The Dealmakers Forum E-Newsletter, July 30, 2014 - Marcus & Millichap Sells Another County SNF, The Amsterdam at Harborside CCRC in New York Restructures Its Bonds, Average Price Per Unit For Stabilized Assisted Living Communities

 

Bringing You Senior Care M&A Deals and News
 

July 30, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Another Health Care REIT?  Despite the temporary slump in health care REIT stock prices a year ago, becoming a health care REIT still remains one way to achieve a higher valuation............ Read More   

 

 

Recent Senior Care M&A Deals
Long Term Care    
Acquirer Target Price
Formation Capital 14 SNF's $150 million
Chartwell Retirement Residences Jardins Notre-Dame $20.274 million

 

Deal of the Week

Another county-owned skilled nursing facility in New York has gone the way of private ownership. Steuben County Health Care Facility in Bath has been sold to a private operator for approximately $11.0 million, or just over $104,000 per bed. The facility was quite new, having been built in 2008 for a total cost of $19.5 million, but it was marginally profitable with revenues over $13 million, which included transfer payments from the state which the buyer will no longer receive. The 105-bed facility had an occupancy rate of 93%, of which 80% was Medicaid. Under new management, we expect pro forma revenues and EBITDA to be close to $9.5 million and $1.5 million, respectively, which would result in a forward cap rate close to 13.5%. Joshua Jandris and Mark Myers of Marcus & Millichap represented the seller in the transaction............ Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

Refinancing of the Month

About the worst thing that could have happened to a new CCRC would have been to start construction just prior to the onset of the Great Recession. Who could have known? But such was the case for The Amsterdam at Harborside on New York’s Long Island which opened in mid-2010 with more than $270 million of bond debt. In a pre-packaged bankruptcy filing, the bondholders are expected to receive par for the $230 million of debt that remains outstanding. For 75% of the debt, the investors will receive the same interest rate as on the original bonds, ranging between 5.875% and 6.5%, and the new bonds will have a set, but different, amortization schedule. For the remaining 25%, investors will receive a 2% coupon but principal will only be paid out of excess cash flow from entrance fees (after refunds, of course), with an expected final maturity of 2049. With the financial situation settled, and occupancy edging up from 85%, the 329-unit/bed CCRC should be on the road to full stabilization as the local housing market continues to recover. Herbert J. Sims underwrote the initial bond issue and was instrumental in the restructuring process, helping investors at least keep their principal, if they still held on to their bonds. Investors, however, have not shown much confidence in the restructuring yet, as the bonds were still trading at a deep discount in mid-July with a 12% yield. But that may spell some opportunity. And tax-exempt, no less...........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

As occupancy levels continue to rise from the recessionary slump, there is an obvious impact on valuation. The average price per unit in 2013 for assisted living communities was $150,600, an 8% decline form 2012. For stabilized assisted living communities, however, the average price per unit was $159,500, which compared favorably with an average of $82,600 per unit for non-stabilized communities in 2013. The difference of $76,900 per unit between stabilized and non-stabilized was much narrower than in 2012, when the difference was $97,600 per unit, and in 2011 when it was $117,300 per unit............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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