Bradley Clousing recently facilitated a Personal Care Home sale in Georgia. The 60 unit building is comprised of 47 Personal Care Home units and 13 Memory Care units. The 69,749 square foot is in a rural Georgia community. It was originally built in 1965 as a school and was converted and renovated to a Personal Care Home in 2007. The Seller had foreclosed on the asset after purchasing the note as part of a portfolio purchase from a local bank. The property was sold at auction to the highest bidder. Transaction Overview
At the time of the Personal Care Home Sale, the census was 78% and the operations were negative cash flow. The Gross Income Multiple was 0.7X.
For additional information on this Personal Care Home Sale or to inquire how SLIB can assist you with a purchase or sale of seniors housing assets, please contact Bradley Clousing of Senior Living Investment Brokerage, Inc. at email@example.com or 630/858-2501
Patrick Byrne of Senior Living Investment Brokerage, Inc. recently facilitated a Residential Care Facility sale in Missouri. Cedars of Liberty is a converted school originally constructed in 1962, licensed for RCF-II. This licensure is effectively low-acuity assisted living, often carried by older buildings which do not meet current ALF standards. Many RCFs also service more of a mental health population, and that’s true of Cedars of Liberty. Years ago we toured this campus when it was a struggling, geriatric focused building with some mental health and we encouraged them to fully embrace that mental health model. Despite being in a major metropolitan market the facility was quite rural and with amenities like a basketball court & many common areas, the facility was uniquely equipped to care for a younger population. Given the low margin in this business, many smaller mental health facilities in the state were closing, leading to a steady increase in Cedars’ population.
While the facility is very large, 129,658 square feet with a capacity of 206 beds, the functional capacity of the license is only 130 beds. As such, the census at the time of marketing was above 90%. The buyer plans to expand the capacity and enhance the physical plant; whereas the seller lacked the capital to justify further investment. In the prior fiscal period the facility barely made $200k in EBITDA so the improvement was recent and combined with the aging physical plant and unique focus, attributed to a higher capitalization rate.
The Seller was a local family who had inherited the operations from their parents. The Buyer is a growing skilled operator and one of the largest mental health operators in the Midwest. The census at the time of sale was 57% and the Residential Care Facility sale was at a 13.94% capitalization rate and a 1.26X GIM.
Patrick Byrne of Senior Living Investment Brokerage, Inc. handled this Residential Care Facility sale. For additional information on this transaction or on how Pat can assist you with a purchase or sale, please contact Patrick Byrne at firstname.lastname@example.org or 314/961-0070
Ryan Saul and Brad Clousing will be attending The 2nd Annual Interface Seniors Housing Midwest Conference June 2oth & 21st. Ryan will be a featured speaker on the panel: Investment Market Update: Who’s Buying, Who’s Selling & What’s Driving Deal Velocity?
Pro-Forma vs. Actual Senior Housing Financial Statements – By Jason Punzel
As brokers, Senior Living Investment Brokerage, Inc. reviews senior housing financial statements for sellers on a regular basis. We typically look at the trailing 12 months of financials to help determine the value of the senior living community, along with the price per unit of sales comparables.
When preparing an Offering Memorandum to market a property, typically, we rely on the trailing actual financials versus using a pro-forma financial statement. It is very easy to make assumptions based upon the market (i.e. 92% occupancy, 40% margin, 3% rent growth, etc.) and apply it to a given property. However, if it was really that easy, the current owner would have already made the changes needed to achieve the pro-forma! We have found it more valuable to present the actual financials, while highlighting upside opportunities for a potential buyer. The potential buyer is going to develop their own 10-year cash flow analysis anyway, based upon their own assumptions and plans for the given facility.
There are a few exceptions. When there is a new facility, or large expansion, and the facility is in the lease-up process, it makes sense to develop pro-forma senior housing financial statements. In this case, the trailing financials do not represent the near term future as the facility is moving towards a stabilization point. This is a much different situation than a facility that has a track record of performing at a given level and without major changes, will probably continue to perform at a similar level.
For more information about analyzing the financials of your senior living community, contact Jason Punzel at 630-858-2501 or email@example.com.
With the low cost of capital and Wall Street behind REIT growth in Seniors Housing, REITs have been buying nursing home and assisted living portfolios at a rapid pace for the last three years. However, all is currently quiet on the REIT front.
Why has there been a slow down with REITs buying?
A few reasons. 1) There is a lack of quality Seniors Housing portfolios on the market. Those companies with high quality portfolios that thought about selling have already done so over the last few years. 2) The REITs are in the process of digesting all of the properties that they have purchased. Like any good investor, they want to be sure their operator has success with what they currently operate. This preserves value and makes sure their assets are headed in the right direction. 3) REITs are trying to figure out what they are going to do with some of their older, aging real estate. They are focusing on selling older, smaller, non-core assets.
Please contact Ryan Saul if you have thought about selling. Now is a great time to sell while interest rates are still at historic lows. Also contact me if you are in the market to buy nursing home or buy assisted living. Our inventory is constantly changing.
Ryan Saul and Patrick Burke of Senior Living Investment Brokerage, Inc. recently facilitated a Skilled Nursing lease for four (4) facilities in North Carolina. The Lessor is a private owner based in Illinois and the tenant is an experienced operator based on the East Coast. The Skilled Nursing lease consisted of 640 skilled nursing beds and 28 assisted living units.
The first building is 42,480 square feet and was constructed in 1977 on 3.90 acres. It consists of 150 skilled nursing beds.
The second building is 50,505 square feet and was constructed in 1979 on 3.07 acres. It consists of 150 skilled nursing beds.
The third building is 76,208 square feet and was constructed in 1990 on 8.25 acres. It consists of 232 skilled nursing beds and 20 assisted living units.
The fourth building is 42,480 square feet and was constructed in 1991 and 2005 on 3.90 acres. It consists of 116 skilled nursing beds and 8 assisted living units.
Due to confidentiality, additional information on this Skilled Nursing lease is not being disclosed at this time.
For additional information on this Skilled Nursing lease or on how Senior Living Investment Brokerage, Inc. can assist you with your skilled nursing lease, please contact Ryan Saul at firstname.lastname@example.org or Patrick Burke at email@example.com. Senior Living Investment Brokerage, Inc. 630/858-2501
At a certain age, virtually any type property will become obsolete. Thus, at what age is it for Senior Living and Skilled Nursing Facilities? I believe it is more a matter of functionality than age.
In today’s competitive world, a senior living facility that is an older converted Skilled Nursing Facility tend to have challenges in keeping stabilized occupancy. Often times they have shared bathrooms, small one-room units and limited common areas. With lower acuity residents, private bathrooms are a must when marketing a facility. Larger units with multiple rooms that can function as an Independent or Assisted Living unit have great appeal to allow residents to age in a place as additional care becomes necessary.
Skilled Nursing Facilities that have 3 and 4 bed wards (rooms) are very difficult to fill and often times the total bed count needs to be reduced to allow for mostly private or 2 bed rooms. Even if the facility is accepting mostly Medicaid residents, two residents per room tends to be the maximum that is acceptable.
Other facility challenges include long narrow hallways, low ceilings, lack of elevators, and poor lighting. Depending on the structure, these challenges can be very difficult to rectify. While it tends to be the older Skilled Nursing Facilities that were built in the 1960s and 1970s, some Assisted Living Communities built in the 1980s and 1990s can also have a functionally obsolete design and layout.
If lack of private bathrooms and small rooms are the challenge, sometimes a solution is to focus on higher acuity Assisted Living and/or Memory Care where residents have higher acuity needs and can use a bathroom or kitchen on their own. Unfortunately, there are some communities that have too many design and layout issues to overcome and possibly the best solution is to build a new facility on the existing ground.
To discuss the age, functionality and sale ability of your Senior Living or Skilled Nursing Facility please contact Jason Punzel at 630-858-2501 x 233 or firstname.lastname@example.org or Joy Goebbert at 630-858-2501 x 230 or email@example.com.
What are the best buying opportunities today for investors in the seniors housing space? The answer begins with an understanding of the deals that are among the least attractive, according to veteran broker Ryan Saul.
A property that is 99 percent full that trades at a 6.5 percent cap rate could hardly be called opportunistic because there is no upside, points out Saul, managing director of Chicago-based Senior Living Investment Brokerage.
Instead, buying a property that is 75 percent occupied for $100,000 a unit with a broken management team in place presents real opportunity, he believes. “You can go in, turn it around and really add value so that you can sell it stabilized for a much larger premium.”
Saul’s insights came during a panel discussion on the state of the investment market at InterFace Seniors Housing Midwest, which took place Tuesday at the Westin Chicago River North Hotel. The conference attracted 265 attendees from a cross-section of the seniors housing industry.
Moderated by Ben Firestone, managing director of Blueprint Healthcare Real Estate Advisors, the investment panel discussed who’s buying, who’s selling and what’s driving deal velocity.
In addition to Firestone, the panelists included Talya Nevo-Hacohen, chief investment officer, Sabra Health Care REIT; David Watkins, partner, SHA Capital Partners; Alan Plush, president and senior partner, HealthTrust; Saul; and Matt Pyzyk, managing director, Green Courte Partners
To discuss your buying and selling goals, please contact Ryan Saul.