The Dealmakers Forum E-Newsletter, November 19, 2014 - Aviv REIT purchases portfolio of 28 senior living communities for $305 million

 

Bringing You Senior Care M&A Deals and News
 

November 19, 2014 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Formation Capital expanding in the UK and U.SBack-to-back deals worth over $1.0 billion in total puts Formation Capital back in the spotlight............. Read More   

 

 

Recent Senior Care M&A Deals
Long-Term Care    
Acquirer Target Price
Trinity Healthcare, LLC 6 SNFs in TX N/A
Oxton Senior Living Roman Court N/A
Real estate investor Gull Creek Senior Living Community $8 million
Formation Capital NHP $761.7 million

 

 

 

Deal of the Week 

Aviv REIT recently announced a $305 million acquisition of a portfolio of 28 senior living communities, plus an office building, from Diamond Senior Living, a subsidiary of General Electric Credit Corporation of Tennessee (itself a subsidiary of GE Capital Corp). The portfolio, operated by Laurel Health Care, includes 23 SNFs, 4 AL communities, one IL community and the aforementioned office building, all in five states, and will enhance Aviv’s geographic and operator diversification. Laurel has been operating the facilities for over 20 years, which have changed ownership several times. In January 2006, Formation Capital acquired the portfolio (also 23 SNFs, 4 ALFs, one ILF and one office building) for $200 million. Later that year in September, GE Healthcare Financial Services purchased the Laurel portfolio along with five other senior housing portfolios for a total of $1.4 billion, which was then GE Healthcare’s largest deal to date. Aviv will be financing the acquisition, which is a 52.5% premium over Laurel’s sale price in 2006, with cash and its available line of credit for 40% (or $125 million) of the price and with a secured loan expected to be from GE Capital for the remaining 60% (or $180 million). The cash portion of the transaction will be refinanced by various debt and equity offerings executed by new partner Omega Healthcare Investors........................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

Livewell Senior Living, which operates three assisted living communities in the Miami MSA, is moving into owning/operating, and RED Capital Partners is financing its growth. Livewell started out managing two properties owned by a group of New York investors in 2012 (and later took over operations at a third property from the same group), a 100-unit AL/MC community in Margate that was built in 1970 but renovated in the 1990s, and a 68-unit AL/MC community in North Miami that was built in 1988. Both properties, though on the older side, were well maintained, and Livewell took occupancy from the 70% range in 2012 to near 100% today. When Livewell took over the operations of the two properties two years ago, that came with a purchase option, with a set price of about $10 million, or $59,500 a unit. So after turning the communities around and with the help of RED Capital Partners, Livewell was able to receive a $10 million bridge-to-HUD loan with a floating rate and a term of just a few months to acquire the two properties. With the increase in occupancy from two years ago, it is believed that the value has increased to $15 million or so. RED closed the loan in 60 days in hopes of the HUD loan closing early next year to take advantage of the low rates. Livewell also has a purchase option on the third community it operates for the NY group. The company, headed by Yanir Shmaryou, plans to grow in the short-term by acquisition and will partner with RED Capital to target lower-end, turnaround properties in Florida........................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 American Seniors Housing Association just published a Special Issue Brief by Jim Bowe of GlenAire Healthcare, LLC about Accountable Care Organizations (ACOs) and integrated care networks as they pertain to seniors housing. According to the report, the number of ACOs tripled from the first quarter of 2012 to the first quarter of 2013, reaching 458, and then increased by another 32% by the fourth quarter of 2013. No one knows how the ACO model will evolve, and it is certainly a work in process, but the Brief brings up several important points for seniors housing, especially for assisted living providers. Will hospitals that are in an ACO with assisted living communities begin to lease a few assisted living units as a step-down option to control expenses, minimize losses and better monitor care? If so, will this take away from the skilled nursing sector some short-term stay business, especially if that patient does not qualify for Medicare in the SNF setting? Will assisted living providers be able to develop data-driven metrics that track quality and outcomes as part of clinically driven care networks? Can early intervention at the assisted living level prevent costly emergency room visits and hospital readmissions? Skilled nursing providers have been working on this with mixed results. All of this is somewhat new terrain for many assisted living providers, but terrain that must be learned and mastered over the next several years. There are many who believe that assisted living, as acuity levels continue to rise, will look more and more like skilled nursing of 30 years ago, but in nicer buildings. If so, care coordination across settings will be more important, but systems, technology and staffing will have to be upgraded, and will matter more than the high-end physical surroundings. Welcome to the new era of seniors housing.......................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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