The Dealmakers Forum E-Newsletter, September 17, 2014 – Freddie Mac Funds Acquisition of a CCRC

 

Bringing You Senior Care M&A Deals and News
 

September 17, 2014 Issue:
Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Senior Care History Repeating Itself: What happened in the 1960s, the 1990s and 2000s have some uncanny parallels to today’s seniors housing and care market………… Read More   
 

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Recent Senior Care M&A Deals

Home Health Care & Hospice

 

 

Acquirer

Target

Price

SSM Health Care

Home Health and Hospice division

N/A

Nautic Partners, LLC

All Metro Health Care Services

N/A

Long-Term Care

 

 

Platinum Health Care, LLC

Scarlet Oaks Retirement Community

$3 million

Private investor

Caring Hands Health

& Rehab Center

$6.5 million

New York SNF operator

Gracy Woods II Living Center

$7.5 million

Private company

Oakton Place

$25 million

Next Healthcare Group

Glenwood Healthcare

$15 million

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Financing of the Week 
We were surprised to hear that Freddie Mac provided financing for the acquisition of St. Andrews Village, a CCRC in Aurora, Colorado (the Denver MSA). Fannie Mae and Freddie Mac traditionally have not gotten involved in CCRCs, as they generally prefer to not deal with skilled nursing and the added regulatory measures that come with it. But, in a transaction handled by Aron Will of CBRE’s Senior Housing Debt & Structured Finance team, the buyer, Sentio Healthcare Properties, secured a $30.2 million loan through the GSE’s Multifamily Seniors Housing product, the first of its kind for a partial entrance fee CCRC. St. Andrews Village opened in 2006 and has 146 independent living units (71 of them being entrance fee units, while the other 75 are rental units), 60 assisted living units and 58 skilled nursing beds in 40 rooms. The purchase price was $42.5 million, or $172,764 per unit, and the operating company, ESLP Management, LLC, was kept on as manager through a sale-leaseback structure. CBRE also secured a commitment from Freddie to purchase the 9 year float-to-fixed-rate mortgage, which includes a 48-month interest-only period. After a term of two years with a floating rate, the loan then has a seven-year fixed-rate term, which should allow Sentio the flexibility to improve the property within the first two years through a planned extensive expansion. Lisa Widmier of VantAge Pointe Capital Management represented the seller in the transaction…………….. 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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Deal of the Week
Bradley Clousing and Patrick Byrne of Senior Living Investment Brokerage, Inc. handled the sale of Glenwood Healthcare, a skilled nursing and assisted living community in Florence, Alabama. The community was operated by the second generation of the original owners, who built the first skilled nursing beds in 1976, later adding assisted living units in 1991 and 1998, along with a Medicare wing in 1993. Today, the facility counts 125 skilled nursing beds and 30 assisted living units on its campus. Extensive renovations were completed in 2013, and occupancy was also strong at 93% with an over 30% Medicare mix. The community had a good reputation, and a 15% operating margin. So, when the owners put Glenwood Healthcare on the market, they attracted five offers in a two-week period. Ultimately, a New York-based investment group, Next Healthcare Group, was the buyer, for the asking price of $15 million, and entered into a lease with Genesis Healthcare to operate the property post-closing. The high price per unit of $96,774 reflects the quality of the building and the influence of the assisted living units, and a cap rate of 12.7% reflects the dominance of the skilled nursing beds. The deal closed on September 9, and Steve Gilleland of CapitalSource Bank provided the financing…………….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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Stat of the Week
For the past two years, the average price paid per square foot for acquisitions of assisted and independent living communities has been above $160 per square foot. In 2013, the average set a record of $169 per square foot, topping the previous record set in 2007 by just $1.00. Part of this increase can be explained by the bull market for acquisitions, where higher per-unit prices are also resulting in higher per-square foot prices. But an influx of newer properties and portfolios for sale in the past few years has also had its impact. New senior living properties, on average cost more than $200 per square foot to build, and in some markets, can exceed $300 and $400 per square foot. As more properties are built, and then sold, the average price paid per square foot should continue to rise. In 2012, a record was set in the acquisition market when one property sold for $561 per square foot, topping the previous record in 2007 by more than $100 per square foot. By 2013, the highest-priced sale declined to a more reasonable $439 per square foot…………….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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