The Dealmakers Forum E-Newsletter, December 17, 2014 – Best-in-class CCRC deserves top price

 

Bringing You Senior Care M&A Deals and News
 

December 17, 2014 Issue:
Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
For REITs Navidad: Year-end deal-making for all the health care REITs…………. Read More   
 

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Recent Senior Care M&A Deals

Long-Term Care

 

 

Acquirer

Target

Price

An investment fund

Lakeside Village

$12.125 million

Senior Resource Group, LLC

The Hallmark Buckhead

N/A

Tryko Partners, LLC

Mont Marie Health Care Center

$3 million

Health and Home Management Company

Presence Ballard Rehabilitation

$17 million

Health and Home Management Company

Saint Andrew Life Center

$9.5 million

Regional operator

The Heritage

$1.0 million

Sentio Healthcare Properties, Inc.

Spring Village of Wildewood

$9.65 million

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Deal of the Week 
When a CCRC works, it can really work. Take the case of a 293-unit community in Pennsylvania that opened in 2005 with 193 independent living units and then added 64 personal care units and 40 skilled nursing beds (36 rooms, private pay and Medicare only) in 2007. The community runs at 95% to 98% occupancy, and that was with the seller/developer managing it (a minority partner was the Executive Director). American Realty Capital Healthcare Trust-II paid approximately $95.0 million, or $324,200 per unit. Based on recent annualized financial data, that comes to about 5.3x revenues and a 6.7% cap rate. This is a beautiful community that obviously has a lot of local appeal. And, it is adjacent to an 880-acre 55+ planned community with 1,700 homes. Dave Rothschild, Matthew Whitlock and Mary Christian of CBRE represented the seller, and we hear that ARC will be tapping Benchmark Senior Living as the new manager………………………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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Financing of the Week
Aron Will, SVP of the CBRE Senior Housing Debt & Structured Finance team, was brought in by a joint venture between Harrison Street Real Estate Capital (HSRE) and Franklin Development Properties to arrange both acquisition financing for an assisted living/memory care community in San Antonio and construction financing to add independent living to the property. Franklin Development built the original AL/MC community in 2011, which currently has 66 AL units and 33 MC units and an occupancy rate in the mid- to high-80s. HSRE stepped in to purchase an interest in Phase I from Franklin Development for an estimated $24 million, and the joint venture will add 162 IL units to the community.  Aron Will provided an $18.2 million floating rate first mortgage at 70% loan-to-value for Phase I, with a five-year term, 36 months of interest only and an “all-in” interest rate today of approximately 2.95%. To construct the IL component, the joint venture received a $22.1 million floating rate construction loan at 70% loan-to-cost with a five-year term, 48 months interest only, very limited recourse, and an “all-in” interest rate today of approximately 3.15%. Franklin Apartment Management, an affiliate of Franklin Development, operates the community, where monthly rates range from the mid-$2,000s up to $3,700 for IL, from $3,700 up to $5,700 for AL, and reach up to $6,000 per month for memory care units. Both loans came from a regional bank, and long term financing options will have to depend on lease-up for Phase II……………………….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
In 2013, the independent living market shattered the record for price per unit. But the average price-to-revenue multiple did not break any records, primarily because so many of the independent living communities had an assisted living or a memory care component, or both. Revenue multiples for these units tend to be about 150 to 200 basis points lower than for straight independent living. The overall IL average revenue multiple in 2013 was 4.6x, the same as in 2012. Consequently, when looking at the sale of the Pennsylvania community described above, with its 5.3x revenue multiple, because of its high quality it makes sense that the revenue multiple would be higher, despite the presence of both assisted living and skilled nursing beds………………………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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