The Dealmakers Forum E-Newsletter, September 3, 2014 - Grace Management and Chicago Pacific Founders Ink Deal

 

Bringing You Senior Care M&A Deals and News
 

September 3, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Summer M&A Activity: American Realty Capital closes the summer with a flurry of seniors housing acquisitions............ Read More   

 

Recent Senior Care M&A Deals
Long-Term Care    
Acquirer Target Price
Pacifica Companies Quiet Oaks $5.2 million
Meridian Senior Living The Oaks-Lynchburg $7.5 million
Harrison Street Real
Estate Capital
11 senior living properties $498.5 million
Lighthouse Realty 
Management
2 assisted living facilities $4.12 million
Sentio Healthcare
Properties, Inc.
St. Andrews Village $42.5 million
Sunrise Senior Living Gracewell Healthcare N/A

 

Deal of the Week

Although this “deal” does not involve an actual property, at least not yet, Grace Management has announced a new partnership with Chicago Pacific Founders, which is a boutique private equity firm that invests exclusively in healthcare opportunities and that was founded by John Rijos, the former COO of Brookdale Senior Living. Rijos will join Grace Management as chairman of the board of directors. This new partnership will allow Grace Management to function as a principal in potential acquisitions, and they have already submitted letters of intent for $35 million of acquisitions, one of which has been signed up. Two properties have already been purchased outside of the new fund, and they expect to invest up to $110 million of equity over the next three years. They are primarily interested in one- or two-property deals, especially those that have been poorly managed with low occupancy where they can add some real value, which is what Grace Management has been doing for others since 1984. They think it is time to use some of their expertise gained over 30 years for themselves, and we can’t blame them. They also like “complicated” transactions that others have passed on. The bigger the challenge, the bigger the opportunity............... 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

Perhaps one indication of a hot market is the increase in hotel conversions to senior living. MidCap Financial recently financed the acquisition of a former resort hotel in Hot Springs, Arkansas that was converted to luxury seniors housing in 2010. The campus includes 20 independent living cottages, 88 assisted living units and 16 memory care units. Capital Health Group took over the property in 2012 under a lease with its affiliate company, Compass Pointe Healthcare Systems, managing the campus. The lease included a purchase option, which has been exercised using $18,836,000 in financing from Midcap. The floating rate mortgage has a term up to three years, providing Compass Pointe with time to fully stabilize the property before they seek long-term fixed rate financing, most likely with HUD. Capital Health Group owns 26 seniors housing properties comprising more than 2,500 beds and units..............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

The Joint Center for Housing Studies of Harvard University just released its report on housing America’s older adults. While there were not many surprises regarding the aging of America and the wealth of those aging (or lack of wealth), there was one interesting statistic that caught our attention. Between 2005 and 2013, home ownership rates actually edged up for households aged 80 and over, and fell by one percentage point for those aged 65 to 79. But for those aged 50 to 64, the home ownership rates dropped by five percentage points. It is possible that the oldest age cohort held on to their homes during the Great Recession, resulting in an increase in home ownership rates, and that the younger 50 to 64 group opted to rent given the dismal housing market. But if the younger age group continues to rent, or the increase in renters continues, this may have a significant impact on the seniors housing market in years to come, especially with regard to home ownership sales funding part of their retirement housing costs, especially for the CCRC market. While it is too early to make any predictions, it is something certainly worth monitoring...............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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