The Dealmakers Forum E-Newsletter, April 22, 2015 - Not-for-profit New York SNF goes private
Bringing You Senior Care M&A Deals and News
April 22, 2015 Issue:
Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Skilled Nursing M&A In 2015: After the record-setting valuations in 2014, the skilled nursing acquisition market is already off to a strong start..................... Read More
|Recent Senior Care M&A Deals|
|The Ensign Group, Inc.||3 assisted living communities||$11,275,000|
|Not disclosed||Independent living community||$24,300,000|
|Capital Senior Living Corp.||Remington Park at Baytown||N/A|
Deal of the Week
It won’t be business as usual for a not-for-profit skilled nursing facility in Yonkers, New York that is being purchased by a private ownership group for $22.7 million, or $189,200 per bed. The facility, built in 2001 by St. John’s Riverside Hospital and operated by the not-for-profit Riverside Health Care System, sits on a hill overlooking the Hudson River. For years, it solely relied on patients discharged from St. John’s, and its occupancy fell from 96% in 2012 to 93% in October 2014.
The new owners, called L&A Operations and who operate Sprain Brook Manor Rehab in nearby Scarsdale, New York, plan to form new collaborations with other health care service providers in the area in addition to the one with St. John’s and renovate the building, which should bring occupancy up to 97%. To cut down on costs, the group will save about $1 million by outsourcing services like therapy, dietary and laundry, and another $2.35 million in annual employee fringe benefit costs. Another big change is the termination of 226 union employee contracts, which will be renegotiated once the new owners assume operations, expected to be in early July.
Going from not-for-profit to for-profit comes with its challenges, but the new owners have plenty of examples to look to, as this is the fourth not-for-profit skilled nursing fa..........................................Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today
Financings of the Week
Aron Will of CBRE National Senior Housing arranged a trifecta of acquisition financings totaling approximately $50 million. All three loans were floating rate bridge loans with five-year terms and between 24 and 30 months of interest only.
The first was a $14.5 million loan provided by a regional bank for Capitol Seniors Housing to acquire a brand new 92-unit assisted living/memory care community in Tampa, Florida.
Next, Mr. Will secured a $21 million loan with an “all-in” interest rate of approximately 2.35% for a joint venture between Sentio Healthcare Properties and Senior Living Residences to purchase a 122-unit/141-bed rental CCRC in Westfield, Massachusetts. The loan was provided by a regional bank.
Finally, working with Andrew Behrens, Vice Chairman of CBRE Multifamily Institutional Group, Mr. Will arranged a $14.5 million loan with a a $3.5 million earn-out feature for DiNapoli Capital Partners, a real estate investment firm, to acquire an 86-unit assisted living/memory care community in Roseville, California. After a strong first quarter of 2015, Mr. Will shows no signs of slowing down...........................................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
For the past few years, we have separated out the “A” properties from the “B” properties in our statistics based on a few factors (age, size and location). Not surprisingly, the average price paid for “A” assisted living properties was higher than “B” assisted living properties ($244,800 per unit versus $102,300 per unit) by a difference of $142,500. To put it in perspective, the spread in 2013 was only $87,500 ($222,400 per unit for “A” versus $134,900 per unit for “B”).
But what was especially interesting was that “A” properties made up about half of the sales in 2014, compared to 2013 when “B” properties were sold three times more often than “A’s”. This means that there were significantly more “A” properties sold in 2014, which makes sense, given the fact that with this hot market, previously unwilling sellers are now parting with their communities to take advantage of the higher valuations.......................................Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today