Bringing You Senior Care M&A Deals and News
January 8, 2014 Issue:
Seniors Housing Weekly Update: 60 Seconds with Steve Monroe
Another Strong Year for M&A? In the fourth year of a bull seniors housing market, let’s hope new buyers don’t ruin the party. Read More
Recent Senior Care M&A Deals
Long-Term Care
Acquirer
Target
Price
CNL Lifestyle Properties, Inc.
MorningStar at Dayton Place
$29.9 million
Heritage Enterprises
Walnut Manor and Homestead
$1.412 million
Aviv REIT, Inc.
Four SNFs
$20 million
Capital Senior Living Corporation
Four Senior Living Communities
$64.9 million
Deal of the Week
American Realty Capital Healthcare Trust, which recently filed to go public, has just purchased a 184-unit retirement community in Katy, Texas for $71.25 million, or $387,200 per unit. This is a Class A property that was built in 2009 by Formation Development Group that originally had 158 units. In 2013, 20 memory care units and six assisted living units were added, so the total now stands at 126 IL units, 38 AL units and the 20 memory care units. Occupancy has been at or above 98%, and the new units, which were 92% pre-leased and started opening in November, have almost completely sold out, which is quite a statement on the demand as well as the sought after location in this suburb of Houston. Estimated revenues and EBITDA for 2014 are about $10.9 million and $4.775 million, respectively. That represents a high 43.8% margin, which can be justified by the high occupancy, high rates and majority of IL units. It also translates into a 6.7% cap rate, which while we believe that is a good market cap rate for a trophy property with interest rates at a two-year high, we would not be surprised if it was 10 to 20 basis points lower. This should be a long-term keeper for the buyer, which will keep The Arbor Company in place as the manager since it would seem hard to do much better with the property. The seller was represented by Ryan Maconachy and Chad Lavender of HFF….. 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
Although the surge in seniors housing and care M&A activity in the fourth quarter was not quite as strong as we were expecting, it did set a quarterly record with 64 publicly announced transactions, beating out the record set in the fourth quarter of 2012 with 61 deals. The big difference compared with past years is that the average deal size is smaller. In 2013, the average deal size was 50% of what it was in 2011, which means that the dominance of the mega transactions has diminished. It will be a record full year as well for number of publicly announced transactions with close to 225, about 20% above 2012’s levels. But the nearly $11.0 billion in announced transactions last year still pales in comparison with the 2006 and 2007 period, and will even be less than both 2010 and 2011. The heavy transaction volume basically translates into an acquisition market with depth, and that is good for the long term…….Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today
Stocks of the Year
On the provider side of the market, there is no question about which company was the leader of the pack, and that was Kindred Healthcare with a stock price increase of 82%. Most of that increase came in the fourth quarter, fueled by some good news for LTAC reimbursement combined with the expiration of a large number of SNF leases that did not fit with Kindred’s future strategic plans. The number two spot went to The Ensign Group with a 63% price increase. Unlike Kindred, Ensign has been steadily increasing in value all year, helped at the end with its announcement that it plans to split into a public REIT and a separate operating company. On the REIT side, Omega Healthcare Investors was the top performer, providing shareholders with a total return (including dividends) of 32.7%, followed by Sabra Health Care REIT with a total return of 26.6%. This is the first time since 2008 that the majority of the health care REITs did not post a positive price increase for the year…….Want to read more news? Click here for a free trial to The SeniorCare Investor and download the current issue today
TOMORROW: Upcoming Interactive Webcast:
Build or Join an ACO—Don’t Let The Opportunity Pass You By!
Thursday, January 23, 2014, 1:00 pm ET
A year ago, the Affordable Care Act directed doctors, hospitals, and other health-care providers—including long-term-care facilities—to coordinate care provided to Medicare patients through Accountable Care Organizations (ACOs). Timing can be tricky—urgent for post-acute care providers—and appropriate contracts are crucial. Go to http://www.levinassociates.com/conferences/1401-online-conference or call 800-248-1668 to register.
NEW – The Senior Care Acquisition Report, 19th Edition – Preorder Today and Get Last Year’s FREE ($595 Value)!
Deals have been made. The 2014 Senior Care Acquisition Report contains private deals in this market that are frequently too small to make into financial press. Take advantage of our limited 2-for-1 offer – Preorder The 2014 Senior Care Acquisition Report by January 31st and receive The 2013 Senior Care Acquisition Report FREE ($595 value)! Now that’s a deal! Go to http://www.levinassociates.com/landing/scar19order or call 800-248-1668 to preorder today.
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