Bradley Clousing of Senior Living Investment Brokerage, Inc. recently handled an Assisted Living and Memory Care Sale in Tennessee. The asset consisted of 42 total units (32 assisted living units and 10 memory care nits). The 23,162 acre community is situated on over 8 acres and was constructed in 2000. The property sold as part of a larger portfolio sale to Valstone Partners in December, 2015. Brookdale remained under a management agreement post closing. This particular asset was not in the strategic footprint of Valstone so they elected to pursue a sale after closing on the portfolio transaction.
The property is located in Newport, Tennessee. The purchase price is $3,900,000 which was $93,000 per bed. The census at the time of sale was 95%. The capitalization rate was 8.5% and a gross income multiple of 2.4x. The Buyer is a regional owner operator based in Florida. They are ambitiously growing their portfolio and presence throughout the Southeast. The acquisition was financed through a FNMA insured Loan.
For additional information on this Assisted Living and Memory Care Sale, please contact Bradley Clousing of Senior Living Investment Brokerage, Inc. at 314/858-2501 or at firstname.lastname@example.org
Toby Siefert of Senior Living Investment Brokerage, Inc.recently facilitated the Marwood Rest Home sale in Philadelphia, Pennsylvania. The 87 bed skilled nursing facility was family owned and managed for two generations. Originally constructed in 1972, the owners recognized the timing of the market was ideal for those family members ready to sell. For the remaining family members wishing to remain involved in management of the skilled nursing facility, they were able to execute an agreement with the Buyer.
The three story, brick building was constructed on approximately 1 acre north of downtown Philadelphia. It contains approximately 35,000 square feet. The resident room breakdown consists of 1 private resident room, 27 semi private resident rooms and 8 4-bed rooms for a total of 87 beds. The overall census at the time of sale was 95% and historically, the census was approximately 80% Medicaid. The Capitalization Rate was 12.86% and the Gross Income Multiple (GIM) was 1.12x. The purchase price was $10,000,000.
Senior Living Investment Brokerage was able to procure 12 qualified offers for the Marwood Rest Home sale through a well implemented marketing effort. The Buyer chosen is a regional owner operator with a strong presence in the area with a good reputation. For additional information on this sale or how Senior Living Investment Brokerage, Inc can assist you with a skilled nursing home sale or purchase, please contact Toby Siefert at 630/858-2501 or email@example.com
Are Cap Rates in Rural Locations Higher? – By Jason Punzel
Often times investors wonder why cap rates in rural locations are higher than in densely populated cities. The capitalization rate “cap rate” is the most common metric in analyzing the value of a senior living community. Cap rates for senior living communities generally range between 6-10%, while skilled nursing facilities range between 9-15%. The lower the cap rate, the higher the price.
Typically, we see much lower cap rates in larger cities, especially in the faster growing coastal cities such as San Francisco, Los Angeles and Seattle, than cap rates in rural locations. However, if two similar quality communities are producing the same amount of cash flow, why should one be worth significantly more just because it is located in a popular neighborhood in Seattle vs. somewhere in rural Western Washington?
The cap rate is determined by dividing the past 12 months (or full year) of net operating income by the purchase price. The cap rate looks backwards and does not make assumptions in the future. However, buyers are analyzing their future hold period using the property’s past performance, as well as many future assumptions including; rent & expense growth, occupancy rates, capital reserves, potential new competition, ability to finance, the exit cap rate, etc. Typically, a community in a large, fast growing city where it is difficult to develop, will have a much faster rent growth, a higher occupancy rate and a lower exit cap rate than a small community where new development might be very easy. Thus, depending on the future assumptions, a community could produce a much higher overall return over the course of 10 years, even if the buyer pays a much lower cap rate to begin with.
To discuss how capitalization rates and future assumptions effect the value of your senior living community, contact Jason Punzel at 630-858-2501 or firstname.lastname@example.org.
Medicare PPS rates increase 2.4% for FY 2017. On Friday, July 29th CMS announced the ruling on the Medicare increase for next year. CMS projects that aggregate payments to skilled nursing facilities will increase in FY 2017 by $920 million, or 2.4 percent, from payments in FY 2016.
Medicare has been the savior for skilled nursing home operators for years. It helps subsidize the lower, Medicaid payments that they receive from a majority of their resident base. An “increase” is always a good thing for nursing home owners and operators. While nursing home operators always hope that rates will increase even more, the fact that Medicare rates increased and didn’t decrease is a great move they should be happy with.
What does this change in reimbursement mean for you and your community? I’d be happy to put together a confidential proposal for your community if you believe now is the right time. Interest rates remain low. Reimbursement remains stable. There is demand for skilled nursing like never before. I believe that now is an ideal time to sell.
Please contact Ryan Saul of Senior Living Investment Brokerage, Inc. for a confidential proposal that will help you in your decision making process.
Senior Living Investment Brokerage, Inc. Was named the 37th largest commercial real estate brokerage firm in the country. According to the National Real Estate Investor, 2015 was another strong year for commercial real estate leasing and investment sales volume. Senior Living Investment Brokerage’s 14 brokers (as of 2015) completed 74 transactions for a total of $720,000,000 in sales.
To learn more about Senior Living Investment Brokerage, Inc. or how we can assist you with your Seniors Housing investment objectives, please contact Grant Kief of Senior Living investment Brokerage at email@example.com or 630/858-2501
Tom Rusthoven recently procured a Michigan Skilled Nursing sale. The skilled nursing sale consisted of a 72 bed. state licensed facility located in Detroit, Michigan. The building was originally constructed in 1957 with an addition and renovation in 2012. The census at the time of sale was an impressive 90% due to the quality of care delivered by the staff. Per the Seller’s direction, terms of the sale are confidential.
Change of Ownership
The Seller was a regional owner operator looking to take advantage of the current, favorable capital markets available to Buyers. The Buyer is an East Coast based owner operator expanding their current presence in Michigan.
For additional information on this Michigan Skilled Nursing sale or to meet with Tom to discuss other opportunities in the seniors housing market, please contact Tom Rusthoven of Senior Living Investment Brokerage, Inc. at firstname.lastname@example.org or call TOm at 630/858-2501
Ryan Saul and Bradley Clousing of Senior Living Investment Brokerage, Inc. recently handled a 213 Bed Skilled Nursing Facility sale in Augusta, Georgia, home of the Masters Golf Tournament. This Skilled Nursing Facility sale was part of a Chapter 11 bankruptcy auction. The contract sales price was $3,700,000, however, as part of the purchase agreement, there was a credit of $250,000 for assumption of future callbacks and prior operation liability. The skilled nursing home was operating at a ($738,000) annual deficit at the time of sale. The census was on 41%. The gross income multiple at the time of sale was 0.80X.
The Seller was a not-for-profit organization. The Buyer is a local, not-for-profit hospital based system. They own and operate additional long-term care communities in the area. They plan on transferring 20 of the beds to a another nearby skilled nursing facility they own. They also have plans to invest in the physical plant in order to capture higher census and improve the financial performance.
Contact Senior Living Investment Brokerage, Inc.
For additional information on this Skilled Nursing Facility sale, please contact Ryan Saul at email@example.com or Bradley Clousing at firstname.lastname@example.org 630/858-2501