Senior Living recently sold a 10 unit memory care, 11 unit personal care and 4 unit independent facility in a rural area of Pennsylvania. The 1975 building is licensed for 44 beds. The census is 82% and consisted mostly of private pay residents but did have a few that are SSI and VA residents. The Seller is a non-profit entity with additional communities located throughout the state. This was their smallest community and it was currently operating in the red. A local, for profit owner/operator purchased the facility. The building is on 16 acres offering potential for expansion. For additional information, please contact Toby Siefert at 630/858-2501 or firstname.lastname@example.org
Ryan Saul, Brad Clousing and Jeff Binder closed the second portion of the Hollinger Group portfolio. This portion of the portfolio consisted of 6 seniors housing communities located in New Jersey, Pennsylvania, Virginia and Maryland. The properties were built between 1986 and 2012 and totaled 299 beds. This portion of the portfolio sold for $54,475,000 at a 7.48% cap rate. The overall census was 94% and closed escrow at over $182,000 per unit. The Seller is exiting seniors housing to focus on rehab, LTACH and CCRC’s. The Buyer was Care Investment Trust who selected a strong, regional operator to manage the properties on their behalf. Senior Living had sold the first portion of the portfolio the previous month for $29,125,000 (see earlier blog post) bringing the total portfolio value to $83,600,000.
Senior Living Investment Brokerage sold a 33 unit Assisted Living Facility in Texas. The property consists of 3 separate buildings on 5.36 acres built between 1987 and 2007. Despite the challenge of three buildings, Senior Living was able to procure a sale at a 10.8% cap rate. The census at the time of the sale was 91%. The Seller was an independent owner/operator. The Buyer is an independent owner/operator from Dallas/Fort Worth area. For additional information, please contact Matt Alley of Senior Living at 630/858-2501 or email@example.com
When considering to exit the senior living industry, there are two main alternatives to consider, selling the facility fee simple, or leasing it to an operator. There are advantages and disadvantages of each option.
The biggest advantage of selling an assisted living facility (or independent living facility) is an owner receives all of their cash up front and has no future financial liabilities or risk. The owner no longer has the risk of the market going down in the future, new government regulations, overbuilding, etc. The biggest disadvantage of selling is paying the capital gains tax, which can be substantial for those owners who have owned their facilities for a number of years.
Leasing, on the other hand, has the advantage of not having to pay a large sum of capital gains tax and the advantage of receiving monthly rent. For those owners who do not need a large amount of cash upfront, leasing can provide a great residual income for years. However, the disadvantages of leasing are many. To begin with, an owner must find a quality tenant that has the operational and financial ability to run the facility for the length of the lease. If the operator defaults on the lease, the owner could be in the position to have to take over the operations of the facility, which could be in poor condition. Additionally, at the end of the lease, the owner still has to make a decision on what to do with the facility. If the market is worse, and/or if there are new competitors in the area, the facility could be worth substantially less than at the beginning of the lease.
When the market to sell a senior living facility is good, like it is today, it typically makes more sense to sell and eliminate the risk of an operator defaulting and/or the facility being worth a lot less at the end of the lease. However, when the market to sell is not as good (like it was in 2009-2010) it might make more sense to lease the facility to a quality operator.
For more information on different exit strategies, contact Jason Punzel at firstname.lastname@example.org or (630) 858-2501 x 233.
Nick Cacciabando, Jeff Binder and Jason Punzel represented the seller of a 24 unit/32 licensed bed memory care facility in Iowa built in 1998. The asset is approximately 14,200 square feet and is on 1.5 acres of land. The large units are fully furnished and arranged around an interior courtyard. One of the challenges for potential Buyers was the layout of two, separate buildings- this presented added expense for staffing and services. The Seller was a financial institution from California. The Buyer is an Illinois based owner-operator. For additional information, please contact Senior Living Investment Brokerage at 314/961-0070 or 630/858-2501.
I saw an interesting article about how the bond market affects real estate value. We are naive to think that it won’t have some affect on the Seniors Housing market.
Here is the article for those that missed it: REAL ESTATE INVESTOR ARTICLE
Please contact Ryan Saul to talk about the current market or if you have thought about buying or selling a seniors housing community (630-858-2501).
Senior Living investment Brokerage sold two Skilled Nursing Facilities in Texas recently. One property has 66 beds on 1.46 acres while the other is 80 beds on 4.29 acres. Both were built in 1968 and the overall census at the time of the sale was 49%. The Seller was a Texas based owner/operator. The Buyer is also a Texas based owner/operator that will utilize a publicly traded REIT for one the properties. The operations have been breakeven since 2014. For additional information, please contact Matt Alley at 630/858-2501 or email@example.com
Matt Alley and Toby Siefert of Senior Living Investment Brokerage, Inc. sold 9 Assisted Living Communities with a focus on Memory Care located in Houston and San Antonio area. Two of the properties were in the lease up stage and the other seven were stabilized. The properties were built between 2005 and 2014. Resident rates range from $5,500-$5,600 per month. The Seller is a private owner/operator and the Buyer is a non-profit entity expanding their presence in Texas. The purchase was financed through the issuance of bonds. For additional information, please contact Matt Alley at firstname.lastname@example.org or Toby Siefert at email@example.com 630/740-0159
Matthew Alley and Ryan Saul recently sold a 137 Bed/Unit Continuing Care Retirement Community (CCRC) in Indiana. The asset, built in 2002, consists of 52 Independent Living Units, 41 Assisted Living Units, 14 Memory Care Units and 30 Skilled Nursing Beds. It is 3 stories, approximately 138,920 square feet on 37.85 acres. Located 25 miles southwest of Fort Wayne, the census at sale was 83% and was marginally profitable. The sale was a Chapter 11 planned bankruptcy sale. Senior Living Investment Brokerage procured multiple offers and closed the transaction within 90 days of commencing marketing. The Buyer is a regional owner/operator with other communities in Indiana. For additional information please contact Ryan Saul or Matt Alley at 630/858-2501