The Dealmakers Forum E-Newsletter, October 15, 2014 - Los Angeles start-up CCRC receives financing at less than 4%

 

Bringing You Senior Care M&A Deals and News
 

October 15, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Seniors Housing Occupancy Trends Still Improving: The data metrics are looking so good they may be attracting unwanted competition............ Read More   

 

 

Recent Senior Care M&A Deals
Home Health Care & Hospice    
Acquirer Target Price
Five Points Healthcare Willowbrook Health Systems N/A
Homestead of Centerville
Operations, LLC
Home Health Care Agency $100,000
Long-Term Care    
$97.74 million
Diamond View Assisted Living $8.7 million
Not disclosed 3 assisted living communities $27.59 million
Homestead of Centerville, LLC The Continental at St. Joseph's $5.365 million
REIT Arbrook Independent Living $11.5 million
NorthStar Healthcare Income, Inc. 4 assisted living communities $125 million
Wilson Senior Care Loris Extended Care Center $3.6 million
Aviv REIT, Inc. Belle Meade Home $4.6 million

 

 

Financing of the Week 

It’s not often we see a start-up, entrance fee CCRC receive financing with a rate less than 4%, but a high-end, well-positioned community in West Los Angeles did just that. The Fountainview at Gonda Westside is Los Angeles Jewish Home for the Aging’s second CCRC, but the first in the Westside of L.A. in 20 years. It will be built in the highly-desirable, master-planned neighborhood of Playa Vista. To finance the 200-unit construction project, LAJHA turned to Cain Brothers, which helped issue $144.1 million in bonds, separated into four tranches. The Series 2014A bonds were issued as 30-year, fixed-rate bonds with an average yield of 3.60%. The Series 2014B, 2014C and 2014D bonds were issued as short-term bonds which will be repaid upon receipt of the first generation entrance fees, leaving behind about $28 million in outstanding debt (or the “A” bonds). Altogether, combined rates came in below 4%, helped in large part by Cal-Mortgage insuring the A, B and C bonds. LAJHA also put in about $25 million in equity, including $18 million for the land and $7 million for architectural planning and other fees. Entrance fees range from $450,000 to $1.3 million, averaging at about $750,000, with 24 units marked off for assisted living or memory care and thus do not have an entrance fee. With a wealthy customer base, LAJHA’s good reputation and a desirable location in the master-planned community of Playa Vista, The Fountainview presold (with a 10% deposit) 92% of its units in less than nine months, which may be a record................... Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today

 

 

Deal of the Week

The Ensign Group announced a deal this week that will leave them the dominant provider of post-acute care in the city of San Diego. The target, Shea Family Care of El Cajon, California, is currently the largest post-acute provider in the San Diego market, with eight SNFs, one ALF, one Medicare/Medicaid certified home health agency, and one private pay home care agency. Between the SNFs and the ALF, Ensign will add a total of 711 beds to its portfolio of more than 127 skilled nursing and senior living properties across the country. Ensign will also purchase the real estate of two of the facilities, and assume long-term leases on the other seven, two of which having purchase options for the real estate. The acquisition will be paid for in cash and is expected to be operationally accretive to earnings in 2015. With the deal expected to close some time in the fourth quarter, Ensign strengthens its ability to offer a continuum of care by working with hospital systems and managed care providers in San Diego. This effort to provide a continuum of post-acute health care services is part of the larger consolidation trend in the health care world resulting from the ACA, and we haven’t seen the end of it in seniors housing...................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

We have written a lot about the rise in the average price per bed of skilled nursing facilities in the past two years, and the record of $73,300 per bed set in 2013. That record may be broken again in 2014, but it will depend on the number of high-priced transactions that conclude the year. In 2013, 59% of the nursing facilities sold with a price above $60,000 per bed. This compares with just 42% in 2012. And in 2013, 11% of the nursing facilities sold with prices above $100,000 per bed, which was a record. On the low end f the spectrum, in 2013 just 11% of the facilities sold at prices below $30,000 per bed, compared with 18% in 2012. Clearly, the market demand is for the higher-end skilled nursing facilities, or at least those that are in markets where they can expand their Medicare census...................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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