The Dealmakers Forum E-Newsletter, April 8, 2015 - The Hollinger Group exits the seniors housing market
Bringing You Senior Care M&A Deals and News
April 8, 2015 Issue:
|Recent Senior Care M&A Deals|
|MBK Senior Living||Memory Care at 7 Lakes||$13.3 million|
|HCP, Inc.||3 senior living communities||N/A|
|Care Investment Trust LLC||6 assisted living communities||$54.5 million|
Deal of the Week
Last month, we wrote about Care Investment Trust’s purchase of the Hollinger South Portfolio, which included five properties in South Carolina (4) and Florida (1) and sold for $29.1 million, or $103,000 per unit. This month, the remaining senior living properties owned by The Hollinger Group, dubbed The Hollinger North Portfolio, were sold to Care Investment Trust, a subsidiary of Tiptree Financial, Inc., for $54.48 million, or about $181,000 per unit, with a 7.5% cap rate.
The communities, which consisted of 299 units of assisted living and memory care units, were located in Maryland (3), New Jersey (1), Pennsylvania (1) and Virginia (1). Average occupancy was around 94% and the properties were built between 1986 and 2002, with renovations. Greenfield Senior Living will operate the communities and plans to implement an extensive capital improvements program and to enhance the programming and services in rebranding them under the Greenfield name.
With this sale, Hollinger is exiting the senior living business, other than a few CCRCs, to focus on its LTAC and rehab hospital businesses. Aron Will of CBRE National Senior Housing Group arranged a $39.5 million loan from a life company that includes 18 months of interest only. Ryan Saul, Brad Clousing, Patrick Burke and Jeff Binder 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
KeyBank provoked some conversation at the recent NIC Conference after announcing that it would provide a $635.6 million Fannie Mae credit facility to subsidiaries of Senior Housing Realty Trust, a Maryland-based REIT owned by an affiliate of Senior Resource Group and its institutional partners. The facility came with a 10-year term (with 10 years of interest only) and a fixed rate, plus the option for releases, additions, substitutions and the capacity to expand with additional fixed or floating debt.
KeyBank will also be able to provide flexible financing solutions ranging from balance sheet to permanent mortgage loans. The 12 properties that are being refinanced with this facility are located in California, Arizona, Oregon and Georgia and featured a majority of IL units, with some AL and memory care. These SRG-operated communities were all built in the last 15 years and had an occupancy above 96%.
When KeyBank was approached last year to facilitate this credit facility, it had already led an $84 million syndicated credit facility in 2013 secured by a senior housing community in Los Angeles owned by a predecessor SRG joint venture. In late 2014, SHRT acquired the community, and the credit facility was then expanded to $86 million and will be refinanced by this new Fannie Mae facility.........................................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
A couple of weeks ago, we discussed the fall in the average skilled nursing facility cap rate by 60 basis points to 12.4% (according to the 2015 Senior Care Acquisition Report, just recently published). For assisted living, we saw an even larger fall of roughly 90 basis points to 7.75%. The downward trend is not surprising, as AL cap rates have steadily declined since the Great Recession, but the extent of the fall was. In this market of higher and higher valuations plus abundant (and cheap) capital, buyers are looking to pay more for quality assisted living communities, even if that means pricing out operating risk somewhat, because margins aren’t changing all that much, at least not that we’ve seen.....................................Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today