Monthly Archives: March 2017

March 27, 2017
Jeff Binder

Staffing Challenges Prevalent Entering 2017

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While there are a multitude of topics deserving attention as we enter 2017, from escalating interest rates to reimbursement challenges to competitive/overbuilding pressures, staffing is at the forefront of concerns for most of our clients. Retaining quality staff will continue to be costly as the competition for employees comes from within and outside of the sector. Progressive thinking on attracting and keeping staff will be needed to not only contain costs, but constant turnover is a proven negative influencer on resident satisfaction. While higher wages can undoubtedly place increased pressure on the short-term financial profile of a community, attractive compensation packages, enhanced benefits, and a positive culture can possibly minimize the tremendous costs of employee turnover down the road.

When certain staffing “issues” are apparent, whether it be high employee turnover, or excessive overtime, etc., it is paramount that the Seller be prepared to respond to questions during the marketing and diligence periods.  Perhaps new supply in the market has increased the competition for quality employees, or after years of stability, the Seller was not prepared to manage staffing in times of instability. Whatever the scenario, we will work with you to develop the appropriate marketing strategy.

Staffing is just one example of a myriad of possible questions, challenges, etc. that will arise during the marketing of your community. Senior Living Investment Brokerage is the market leader in seniors housing investment sales for a reason. Put our experience, knowledge, and unparalleled buyer pool to work for you.

Jeff Binder, Managing Director, 314-961-0070, binder@slibinc.com.

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March 24, 2017
Ryan Saul

Nursing Home in Medicaid game?

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Ryan Saul

Nursing Home in Medicaid game?

If you are in the nursing home business your community is in the Medicaid game.  The AHC Act is dominating the headlines.  As of today, the future is uncertain.  While everyone is thinking about how their individual health insurance is going to be impacted, nursing home owners have to be thinking about how Medicaid is going to be impacted.

Changes in AHC will most certainly result in Medicaid cuts.  Since Medicaid is the largest payor source for skilled nursing, this is going to have a major impact on nursing home operators and how they are paid.  More than ever it is going to be important to provide quality care and be the preferred long-term care community in the market.  The market is shifting to a pay for quality vs. a pay for volume business.

Medicaid cuts and value

Medicaid cuts will definitely effect value.  In the late 1990s we saw a complete overhaul with PPS.  I think we are positioned to see a dramatic change in the way nursing homes provide care and consequently, how nursing homes are paid.

Senior Living Investment Brokerage

Senior Living Investment Brokerage can provide current market valuations based on changes in the market related to Medicaid and reimbursement.  Please contact Ryan Saul for a market valuation to determine what your community is worth.

Interesting article on the effects of AHC on Medicaid can be found here:

Health Reform and Reimbursement

March 20, 2017
Jason Punzel

Who are the buyers for Seniors Housing Communities?

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Who are the buyers for Seniors Housing Communities? – by Jason Punzel

There are many types of buyers in the seniors housing market and sometimes it can get confusing for sellers to know who they are really dealing with.  While it is great to get a high-price offer for your community, if the buyer doesn’t have the ability to close, it is doesn’t matter how good the offer is.

There are four main types of buyers:

  1. Real Estate Investment Trusts (REITs) – REITs are publicly or privately traded real estate companies that typically have ample cash available to acquire properties. Most of the time REITs buy a community and at closing, sign a long term NNN lease with a local or regional operator to operate the community.  REITs typically buy with cash.  Since the early 2016, REITs have slowed their acquisition pace due to a decline in most of their stock prices.
  2. Private Equity Companies – They come in all different sizes from multi-billion dollar companies like the Carlyle Group to much smaller companies. Private Equity companies typically buy properties and use a management company to operate them.   Private Equity companies typically buy with cash or with a large line of credit.   Private Equity companies continue to be strong buyers and we have started to see foreign buyers come into the market as well.
  3. Local and Regional Operators – Local and Regional operators may own/lease 5-50+ communities. They may use a REIT or Private Equity company as a partner or may buy a community on their own.  If they are buying a community on their own, they typically use bank debt and raise equity internally with high net worth individuals, and through friends and family.
  4. “Mom and Pop” Operators – They typically own from 0-5 properties. Most REITs and Private Equity companies will not partner with Mom and Pop operators because they are too small, have too short of track record and the communities they operate have too few of units.  They typically buy with personal equity or friends and family’s equity, and bank debt.

Conclusion:

As a seller, it is important to understand what type of buyer is making an offer to buy your community and how they plan to financing the purchase.  Far too many buyers try to put communities under contract to buy, and THEN try to find the equity and debt.   This often times lead to delays in closing, cancelling the offer to purchase, or retrading at a lower price.

At Senior Living Investment Brokerage, Inc. we have relationships with over 1,500 of different types of buyers and can help you understand what type of buyer is making an offer, their track record in closing deals and how they plan to finance it.

For more information on selling your community, contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.

Front = Woodlands

March 1, 2017
Grant Kief

Missouri Skilled Nursing Facility Sale

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Missouri Skilled Nursing Facility Sale

Senior Living Investment Brokerage, Inc. recently completed a Missouri Skilled Nursing Facility Sale in the town of Liberty. The transaction was handled by Patrick Byrne, Toby Siefert and Matthew Alley. The 143 Bed Skilled Nursing Facility was built in 1992 and was vacant at the time of the sale. The Missouri Skilled Nursing Facility sale price was $2,000,000.

Background

The sale of the skilled nursing facility was prompted after CMS terminated their provider agreement with a public healthcare company. They had purchased the facility in early 2015 and inherited some operational challenges in the process. Shortly thereafter CMS moved to close the skilled nursing facility and all of the residents moved out over the course of the next few months. At this point, the license was to remain active for a full calendar year and Senior Living Investment Brokerage, Inc. was retained to market the property.

The single story building was built on a prominent site next to Liberty Hospital and contains approximately 38,765 square feet. The census was 77% at the end of 2014. The skilled nursing facility had one of the best reputations in the area and Senior Living Investment Brokerage, Inc. had sold the property as part of a portfolio in 2006. The physical plant had deteriorated since the sale in 2006 and recent survey challenges had impacted the profitability. Though the location is favorable, the greates challenge facing the skilled nursing facility comes from Liberty Hospital which is developing a CCRC on an adjacent lot. This has impacted the market for the home but Clay County currently has one of the greatest demands for seniors housing in Missouri.

Sales Process

Despite the challenges facing the property, Senior Living Investment Brokerage, Inc. procured multiple offers for the skilled nursing facility. The Buyer selected is a private equity group who has partnered with a regional operator. The license has been transferred into their name and a new provider agreement with CMS is in process.

Contact

For additional information on this Missouri Skilled Nursing Facility Sale or for an analysis of your seniors housing property, please contact Patrick Byrne (byrne@slibinc.com), Toby siefert (siefert@slibinc.com) or Matthew Alley (alley@slibinc.com) of Senior Living Investment Brokerage, Inc.