22 million                              

 

Deal of the Week

Although it already owned a few senior living communities in Canada, Ventas made a major push north of the border with its announcement of the acquisition of 29 Holiday Retirement Corporation communities with 3,354 units for approximately $900 million, or $268,300 per unit. These are high-performing communities, with average occupancy of 90% and an operating margin of 50%, which is what the margin for independent living communities used to be in the U.S. in the good old days. Based on average revenue per occupied room and the margin, we have estimated that revenues and EBITDA for the portfolio are approximately $106 million and $53 million, respectively. This puts the cap rate at approximately 6.0%, which while not unheard of, is somewhat aggressive for properties that we believe have an average age of about 15 years. Unlike the last acquisition of Holiday Retirement communities (in the U.S.), which were leased back to Holiday, Ventas will have its portfolio company, Atria Senior Living, manage the 29 properties. We believe this is Atria’s first venture into Canada.  The transaction is expected to close in the third quarter............. 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

In 2011, Yost Management Company developed a 68-unit supportive living facility (SLF) in Illinois that has been managed by BMA Management. The facility census is a combination of private pay and Medicaid waiver. What was unusual was that the financing was a combination of a loan via the U.S. Department of Agriculture Section 538 program plus 9% low-income housing tax credits, which are usually associated with not-for-profit or affordable housing developments. Lancaster Pollard purchased the existing 538 loan from the existing lender, a non-GNMA approved community bank, and refinanced $4.3 million through the sale of a GNMA security. The transaction involved no new equity from the borrower, and the refinancing lowered the interest rate by more than 150 basis points and extended the term and amortization by 13 years. In addition, the new financing eliminated the existing personal recourse feature, which is always attractive to remove.................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

One of the reasons why the average price per unit sold for independent living communities hit a record in 2013 was because the average net operating income (or EBITDA) per unit sold in the IL market jumped by 28% from 2012, to 13,500 per unit. The was the second highest ever achieved, and one of the reasons for the high price per unit in the Canadian IL portfolio mentioned above is because the average EBITDA per unit for that portfolio was just over $16,000. The significant change from 2012 was obviously impacted by higher quality communities and portfolios sold in 2013, driven by strong demand and still-low interest rates that helped push pricing up. The same was not quite true in the assisted living market, which actually saw a drop in the average EBITDA per unit sold in 2013. ..............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 Dan Trigub

In this "Expert Opinion" interview, Dan Trigub, Co-Founder, OpenPlacement, discusses care transitions, home health, accountable care organizations, the internet, and more....................Watch the video

 

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The Senior Care Acquisition Report, 19th Edition - Catch the Competition!
Deals have been made. The 2014 Senior Care Acquisition Report contains private deals in this market that are frequently too small to make it into the financial press. Order by June 30th and you will recieve a complimentary $150 worth of deals in our online senior care m&a databse. Now that’s a deal! Go to http://www.levinassociates.com/landing/scar19order or call 800-248-1668 to order today.

 

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