Monthly Archives: September 2014

September 30, 2014
Grant Kief

Ryan Saul Sells $23,000,000 Seniors Housing Communtiy in Illinois

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Ryan Saul sold a 171 bed/unit seniors housing community in the south suburbs of Chicago. The 87,105 square foot community consisted of 37 Assisted Living/24 Memory Care and 110 Skilled Nursing Beds/Units on 11.78 acres. The SNF was built in 1989, ALF in 1999 and the MC in 2009. The skilled nursing portion had a 38% quality mix at the time of sale. The Seller purchased the community in 2009 as part of a portfolio of properties in Indiana, Kentucky and Illinois. The Seller had holdings in all of these states except Illinois. The intent was to look for other opportunities to grow in Illinois, but that strategy did not materialize. Because the Illinois community was an outlier, the decision was made to sell and deploy the capital to their core growth areas. The Buyer is a regional owner/operator with more than 50 properties in Illinois. The property sold at an 11.2% cap rate/2.0 GIM. Ryan was able to generate multiple offers in a very short marketing period while maintaining confidentiality throughout the process. For additional information, please contact Ryan Saul at ryansaul@slibinc.com or 630/858-2501.

September 29, 2014
Grant Kief

Brad Clousing Notches Another Florida Sale

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Brad Clousing sold a 58 unit Assisted Living Community in Tampa, Florida. The building was constructed in 1984 and 1986 and is approximately 26,840 square feet.. It features 40 units with shared bathrooms and 18 resident units with private bathrooms. All of the 58 units have capacity for two residents. Although many of the residents are private pay, a significant percentage of residents are reimbursed through the Med Waiver/Diversion program. The Seller is primarily a skilled nursing operator and is planning on focusing on core operations in the skilled nursing sector. The Buyer is a regional owner/operator that is expanding their footprint in Florida. For additional information, please contact Brad at clousing@slibinc.com or 630/858-2501.

September 25, 2014
Admin

How many months of consistent cash flow do I need to maximize the price in selling my Senior Living Community?

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When determining the price a buyer is willing to pay for a Senior Living Community, they look at many things.  Ultimately, though, every operating asset is worth the future cash flow it will produce and future sale price, discounted back to today’s value.   One of the best ways to predict future cash flow is by analyzing what the community is currently producing and what it has produced in the past.   The more consistent a community has produced cash flow over the past several years, the more confident a buyer will be that it will continue to do so and willing to pay more for the community.  
However, often times a community, or any business, will go through some struggles.   If an owner fixes the problems and increases cash flow over an extended period of time, most buyers will give the owner credit for its current higher cash flow and base the purchase price on the new amount.  However, when there is not a long track record of consistent cash flow, the potential buyer is going to try to determine if it is realistic that the new, higher cash flow will continue.  There are several key questions they will ask and analyze:

1.  Is the community’s new rents and occupancy similar to the market?      
2.  Does the physical structure warrant market rate rents and occupancy?  
3.  Did the community increase occupancy via Medicaid or by offering steep incentives/temporary discounts?
Typically, a minimum of three months of consistent cash flow is needed to maximize the price.  12-24 months is ideal.  However, if a seller can clearly demonstrate what they did to fix the problem, sometimes even a shorter amount of time is needed.  Though, the new cash flow will HAVE to continue through the marketing, due diligence and closing timeline, which could take 3-6 months.
If a potential buyer determines that the new, higher cash flow will realistically continue, a higher price is warranted.  However, if the new cash flow is just a cyclical event or was achieved by using Medicaid or steep discounts, it will be difficult to achieve the higher sales price and a longer track record may be required. 
For more information on what your Senior Living Community might be worth, contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.
September 16, 2014
Admin

Is Now a Good Time to Sell?

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This is the question that I am asked most often in my conversations with owners and operators of senior housing communities.  The answer is never simple and depends on several factors.  What are some of these factors?
 
1. Is it a strong market?  The answer is a resounding yes.  There is more debt and equity to be placed now than in recent memory and not enough inventory on the market to keep up.  Simple supply and demand theory leads to higher pricing.  
2. How is my facility performing?  While that answer is different for every community, it is likely that as the summer is almost over and the fall is beginning, your community is operating at its peak levels for the year. 

3. When do I want to close?  Many potential sellers want to sell before the beginning of a new year in order to reduce partial year paperwork, i.e. cost report, prorations, capital gains tax treatment.  It typically takes 3-4 months to close, so if you want to close by year end, now is an ideal time to list your facility.

4. Is the cost of capital low?  When the cost of debt (interest rates) and equity (internal rates of return) is low, buyers can afford to pay a higher price for obvious reasons.  Interest rates are near historical lows and with the economy improving, there is risk in those rates increasing.  Equity internal rates of return are also very competitive right now.  All of this leads to low costs of funds for buyers and lower cap rates for sellers!

Although I don’t have a crystal ball, there may never be a better time to consider a sale of your long-term care or senior housing community.  For a complete analysis of what your community is worth, contact Matthew Alley – alley@slibinc.com or (630) 858-2501

September 5, 2014
Grant Kief

Pennsylvania Personal Care Home Sold by Ryan Saul and Toby Siefert

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Toby Siefert and Ryan Saul recently sold a 38 unit Personal Care Facility in Pennsylvania. The 28,277 square foot building built in 1965 consists of 38 units/60 beds on 11.4 acres. It is a well maintained community that was renovated in the late 1990’s. The facility had a consistent track record of high census (98% at closing) and is 100% private pay even though the building has mostly semi-private rooms. Rents average $2,200/unit. The Seller was a regional seniors housing owner/operator that sold to focus on their 10 other/larger communities and to develop CCRC’s. The Buyer was a Pennsylvania-based operator growing their portfolio. This was a strategic acquisition that fit well with their smaller, profitable communities. The property sold at a 1.3x GIM/11.6% capitalization rate. For more information, please contact Ryan at ryansaul@slibinc.com or Toby at siefert@slibinc.com 630/858-2501