The Dealmakers Forum E-Newsletter, January 7, 2015 - Profitable county-owned SNF sold to private company


Bringing You Senior Care M&A Deals and News

January 7, 2015 Issue:

Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
The ACA Hits Harvard ProfessorsAs 2015 begins, ivory tower residents are discovering that ObamaCare has its costs, but they don't like it.............. Read More   



Recent Senior Care M&A Deals
Long-Term Care    
Acquirer Target Price
Cornerstone Healthcare Group TrinityCare Senior Living $27 million
Tryko Partners, LLC Burnt Tavern Rehab and Health Care $10 million
ARC Healthcare Trust-II Wellington at Hershey's Mill $95 million
ARC Healthcare Trust-II Wood Glen Pavillion $20 million
ARC Healthcare Trust-II 2 assisted living communities $54.7 million
Global Healthcare REIT, Inc. 4 skilled nursing facilities $27 million


Deal of the Week 

Most county owned and operated skilled nursing facilities that are sold are losing money, and sometimes a lot of money. But at the end of 2104, an upstate New York facility with 216 beds was sold for $16.0 million, or $74,100 per bed, and it actually made a profit. Although it was built in 1960, there had been major renovations and additions in the past 15 years, adding more than 47,000 square feet and replacing most of the heating and HVAC systems, among other improvements. Occupancy averages 95% with a 75% Medicaid census. It had a positive operating margin of about 2.2%, but under private ownership, pro forma revenues and EBITDA should be close to $19.0 million and $2.5 million, respectively. That represents practically no change in revenues but a $2.0 million positive swing in cash flow. The deal came with a 2.6% cap rate on existing cash flow, and a 15.6% cap rate on pro forma cash flow. Guess how the buyer, a private family operator in New York, looked at it. Joshua Jandris and Mark Myers of Marcus & Millichap represented the seller............................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

In another instance of a not-for-profit going to HUD for a refinance, Aaron Becker of Lancaster Pollard helped refinance two SNFs (a 167-bed SNF in Quincy, Massachusetts and a 138-bed SNF in Brockton, Massachusetts) for Alliance Health and Human Services, a nonprofit provider of senior care and therapeutic foster care for children with medical and/or emotional needs. In 1999, Alliance issued $38 million in publicly offered, tax-exempt bonds for the construction of the Quincy property and the acquisition and renovation of the Brockton property. Both properties were cross-collateralized through terms outlined in the bond indenture and were required to be refinanced simultaneously. However, the properties were highly-leveraged, and the Brockton community did not meet HUD’s LTV limitation. As a result, LP provided a $23.2 million fully amortizing HUD loan with a 35-year term and a 3.72% rate for the Quincy property and a separate $5.3 million bridge-to-agency loan which will be taken to HUD once it fulfills the underwriting requirements. The blended rate of the two loans reduced Alliance’s cost of capital from 7.75% to under 4.75%, which generates annual debt service savings of over $1 million.............................Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today


Start of the Week

The Ensign Group has not wasted any time. Effective January 1, the company closed on four separate acquisitions in three states. The largest was a post-acute campus in Pueblo, Colorado that includes a 60-bed skilled nursing facility, an 81-bed skilled nursing facility with a subacute unit, and a small 17-bed independent and assisted living operation, all on the same campus. It also bought a 103-bed SNF in Lubbock, Texas that is on the campus of Texas Tech University. Also in Lubbock, it purchased a hospice that serves patients throughout the South Plains area of Northwest Texas. Finally, Ensign bought a Medicare and Medicaid home health agency located in Scottsdale, Arizona. All of these acquisitions are expected to be accretive to 2015 earnings. More importantly, it is a strong signal for a busy year of acquisitions and growth for the company, which has been a top performer in the equity market............................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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