Monthly Archives: May 2014

May 28, 2014
Grant Kief

Patrick Byrne Sells Illinois Skilled Nursing Facility


Patrick Byrne sold a 75 bed skilled nursing facility in Coulterville, Illinois, a small town 50 miles east of St. Louis. The 28,606 square foot building was built in 1999 on 0.83 acres and sold for almost $60,000/bed. Originally developed by a non-profit organization, the property struggled financially. Sold to a for profit owner, they were able to stabilize the property, improve operations(91% census at the time of sale). Despite being profitable, Illinois’ delay in Medicaid reimbursement and poor rates, led the owner to pursue a sale. Although the Medicaid rate is $101.09 and Illinois is approximately 6 months behind in reimbursement, Senior Living Investment Brokerage, Inc. was able to procure three strong offers within 10 days. The ultimate Buyer was a regional operator from Missouri. For additional information on this transaction, please contact Pat Byrne at 314/961-0070 or

May 16, 2014
Grant Kief

Toby Siefert and Ryan Saul Complete Skilled Nursing Sale in Pennsylvania


Ryan Saul and Toby Siefert recently sold a 97 Bed Skilled Nursing Facility in Pennsylvania. The Seller was a regional not-for-profit that had engaged Genesis Healthcare to manage the community. The property had bond financing and the hold on the bond was achieved. It was a mutual decision by the owner and the bondholder to divest of the community. The property was not in a core market of the owner or manager. The Buyer was a regional owner with other seniors housing properties in Pennsylvania. The 24,000 square foot building was built in 1967 and 1972 on 0.69 acre. The census at the time of sale was 89.9% Senior Living Investment Brokerage was able to procure multiple offers for the Seller. For additional information, please contact Toby or Ryan at 630/858-2501.

May 6, 2014

What a buyer can do

I am often asked by buyers of nursing homes and assisted living communities what they can do in order to “get the deal.”  Well, there are a lot of things that a buyer can do in order to grab a seller’s attention.  A little work up front can go a long way when that perfect opportunity comes up.  Here are a few things you can do in order to better your chances to get the deal.
  1. Prepare a bio with company history and facilities owned and operated.  What is your mission?  Sellers want to know your philosophy and who they are leaving their property to.
  2. Have your equity lined up.  Ask your personal banker to provide a letter referencing your financial strength and ability to provide the equity required for a transaction. 
  3. Have your debt lined up.  Obtain letters from two lenders speaking to their interest to provide financing for you.
  4. Put together a professional letter of intent with your logo.  The letter of intent should clearly state the purchase price, earnest money deposit, due diligence period and closing period.
  5. Have your due diligence list ready so that a seller can anticipate the type of information that they will need to put together for you.
  6. It might sound simple, but don’t breach confidentiality and abide by the process that the broker and seller have established.  Meet timelines and provide all information that is requested.

If you would like to learn more about buying or selling a nursing home or assisted living facility, please contact Ryan Saul at Senior Living Investment Brokerage, Inc. at or 630-858-2501.

May 5, 2014

Should I sell now or wait to improve my community’s performance?

As broker’s we get posed this question often.  The biggest driver of a community’s value is its current net operating income and Cap Rates.   Communities are typically valued be dividing its current net operating income (NOI) by the current cap rate.   A cap rate is similar to an interest rate and measures investor’s perception of risk in a given asset.   A high cap rate indicates greater risk, and thus a lower value.
When a property is not operating at its potential, net operating income is lower than it could be and the value is thus lower.  Many owners think it might make sense to try to improve their community’s NOI and then try to sell in the future.  There are two main things an owner needs to consider when thinking about this strategy.  First, is it realistic that their community’s net operating income will increase in the near future without significant changes – capital expenditures/remodeling, a new management company, new staff, etc.  Does the owner have the ability and resources to execute this changes?  The community will not simply do better on its own because it may have had success at some point in the past.   The industry is constantly changing and improving, and owners need to also continue to change and improve to keep up.  It is not simply good enough to keep doing what you have done in the past and hoping things will improve on their own.  This strategy doesn’t work in any industry.
The second item to consider is; where will cap rates be in the future?  Cap rates are greatly influenced by interest rates.   As interest rates rise, so do cap rates, and thus property values decrease.  Although there is not a 100% correlation between cap rates and interest rates, there is a very strong correlation between the two.  Since interest rates are at an all-time low right now, there is a good chance that they will raise in the future, and cap rates will along with them. 
For example, a community is currently producing $600,000/year in NOI and the current cap rate for that type of community is an 8%.   To determine the value, $600,000 would be divided by .08 to come up with a value of $7,500,000.  However, the owner is not happy with the value and decides to spend $300,000 on remodeling, hire a new marketing director, and spend more of their own time at the community to help control expenses.   Over the course of two years, the owner increases NOI to $800,000/year.   However, during that time, interest rates increased and now the cap rate for this type of community has increased to a 10%.   The new value would be determined by dividing the current NOI of $800,000 by .10, equaling $8,000,000.  Thus, after spending $300,000 in remodeling, the owner has only increased the value by $200,000 after working hard for over two years.  It is also possible, that NOI doesn’t increase at all with a remodel and new marketing director because a competitor builds a new facility close by and saturates the market, or the new marketing director turns out to be worse than the original director, or the Executive Director quits and the owner can’t find a good new one, or one of the many other challenges that owner’s face every day occurs. 
The biggest risk facing owners today who are considering selling in the next several years are rising interest rates.  If a community is not preforming at its optimum, an owner has to realistically assess if they have the ability, time and resources to make the changes needed to truly increase the NOI, understanding there are many outside factors that could inhibit their ability to execute the plan.  The old saying, “A bird in the hand is better than two in the bush” is often true today.

For a complete analysis of what your community is worth, contact Jason Punzel – or 630/858-2501
May 2, 2014
Grant Kief

Ryan Saul Completes Indiana Nursing Home Sale For Record Price


Ryan Saul sold an 128 Bed Skilled Nursing Facility in Fort Wayne, Indiana. The facility has a stellar reputation for quality care which was reflected in the purchase price of over $100,000/bed. Although originally built in the 1970.s, the Seller had continually invested capital and upgraded the building. It is arguably one of the best SNF’s in Indiana. The Seller was an Assisted Living owner/operator that purchased the SNF because it was adjacent to one of his ALF’s. The Seller had recently sold his Assisted Living portfolio so he elected to sell the SNF. The Buyer, based in Chicago, aligned with a regional to operate the facility. The operator manages several properties in Indiana and Illinois. The 37,000 square foot building on 4.3 acres was built in the 1970’s. The census at the time of sale was 84% with an 80% quality mix. The community sold at a 14.13% capitalization rate/1.4 GIM. For additional information, please contact Ryan Saul at or 630/858-2501.