Senior Living Investment Brokerage prepares an analysis of what a property is worth using market research and our vast knowledge of the senior housing market. It is important to price an offering that maximizes return for a Seller and also is attractive to Buyers. Upon completion of our analysis, Sellers acknowledge that our value is in line. Rightfully so, every Seller wants to maximize their return. They ask us to list 20%, 30%, even 40% higher than the true market value. They feel that an overpriced property can simply be reduced if it doesn’t sell. The danger with this approach is that many Buyers won’t even look at an offering if it is priced too far above market.
A property that is overpriced and has been on the market too long is perceived as tainted. Buyers start to question why it hasn’t sold. A property that is priced correctly generates the most Buyer interest and competition that results in top-of-the-market values.
If you are looking to sell and want to maximize your return on investment, make sure your facility is priced accurately. In the past three years we have sold our offerings for 96% of our initial market valuation. Please contact Ryan Saul
for a confidential proposal to determine market value.
In a SNF transaction, it is commonplace for the buyer to assume the seller’s Medicare Provider Agreement. Of course there are exceptions, but they are rare as each of our 25 SNF transactions in 2011 saw the Provider Agreement passed to the buyer. In fact, the assumption of the Medicare Provider Agreement is also assumed by CMS, as the Medicare Provider Enrollment application (CMS-855A Form) states: “A CHOW typically occurs when a Medicare provider has been purchased (or leased) by another organization. The CHOW results in the transfer of the old owner’s Medicare Identification Number and Provider Agreement (including any outstanding Medicare debt of the old owner) to the new owner.” If the purchaser (or lessee) elects not to accept a transfer of the provider agreement, then the old provider agreement would be terminated, and the purchaser or lessee is considered a new applicant. Given the inherent successor liability issues associated with such an assumption, it begs the question “why don’t more buyers terminate the agreement and apply for a new provider number?” Well, CMS has made this very difficult from an operational perspective; these types of initial surveys have been given less priority over the standard annual survey and routinely take more than six months to occur. In fact, we have heard of instances of this taking over one year to complete. Until an operator obtains Medicare certification, it will not be able to charge for Medicare residents. So, the impact, or risk, of going through the recertification process is directly related to the facility’s Medicare exposure (mix-revenue dependence) – those with a significant portion of their census/revenues tied to Medicare would be more averse to terminating the existing agreement. It is paramount for each buyer of a SNF to receive appropriate consultation and direction when considering whether or not to assume the seller’s Medicare Provider Agreement.
Tuesday saw the biggest one day drop in the stock market in 2012. Are you sick of losing a percentage of your net worth in one day because of some bad economic news? Why not take advantage of the low cost of capital? Why not buy a nursing home, assisted living facility or independent living facility? Now is a great time. There is lending available. There is great demand from potential residents. Unlike stocks, you have some control and say in your profitability. Sellers should take advantage of the strong demand, lack of supply and current capital gaines tax structure! We all know there is change coming down the pike. Take advantage of the great market today.
Call Ryan Saul at 630-858-2501 to learn about what your propery is worth or to learn about what we have for sale.
Senior Living Investment Brokerage, Inc. sold four facilities on two separate campuses for Mercy Medical, a local non-profit. Mercy Medical has been strategically divesting their assisted and skilled nursing assets to focus on their hospice and PACE programs. Senior Living Investment Brokerage assisted Mercy Medical in the sale of all seven of their assisted living and skilled nursing assets. These four assets are located on two different campuses, one in Daphne, Alabama, and one in Fairhope, Alabama. The Daphne site is approximately 37 acres and consists of a 60 unit ALF and a 64 unit Memory Care- SCALF. The facilities were built in phases between 2001 and 2005. The Fairhope site sonsists of a 95 unit ALF (1987-2002) and an 18 unit ILF villa community built in 2005. The Buyer assumed $2.0 million in projected life-care contract liabilities and also assumed a long-term ground lease as part of the transaction.
The Buyer was a joint venture between a regional operator from Texas and a REIT. The census at the time of sale was 70%. The sales price was $19,300,000 ($81,435/unit) at a 7.65% cap rate. For additional information, please contact Matt Alley, Ryan Saul or Brad Clousing at 630/858-2501.