The Dealmakers Forum E-Newsletter, September 10, 2014 - American Realty Capital Healthcare Trust I and II Close Deals

 

Bringing You Senior Care M&A Deals and News
 

September 10, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Diversicare Healthcare Surges: After years of disappointing shareholders, Diversicare Healthcare Services is on the move, both with growth and increasing value............ Read More   

 

Recent Senior Care M&A Deals
Home Health Care & Hospice    
Acquirer Target Price
Phoenix Home Care, Inc. Essential Health Care N/A
Long-Term Care    
Aviv REIT, Inc. 7 senior care properties $83.6 million
Private equity fund Renaissance Village $5 million

 

Deal of the Week

American Realty Capital Healthcare Trust is still on a roll, using both the original REIT, which is being bought by Ventas, and what is referred to as ARC-II, its new REIT for the post- sale-to-Ventas deals. At the end of August, ARC-II closed on the purchase of 12 assisted living and memory care communities with 680 units in Iowa from Sunnybrook Senior Living. The purchase price was $164.175 million, or $241,400 per unit, with a cap rate of about 7.2% based on annualized financial performance. These properties were all built between 2003 and 2009, and have an average 93% occupancy. The communities include 544 assisted living and 136 memory care units. ARC will be hiring Provision Living and Frontier Management to operate the properties. A 13th property will close later this year, and Ryan Maconachy and Chad Lavender of HFF represented the seller. ARC-II also closed on several one-off properties and another large portfolio. It looks like it’s off to the races................ 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

On the heels of closing its acquisition of Emeritus, Brookdale Senior Living has just sold 8.75 million new shares at $33.50 per share, raising nearly $300 million before the underwriters exercise their over-allotment option (which will most likely occur). Here is how to put money to good use: the company is exercising some purchase options for 10 senior living communities for about $60 million, which will reduce the company’s lease expense (these were at an 8.2% yield); it is paying down $121 million of debt with a high 7.3% weighted average interest rate; and the rest will go to general corporate purposes and possibly additional debt paydowns. While shareholders never like to see dilution, when it can strengthen the balance sheet and provide more financing flexibility in the future, there should be no complaints. The joint book-running managers were BofA Merrill Lynch and Goldman, Sachs & Co., and the co-managers were CS Capital Advisors and RBC Capital Markets...............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

Last week we reviewed the relationship between the average price per unit and the expense ratio in sales involving just assisted and independent living communities, where there was a perfect correlation in 2013. In the skilled nursing acquisition market, there was also a perfect correlation between the price per bed and the average expense ratio in 2013, but it was even more pronounced. For those SNFs sold that had an expense ratio below 85%, or an EBITDA margin greater than 15%, the average price per bed was an unprecedented $103,300. For those with an expense ratio between 85% and 89%, the average price was $71,600 per bed, or just below the national average for all SNF sales in 2013. The least profitable nursing facilities, at least measured by margin, were those with an expense ratio of 90% or higher, and these sales came with an average price of just $39,500 per bed. It must be noted that in high-rate states, even low-margin nursing facilities can be very profitable with a high absolute level of cash flow, and sold for prices above the national average...............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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