The Dealmakers Forum E-Newsletter, February 18, 2015 - A Miami SNF built in 1926 sells for $164,000 per bed
Bringing You Senior Care M&A Deals and News
February 18, 2015 Issue:
Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Brookdale and Monetizing Real Estate Value: Pressure is mounting on Brookdale Senior Living to monetize the value of its owned real estate, but at what cost?................ Read More
|Recent Senior Care M&A Deals|
|Home Health Care & Hospice|
|Hospice Compassus||Life Choice Hospice||N/A|
|Large private fund||The Landing of Canton||$13.8 million|
|Investment group||Floridean Nursing & Rehab Center||$14.8 million|
|HC-One||Meridian Healthcare Ltd.||N/A|
|Private investor group||Claiborne Hughes Health Center||$7.5 million|
Deal of the Week
A 90-bed skilled nursing facility in Miami, Florida that was built in 1926 sold for $14.75 million, or $164,000 per bed, a price you would normally only see for a brand new purpose-built SNF. Why so high, you might ask? For one, the facility was extensively renovated in 2007, so its effective age makes it relatively new. Second, it is in a high Medicare market, so it operated with a half-Medicare, half-Medicaid census. And third, it was managed well, with 95% occupancy and $1.9 million of EBITDA on $12.2 million of revenues, so it sold for a market cap rate of 12.9%.
The seller was a fourth generation owner/operator who decided to exit the business. The buyer, a New York-based private equity group, hired Consulate Health Care to operate the facility under a long-term lease. CapitalSource Bank provided the acquisition financing, and Brad Clousing of Senior Living Investment Brokerage handled the transaction..................................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
Aron Will of CBRE’s Senior Housing Debt & Structured Finance group secured a $22.5 million loan from a regional bank on behalf of a joint venture between Care Investment Trust (a subsidiary of Tiptree Financial, Inc.) and Royal Senior Care to fund the acquisition of a senior living portfolio of five properties in South Carolina and Florida, totaling 282 units of independent living, assisted living and memory care, for a purchase price of $29.2 million. The five-year loan included a 36-month interest only period and a $2 million earn-out feature. The portfolio will be cross-collateralized and cross-defaulted. Royal will take on operations, and the joint venture (of which Care will own 80% and Royal will own 20%) is planning an extensive $2.7 million capital improvement program, which will both upgrade the communities and also enable them to cater to higher acuity residents. This may not be the last we hear of the joint venture, as Care is looking to do more deals and possibly development projects with Royal.
And by the way, last October, Care also acquired a three-property senior living portfolio in Texas, Virginia and Tennessee in a joint venture with Greenfield Senior Living for an estimated $33 million, or about $92,000 per unit. In that deal, Care would also own 80% of the joint venture, and Greenfield the remaining 20%. Mr. Will of CBRE also provided the acquisition financing, a $23.1 million five-year loan with 36 months of interest free and a $2 million earn-out feature. Sound familiar?.................................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
Are we at a market peak? Judging by the number of long-term care deals we saw in January, our guess is…not yet. Typically, there is a significant drop off in deal making in the first month of the year, which usually follows a strong fourth quarter. January 2010 and 2011 saw 10 deals a piece, rising to 11 in 2012, and 13 deals in each of the last two years. To put it in perspective, January 2014 represented only 4.4% of the year’s total of 294 deals.
If that low percentage holds any bit true this year, then we have definitely not hit a market peak, with a total of 21 deals announced in January, a 62% increase from 2014. Though it is still a 30% drop from the 30 deals announced in December 2014, if every month saw the same number of deals as historically weak January did, we would have a total of 252 deals in 2015, which would still beat out 2013 by 25 deals. We may still have a way to go in this bull market...............................Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today