October 16, 2017
Jason Punzel

Is Assumable Debt a Positive Attribute in Selling a Property?

Is Assumable Debt a Positive Attribute in Selling a Property? – by Jason Punzel

One of the first questions we get asked by buyers when marketing a property is “What type of debt is on the property, can it be assumed, or must it be assumed?”  Thus, sellers need to know, “Is assumable debt a positive attribute in selling a property?”

There are many different types of debt available; Fannie/Freddie long term debt, HUD, CMBS (yes, it is making a comeback), bonds, and commercial bank debt.   Some debt must be assumed by a new buyer, some debt has high pre-payment penalties so it needs to be assumed (but doesn’t have to be), some debt has an option to be assumed, and some debt can NOT be assumed.

The best type of debt is when the buyer has the option to assume the debt, but if they don’t, the pre-payment penalty is very small, or none at all.  Assuming existing debt can be very advantageous for a buyer in a raising interest rate environment, which has not been the case in recent years.   However, if a property had long term financing at 5%, and the current interest rate to finance a property is 7%, obviously, this would have a monetary value to the buyer, and could be calculated using a discounted cash flow analysis over the life of the loan.  Additionally, if the property is older, smaller, or in a rural location where new debt might be hard to obtain, assuming existing debt can also be very valuable to a new buyer.

One major challenge in assuming existing debt is the loan to value, or leverage ratio.  If a current property has a sales price of $10,000,000 and the existing debt is $6,000,000, the new buyer may want to put down more, or less, equity than would be required by assuming the existing debt.  This can become very problematic in some situations.  The other challenge, of course, is when the current debt has a higher interest rate than the current rate, resulting in a negative value to the buyer, thus reducing the purchase price.   When the assumed debt has a loan to value ratio that is not optimal, or if the interest rate is higher than current interest rates, assuming the debt will have a negative impact on the sales price.  Conversely, when the interest rate on the debt is favorable compared with the current interest rates, assuming the debt will have a positive impact on the sales price.

Conclusion:

Typically, we recommend that if the seller does have assumable debt that they give the buyer the option to assume the debt.  If there is a pre-payment penalty, that should be reflected in the sales price so a buyer knows the value to the seller if they assume the debt at closing.

To learn more about how different types of debt can affect the price of your senior living community, contact Jason Punzel at punzel@slibinc.com or 630-858-2501.Sunnyhill

October 13, 2017
Brad Goodsell

Does Using a Senior Living Broker Matter?

Everyone is looking to save money, whether at the grocery store, cutting the cable TV bill, or selling a senior living property, saving a ‘buck’ is often the name of the game.  When considering selling a senior living property, the temptation to list without a senior living broker, or use a low fee unproven brokerage, can be tempting.  However, it is also important to consider the benefits of listing with a proven senior living brokerage, that provides a track record of past successes within your region.

A good senior living broker, working as part of an established senior living brokerage, can provide access to a qualified pool of buyers with known financial resources.  This is something that is often unavailable to those without a background in senior housing circles.

Some of the benefits of working with an establish brokerage include; creative marketing plans to aggressively present the ‘upside’ of your community to buyers, creating a market, and thus maximizing a sale price.  BuildingAdditionally, if a senior living broker works within a larger collaborative brokerage team, the team will make hundreds of confidential calls presenting your property to a network of qualified buyers.

Upon receipt of qualified offers, senior living brokers will also help a seller select the most attractive offer, considering any contingences, buyer financing and track record of the acquiring entity.  This can prove invaluable when navigating the complicated transaction of a senior living community, as both the building and business are being sold.

Conclusion

It is important to consider all the factors within a potential sale, as no two transactions are exactly identical.  While senior living brokerage fees vary, a good senior living broker can return many times that amount in creating a competitive bid situation for your property, while helping to guide you step by step throughout the process to ensure a timely, smooth and favorable outcome.

Contact Information

To discuss how we can assist you with the sale of your senior living Community, contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property analysis for you.

September 21, 2017
Jason Punzel

Cap Rates vs. Internal Rate of Return (IRR)

Cap Rates vs. Internal Rate of Return (IRR)  – by Jason Punzel

The Senior Living Industry uses Cap Rates vs. Internal Rate of Return (IRR) as a standard pricing metric.  The Cap Rate is derived by dividing the Net Operating Income (NOI) by the purchase price.  The lower the Cap Rate the higher the price, and vice versa.   However, a Cap Rate is simply a snap shot based upon current, or trailing 3/6/12 month NOI.  The Cap Rate does not factor in future capital expenditures, rent and expense growth, vacancy, or future sales price.   Thus, while a Cap Rate can be a useful tool, it is not the best indicator of future returns.

The Internal Rate of Return (IRR) can be a more useful tool in evaluating the returns on a property over the entire holding period.  The IRR is calculated by taking all future cash flows, and the future sales price, and discounting back to present value.  Thus, all future cash flow items, revenue, expenses, capital expenditures, vacancy and future sales prices can be modeled to better predict future returns.

A new property with a low Cap Rate may have a higher IRR than an older property with a higher Cap Rate.   This could be due to lower future capital expenditures, faster rent growth, lower future vacancies, etc.

Additionally, IRR is usually calculated both with and without leverage.  The failure to factor in debt is another shortcoming of using Cap Rates.  Different properties support different leverage amounts and types of debt.   A newer property financed with long term, low rate financing at 80% LTV, has the ability to increase its returns, and lower its risk, far greater than an older property with a 70% LTV, with commercial bank debt, fixed for 3-5 yrs.

IRR has its shortcomings too.  It assumes that all positive cash flow is reinvested at the same rate of return as the IRR, which oftentimes is not.  Also, when there is a year with negative cash flow, the calculations can be a bit inaccurate.  The biggest drawback in IRR is one’s own financial modeling.   It is very difficult to predict the future and there in lays the challenge.   We don’t know what rent growth will be over the next five years, or what a property might sell for in seven years, etc.

Conclusion:

While there is no perfect tool to evaluate a senior living community, a longer-term approach is better than just looking at a snapshot in time.  Thus, using an IRR methodology is more useful than just looking at the cap rate.

To learn more about how these methodologies effect the price of your senior living community, contact Jason Punzel at punzel@slibinc.com or 630-858-2501.

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September 15, 2017
Brad Goodsell

How does the immigration debate impact your Senior Care community?

How does the immigration debate impact your senior care community, specifically around labor implications?  Immigration is a widely, and very passionately debated issue on nearly every network and news source today, but what should be done about immigration and the illegal immigrants currently in the United States?

Regardless of your personal leaning in the immigration debate, there are a number of factors to be considered, flagfrom the perspective of a senior care community owner.

Recently, an article was published by Senior Housing News (Why Ending DACA Could Make Senior Living’s Labor Crisis Worse), which provides some interesting insights as to how President Trump’s plan to end the “Dreamer’s” law could impact staffing senior care communities nationally.

Closing;

As you consider the future, and possible sale of your senior care community, a qualified senior living broker, will be able to provide a throughout property analysis, and recommended list price.

Please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary property valuation and analysis.

August 21, 2017
Jason Punzel

The Danger in Long Term Financial Modeling in Seniors Housing

The Danger in Long Term Financial Modeling in Seniors Housing – by Jason Punzel

Long term financial modeling is essential in evaluating any income producing asset.   Using the Cap Rate method, one is only looking at the current (or trailing) net operating income, which does not factor in things that could happen during the hold period.   The IRR method (leveraged and unleveraged) is a much more valuable tool.   By using IRR or a discounted cash flow model, one is able to factor in future impacts on cash flow such as rent growth, expense growth, vacancy, capital expenditures, leverage, future interest rates, and future sales price.   However, the danger in long term financial modeling in Seniors Housing is in the assumptions made.

In using IRR, or any long-range planning tool, one must be disciplined enough to not use the financial model to justify a current sales price.  For example, if a property is selling at $10,000,000 and a company’s investment threshold is a 10% IRR, it could be very easy to increase the future rent growth to 3% vs. 2% to help justify a current sales price.  In a financial model that I recently developed, the IRR went from 8% to 18% just by increasing the rent growth from 2% to 3% per year.  While this may seem like a lot, the future rent growth compounds upon itself and the NOI increases much faster during the hold period resulting in more cash flow, AND a higher sales price at the end of the hold period.  Similarly, an expense increase of 2% instead of 3% resulted in an IRR of about 24% vs. 18% in the same model.  These are just two of many examples of how changing a few “minor” details can dramatically change the IRR and justify a given purchase price.

Another important item to consider is that most models predict a straight line future.  For example; rent growth will be 2% a year during the hold period (or expense growth, vacancy, etc).  We all know that this simply won’t happen.  There will be ups and downs based upon the economy, competitors, etc.  If we predict a 2% rent growth each year and one year the rent growth is zero, and then resumes at 2%, not only did the property lose the 2% rent growth that year, but every subsequent year because financial models compound each year.

Conclusion:

While long term financial models are very useful, and essential, in valuing a property, one must be very careful to take an unbiased, conservative approach as to not use the model to justify a sales price.  Additionally, it is useful to run multiple financial models, or stress tests, to study how different financial scenarios effect the rate of return of a given property.

To learn more about how long term financial models effect the price of your senior living community, contact Jason Punzel at punzel@slibinc.com or 630-858-2501.

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August 18, 2017
Brad Goodsell

Who Will Buy My Senior Care Property?

It’s a question frequently asked by owners of smaller portfolios or a single property; who will buy my senior care property?  As a broker, it is my job to ensure that your senior care property is confidentially marketed to a select group of qualified buyers.

Depending on the location, number of beds/units and acuity level, buyers for a senior care property can range from the large healthcare REITs, private equity groups, regional (and local) operators, as well as ‘mom and pop’ type operators.

Because of such a large pool of perspective buyers, it is essential to the sale of a senior care property that the list price (and price per unit and associated cap rate) are in-line with market trends, while also taking local market influences into account.  SeniorCareBuyerAs such, your senior care property will marketed to the appropriate perspective buyers who are most qualified and interested.

At times, a property may garner interest from buyer groups of varying backgrounds (both in the number or properties owned and available capital).  An example of this may be a property that is smaller in the number of beds/units, but is a newer build, located in a high-barrier to entry market.  Because of these factors, REITs and regional ownership groups may be interested, whereas if the same senior care property was located in a lower barrier to entry market, the property may only appeal to regional or local buyers.

Additional perspective is provided by my business partner, Jason Punzel, in his blog post (Who Are the Buyers for Seniors Housing Communities?)  from earlier this year.

Closing;

When considering the sale of your senior care property, Senior Living Investment Brokerage will walk you through the entire sales process and associated timeline, helping you understand how to best market your property to the most targeted pool of buyers.

Please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary property valuation and analysis.

August 18, 2017
David Balow

Are Online Reviews Impacting Your Senior Living Community?

As a Senior Living broker, I spend a lot of my time evaluating our clients’ and prospective clients’ Senior Living assets for a confidential sale. There are some important components we evaluate for each individual asset including: financial performance, market demographics, area competition, upside potential and the physical property itself. In our thorough evaluations, I can’t help but find myself gravitating towards what’s being said in online reviews (Google, Facebook, Caring.com, etc.) about the communities I evaluate. While I don’t deem online reviews as a primary source for my evaluations, I do think they carry some weight.

When I read online reviews, it helps me form a more complete picture of the community that I am evaluating. I believe it provides some clarity as to the overall culture of the community.  In those reviews you find out if children whose parents reside in a community are happy with the level of care they are providing and the facility itself. You find out if staff are truly passionate about their jobs. For instance, I was looking through a Facebook page of a community I was evaluating, and found that a staff member for that community was “tagging” themselves at the facility, and complaining about how much they hate their job. How does that make a community look to the public? reviews-image_0

While online reviews are not going to add monetary value to the valuation of a community, it is going to help give a more complete picture as to how the community is perceived by those connected in some capacity to the community. If you are an owner of a Senior Living community, it’s important to see what’s being said about your community by searching for online reviews. Make sure that you respond to negative reviews in a way that’s either apologetic, or showing that you are committed to making improvements. If you see staff members complaining online about their jobs, have a conversation with them about it so they aren’t harming your communities’ reputation.

If you own a Senior Living community, and would like an evaluation on your community, to give you the “complete picture”, please contact Dave Balow at balow@slibinc.com or 630.858.2501.

July 26, 2017
Jason Punzel

How Are Cap Rates Calculated?

How Are Cap Rates Calculated? – by Jason Punzel

The cap rate ratio is probably the most common metric in reporting and comparing real estate sales, which leads many new investors asking, “how are cap rates calculated?” A cap rate is calculated by dividing the net operating income of a property by the purchase price.   The cap rate would equal the cash on cash return on equity if a property was bought with all cash and the net operating income stayed the same for the next twelve months.  Cap rates move inverse to price, thus, as cap rates increase, the purchase price decreases, and vice versa.   The cap rate is also inverse to a P/E ratio (price to earnings) the common metric to measure stock values.

A cap rate is a measure of risk.  Typically, the higher the cap rate, the riskier the asset is.  Cap rates for skilled nursing facilities typically range between 10-15%, where assisted living facilities typically range from 7-10%.  However, why does one assisted living facility sell for a 7% cap rate and another one sell for a 10% cap rate?

Typically, newer, larger facilities located in larger, growing, metropolitan areas are perceived to be lower risk and thus sell at lower cap rates than older, rural facilities.   Other determinates are the income/occupancy history of a property.  Properties that have a history of high occupancy and consistent earnings sell for lower cap rates than properties that have struggled in the past.

Outside factors also determine cap rates such as interest rates, availability of debt and equity capital, and general economic conditions.  As interest rates rise, cap rates tend to rise as well because debt becomes more expensive and other “risk free” investments become more attractive.

Conclusion:

Although there are many factors that determine the cap rate of a property, it is important to remember that cap rates are a measure of risk and the lower the perceived risk the lower the cap rate and the higher the price.

For more information about cap rates and how they affect the value of your senior living communities, please contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.

July 21, 2017
David Balow

Where’s the Upside? What Senior Living Buyers Really Want…

About a month ago, I wrote a blog post on some questions Senior Living buyers should ask themselves when evaluating Senior Living acquisition opportunities. The final question on my list was, “Is there any upside?”. When Senior Living buyers evaluate deals, they aren’t just looking at the present value of the opportunity, but they are looking for ways to enhance the value of their investment in the future. Here are a few questions buyers will ask themselves, when evaluating what the upside of a deal is for them:

Can I improve my payor mix? If a facility is predominantly comprised of Medicaid residents, a buyer will want to evaluate the feasibility of boosting their Medicare and Private Pay payor mix.

Is there an expansion opportunity? If a facility has adjacent land that it resides on, a buyer could view that land as an opportunity to expand the facility to add more units, or potentially develop on that land and add a new level of care to their operation.

Senior Living BuyersAm I able to manage expenses more efficiently? When a buyer underwrites a deal, they will typically spend a lot of time in the financials for the deal. If there is an opportunity to manage the expenses required to operate the facility more efficiently, that will show a buyer there is more potential for their bottom line.

How are the demographics of the area trending? If a buyer sees an upward trend forecasted for the 65+ demographic, and also a rise in their median income, that indicates more future opportunity for their investment.

If you currently own a Senior Living community and wanted a no-obligation valuation that factors in the upside present within your community, please contact Dave Balow at 630.858.2501 or balow@slibinc.com.

July 18, 2017
Brad Goodsell

How to Maximize Sale Price of Senior Care Property?

It’s an essential question for any seller of a senior care property; how to maximize the sale price of a senior care property?

The answer to this question can take a variety of angles, however this blog will focus on most commonly discussed solution, and that sought most by senior care buyers; cash flow.

Cash flow can be called a number of different terms from Net Operating Income (NOI) or Earnings Before Interest Tax Depreciation Amortization & Rent (EBITDAR).  Senior Care Property ValueIn the world of senior care transactions, buyers are most concerned with the cash flow that a given property produces, as income is primary driver of its value.  For more on valuation, please refer my prior blog post (Valuation of Senior Care Properties).

Typically, the most common ways for the owner of a senior care property to maximize their sale price is to increase the occupancy of the property, thereby increasing the top line revenue, and associated bottom-line revenues.  To increase occupancy, a property may need to focus on their marketing or spectrum of care offered.  For instance, skilled nursing beds may be converted to assisted living or memory care, if it is believed this would cater to a larger pool of new residents.

Other factors that help to drive cash flow, and thereby the value of your senior care property can also include the optimization of staffing.  When analyzing staffing levels, the decrease of costs, must be balanced with the quality of care provided, ensuring no drop-off of care occurs.  Other options for increasing cash flow may be to re-evaluate the monthly rates charged versus those of the local market competition.

Closing;

When considering how to maximize the sale price of your senior care property, a qualified senior living broker, will be able to provide a throughout property analysis, and recommended list price.  Additional consideration should also be given to the current analysis versus an anticipated sale price if cash flow increases.

Please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary property valuation and analysis.

July 5, 2017
Brad Goodsell

Elimination of 1031 Exchange?

Always a favorite of real estate investors, the question looms, will there be an elimination of the 1031 exchange?  Increasingly so, the answer may be ‘yes’, as Congress mulls options to implement a tax cut, while finding ways to supplement the tax breaks.

In short, a 1031 exchange allows investors to defer their tax liability, while reinvesting capital gains from a sale into a like asset.  Senior Living 1031

Currently a 1031 exchange applies to a variety of assets, however according to Ernst & Young LLP, real estate exchanges account for 36% of all 1031 exchanges, across industries.

 For more insight, the Wall Street Journal published a recent article (1031 Exchange, a Cherished Real Estate Tax Break, Faces Extinction).

Closing;

As you consider the timing of selling your senior care property, please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary valuation, and associated timeline of sale.

June 29, 2017
David Balow

Why do Senior Living buyers want Assisted Living Program (ALP) beds?

As a Senior Living broker, we interact with active buyers seeking acquisition opportunities on a daily basis. For each of our buyers, not only do we strive to develop an ongoing relationship, but we always seek to understand what their acquisition criteria is, at any particular time. In New York, we are finding an increasing number of buyers who are actively seeking out Assisted Living Facilities licensed for ALP beds.

What is ALP? The Assisted Living Program (ALP) is defined by the New York State Department of Health as a service which, “Serves persons who are medically eligible for nursing home placement but serves them in a less medically intensive, lower cost setting.” This license allows for Assisted Living Facilities in New York to provide some level of care that a resident may be able to receive within a Long Term Care facility. Some of those services include: physical therapy, occupational therapy, speech therapy and personal emergency response services.

The State of New York not only regulates this program, but they have also limited the number of ALP beds that are able to be licensed throughout the state. This results in only a select number of Senior Living facilities having the ability to be licensed for the Assisted Living Program. Facilities that are licensed for ALP must provide appropriate staffing in order to fulfill each service that the ALP provides its residents receiving that level of care.

Facilities with ALP beds are attractive to buyers, primarily for the additional Medicaid revenue that is realized from each ALP resident, in addition to their regular monthly room rate. Much of this additional revenue is able to transfer down to the bottom line, thus creating a stronger NOI for owners that are licensed for ALP.

If you currently own a New York based Senior Living community that is ALP licensed, please contact Dave Balow at 630.858.2501 or balow@slibinc.com to discuss the demand for your community, and to get a no-obligation valuation.Dave Balow - Headshot

June 19, 2017
Jason Punzel

How Closely are Senior Living Cap Rates and Interest Rates Correlated?

How Closely are Senior Living Cap Rates and Interest Rates Correlated? By Jason Punzel

As we see interest rates starting to rise, many owners are asking us how closely are cap rates and interest rates correlated and how will it affect the value of their senior living communities.

The interest rate on a US Treasury Bond is considered the “risk free” rate of return since the United States Government has never defaulted on its treasury bonds, it is the world’s trade currency, and the United States has the ability, through the Federal Reserve, to print money to meet its obligations.   Therefore, many investments are analyzed by their spread over the US Treasury rate.   The riskier the asset, the larger the spread is over the US Treasury.  Over the past 10 years, skilled nursing cap rates have averaged about 1,000 basis points above the US 10 year treasury rate and assisted living cap rates have averaged about 600 basis points above the US 10 year treasury rate.   This is because skilled nursing is considered a riskier asset than assisted living.

This raises the question, is the risk “spread” over the US Treasury a constant or not?  Or, when interest rates change, do cap rates always change in exact correlation?   Although interest rates and cap rates are closely correlated, there is not a 100% correlation.

The risk premium over the “risk free” rate of a US Treasury Bond of any asset is going to vary based upon the demand of investors.   If the given asset suddenly becomes more attractive to investors, the risk premium will decrease, and vice versa.  The risk premium also varies based upon future expectations of a given asset.  Seniors housing assets still have a greater risk premium than traditional market rate apartments since the investment community considers it a riskier asset.  However, given the future demand for seniors housing, this risk premium may decrease, resulting in a lower cap rate, even if interest rates increase.

Conclusion:

While interest rates do have a strong correlation with cap rates, there are many other factors that go into determining a cap rate, most importantly, the future risk that investors perceive in a given asset.  Thus, in a rising interest rate environment, we can expect cap rates to increase.  However, based upon investor demand, the correlation will not be exact.

For more information about the value of your senior living communities, please contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.

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June 16, 2017
David Balow

5 Questions To Ask Before Buying A Senior Living Community

Buyers of Senior Living communities have a thorough review process when evaluating acquisition opportunities. Senior Living buyers want to see current and historical financials, census information, Medicaid rates, survey histories, and many other pieces of information about the acquisition opportunity. While each buyer is different in how they like to review deals, here are 5 questions to ask before buying a Senior Living community:

1)      Do I know the market? There is a big difference between operating in an urban setting, and a rural setting. A primary market and a secondary market. Knowing how to operate where the acquisition opportunity resides is very important to a buyer.

2)      Do I have economies of scale? Buyers who have an established footprint in the area of the acquisition opportunity can recognize many operational efficiencies, which can positively affect their bottom line.

3)      Will I need to invest CAPEX to update the facility? If a facility needs work to the physical structure itself (new roof, new flooring, etc.), that will impact a buyer’s consideration and potentially any offer that they would consider making.

4)      What’s the culture of the community like?  Buyers don’t want to see disgruntled staff, or unhappy residents. Often times when buyers tour facilities, they are noting what the culture of a particular community is like, and that will have a strong influence on their decision.

5)      Is there any upside?  Buyers want to see what’s in it for them for a Senior Living community they are interested in acquiring. Buyers want to see things like: Adjacent land on the property to expand onto, opportunities to improve upon occupancy with better marketing, a chance to acquire more private pay residents, and opportunities to trim expenses by providing their own ancillary services.

If you are an owner of a Senior Living community and wanted to gain a better understanding of what buyers are looking for, and potentially how they would evaluate your community, please contact Dave Balow at 630.858.2501 or balow@slibinc.comDave Balow - Headshot

June 9, 2017
Brad Goodsell

Valuation of Senior Living Properties: Sold Comparables

The valuation of senior living properties is a central discussion point for any owner considering a sale of their asset.  This is third, and final part of a blog series, focused on the valuation of senior living properties using Sold Comparables as component of valuation.

Previous prior blog posts (Cap Rate Valuation & EGIM Valuation) discussed the most prevalent valuation method in a senior living sale that is the, Income Approach (or Capitalization Rates and Effective Gross Income Multiple).

At Senior Living Investment Brokerage, we very closely follow the Senior Housing Merger and Acquisition market specific to the West Coast, and throughout the country.  Compiling sales comparables for senior living and skilled nursing, we have current, up-to-date information.  With every property being unique, all sold comparable need to be analyzed for quality and relevance to the subject senior living property.

senior living properties valuation

In today’s market, there is a wide range in value when based solely on a price per unit basis.

As such, it is important to consider the many factors impacting a comparable relevance to a the subject property.  Some factors impacting the valuation of a senior living property that are worth considering may include; geographic location, age, size, and quality of the physical plant.

Once comparables are established, adjustments can be made accordingly to the subject property’s value based on positive or negative attributes.  Negative adjustments to valuation may be made due to a smaller, rural, Medicaid, older, or less profitable senior living property.  However, positive adjustments can be made if the subject senior living property is larger, better located, private pay, newer, or more profitable.

Closing;

When determining the value of a senior living property, a qualified broker will base their property valuation and analysis to incorporate all relevant factors, thus ensuring an educated sale price is offered.

Please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary property valuation.

May 17, 2017
Brad Goodsell

Valuation of Senior Living: EGIM

This is the second, of a three-part blog series, focused on valuation of senior living, and the approaches used in the transaction of senior living properties, that is; Effective Gross Income Multiple (EGIM).

As previously mentioned in my post on May 1st, the valuation approaches that are most prevalent in a senior living sale are the Income Approach or Capitalization Rates, and Effective Gross Income Multiple (EGIM), and Sold Comparables.  In most instances, these statistics serve as our cornerstones of valuation, and set the foundation for a suggested list price.

An EGIM can be used to estimate the value for a non-performing or performing property. While this calculation only carries so much weight with investors, it is a good tool to reaffirm a value generated by capitalization rates. valuation

According to the Senior Care Acquisition Report, Twenty-Second Edition, 2017, assisted living properties had an average EGIM of 3.75.  This figure, multiplied by the gross revenue, produces an EGIM valuation.  It is important to note that these averages, in this case of assisted living properties, are largely skewed by institutional portfolio transactions that occurred during that time period.  Often, individual transactions close at significantly lower multiples.

When choosing an appropriate EGIM for a property, we focus on the same factors (cash flow, competitive profiles and a quality physical plant, etc.) to determine the capitalization rate.  Due to the size, age and quality, an EGIM can be applied to annualized revenue to determine a property value.

It should be noted that EGIM is the least relied on approach utilized by investors.

Closing;

When determining the value of a senior living property, a qualified broker will be able to rely on such things as interaction in the market, recently closed transactions, industry data, property specific information and both positive and negative influences to determine an appropriate cap rate or EGIM for your specific senior living property.

The final post of this series will focus on Sold Comparables, specific to valuation.

Please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary property valuation.

May 15, 2017
Jason Punzel

Value Add vs. Stabilized Properties – How are they valued?

Value Add vs. Stabilized Properties – How are they valued? – by Jason Punzel

As brokers, we sell both value add and stabilized properties and often times investors ask us how are they valued.  To begin with, for a property to be considered “stabilized”, it’s census and monthly (daily) rates must be similar to other properties in the market.  For example, if market occupancy is 92% and the average private pay rate for assisted living is $3,500/month, and if the property that is being analyzed has an occupancy of 93% and average rate of $3,400/month, the property would be considered stabilized.   In this case, the best way to determine its value is by using the Capitalization Rate method.  This involves using the Net Operating Income of the property (NOI) and dividing it by the Cap Rate.  If a property has an NOI of $1,000,000 a year and the typical Cap Rate for this type of property is a 7.5%, then the property’s value would be $13,333,000.  This is a very straight forward method of analyzing the value of a property.

Where valuing a property becomes more challenging is when the property is not stabilized at the current market occupancy and rates.   For example, if a property is 100% occupied with an average monthly rate of $3,500, one might assume that it will be hard to maintain a 100% occupancy on a going forward basis, and therefore will reduce the revenue in their analysis to an amount closer to market occupancy, thus reducing its NOI and price from its current state.

Likewise, if a property has an occupancy rate below market, for example 75%, the NOI of the property is probably very low or may even be negative.  However, the property still has value.  Depending on the quality and location of the property, it may have the potential to achieve a market occupancy rate, and therefore be worth significantly more than simply using the Cap Rate method to determine its value.  A new owner must identify what changes need to take place (capital expenditures, a new marketing plan, a new administrator, etc.), along with the time, cost and likeliness of success to determine the potential future net operating income.   Typically, we see properties that are operating significantly below the market getting sold at a price somewhere between its current state (current NOI/Cap Rate) and its future value (potential NOI/Cap Rate).  The new buyer must be rewarded for solving problems and taking the risks involved in turning around a property.  However, the current owner will not sell unless they think they are getting a fair price for giving up the future upside.

Conclusion:

Senior Living Investment Brokerage, Inc. works with both sellers and buyers on stabilized and non-stabilized facilities and has a long track record of selling both types of facilities.

For more information about the value of your senior living communities, please contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.

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May 1, 2017
Brad Goodsell

Valuation of Senior Living: Cap Rate

Ultimately, the valuation of senior living properties, and in-turn subsequent pricing decisions are the focal of point of a senior living transaction being considered a ‘success’.  While there are many influences on pricing, many not necessarily being under the control of the owner/seller, these outside forces are nonetheless considered during the valuation process.

Being that the sale of a senior living property is a unique transaction, most often incorporating both the sale of the real estate, as well as the business, there are two common variables used when pricing a senior living property.

valueThe approaches that are most prevalent to senior living, are the Income Approach (or Capitalization Rates and Gross Income Multiple) and Sold Comparable.  In most instances, these statistics serve as our cornerstones of valuation, and set the foundation for suggested list price.

This post will focus on the capitalization rate as a valuation tool used by investors, underwriters, brokers, lenders, and appraisers to determine the value of an income producing property.

To understand the capitalization rate (cap rate) approach of valuation, let me first explain how ‘EBITDAR’ is defined.  Simply put, this is the earnings of a property before interest, income taxes, depreciation, and amortization, but after the industry standard management fee of 5% of revenues is added back, removing any prior management fee.

The cap rate is derived by dividing the EBITDAR of a property by its purchase price/value.  For instance, in 2016 the average cap rate of an assisted living property was 8.5%, according to The Senior Care Acquisition Report.

The selection of a cap rate is directly related to the perceived risk of the property; those with cash flow, sound competitive profiles and a quality physical plant will carry less risk and justify a lower cap rate.  Conversely, those senior living properties that are smaller, distressed or located in a less desirable markets will typically carry additional risk and thus a high cap rate.

Closing;

When determining the value of a senior living property, a qualified broker will be able to rely on interaction in the market, recently closed transactions, industry data; and property specific information, both positive and negative influences to determine an appropriate cap rate for you specific senior living property.

Upcoming posts will focus on Gross Income Multiples and Sold Comparables.

Please contact Brad Goodsell at 630.858.2501 or goodsell@slibinc.com to discuss a complimentary property valuation.

April 18, 2017
Jason Punzel

Pricing Premium for Portfolios vs. Single Asset Sales

Pricing Premium for Portfolios vs. Single Asset Sales- By Jason Punzel

As a company, we sell many senior living and skilled nursing facilities both as portfolios and single asset sales.  Often times we get asked the question “Is there a pricing premium for portfolios vs. single asset sales?”.  In general, the answer is “yes”.  However, it depends on the size of the single asset vs. the size of the portfolio, the location of the portfolio and the make-up of the portfolio.

In general, portfolios are more attractive to buyers if they are in the same general geographic location, are similar in size and quality and are either all seniors housing or skilled nursing.  A portfolio that is more homogeneous makes it easier to manage, efficiencies and economies of scale can be easier to obtain, and it will fit the acquisition criteria of a buyer better.

When comparing prices of an individual asset vs. similar assets that are in a portfolio of multiple assets we typically see a premium of 5-10% for a homogeneous portfolio.  A portfolio allows a buyer to deploy more capital at once, achieve greater economies of scale, enter a new geographic location more easily, and often allows for more attractive financing terms.

Conclusion:

Whether you own one community or several, the first step in determining value is to engage an experienced professional to assist in the valuation and analysis of your property/properties.

For more information about the value of your senior living communities, please contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.Front View

April 5, 2017
Brad Goodsell

What to Know When Considering Selling a Senior Living Property

The sale of a senior living property is complex transaction, involving both the real estate as well as the business.  As such, there are a variety of factors for owners to consider as they prepare their property for sale.

Choosing the right broker (and brokerage firm), with experience in your area, specific to senior housing can prove to be critical.  Your selected broker will help you price your property in an aggressive, yet realistic approach, safe-guarding your best interests throughout the transaction process.  Considerable analysis should be given to trends of financial statements and current rent roll, as it will effect list/sale price.

In conducting preliminary retirmenthomeproperty evaluations, a qualified broker, specializing in seniors housing, will be able to provide constructive feedback as to any property improvements to be made prior to listing, and if those improvements are likely to increase the sale price.  Additionally, a detailed marketing plan for presenting the property to buyers should be outlined.

Differing from many real estate transactions, confidentiality in the transaction of senior housing cannot be over stressed.  This is due to the fact that sale of the business, and not just real estate is involved.  The meaning ‘confidentiality’ can vary by brokerage, so it is important to properly vet each broker’s process, and how they will safe guard your business’ need for a quiet transaction, away from the ‘ears’ of employees.

The associated timeline for selling a senior living property is often greatly affected by the ‘sale readiness’ of the property, any associated encumberments, as well the quality of buyer pool that your chosen broker provides.  A typical transaction, from beginning of marketing phase to closing takes an average of four to six months.

Conclusion:

At Senior Living Investment Brokerage, the confidential sale of skilled nursing and senior care properties is our singular focus.

For further insights or questions on the transaction process including valuation, marketing and timelines, contact Brad Goodsell via phone (630.858.2501) or email (goodsell@slibinc.com).

March 27, 2017
Jeff Binder

Staffing Challenges Prevalent Entering 2017

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?

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?

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.

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March 1, 2017
Grant Kief

Missouri Skilled Nursing Facility Sale

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.

February 27, 2017
Grant Kief

Assisted Living and Independent Portfolio Sale

Assisted Living and Independent Portfolio Sale

Jason Punzel recently represented the Seller in an Assisted Living and Independent Portfolio Sale. The Assisted Living and Independent Portfolio Sale consisted of four properties in Washington. The portfolio consisted of a total of 368 units for a price of $78,000,000 ($212,000 per unit). All four communities are located in Seattle’s greater metropolitan area. The communities were all constructed between 1989 and 2005. The entire portfolio consisted of approximately 354,083 total building square feet.

Seller and Buyer Overview

The Seller is a local investment group looking to capitalize on the strong market. The Buyer is Capitol Seniors Housing. The communities will be managed by MBK Senior Living> The new owner is planning to make significant capital investments to upgrade the properties to be more competitive in their respective markets and to also convert some independent living units to assisted living units and into memory care units.

Contact

For additional information on this assisted living and independent living portfolio sale or for an analysis of your seniors housing community, contact Jason Punzel of Senior Living Investment Brokerage, Inc. at 630/858-2501 or at punzel@slibinc.com

February 20, 2017
Jason Punzel

Selling Seniors Housing Communities – Pro Forma vs. Actual Financials

Selling Seniors Housing Communities – Pro Forma vs. Actual Financials – by Jason Punzel

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 the exit sales 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 because they will perceive it as lower risk (thus a lower cap rate).

However, often times a community, or any business, will go through financial ups and downs.   If an owner fixes the problem and increases cash flow over a period of time, most buyers will give the owner credit for its current higher cash flow and base the purchase price on the new, higher amount of cash flow.  However, when this is the case, the potential buyer is going to try to determine if it is realistic that the new 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?

Ideally, a community will have a 12-month track record of consistent cash flow.  However, if a seller can clearly demonstrate what they did to fix the problem, often times we can use a short as 3 months of trailing financials.  However, the new cash flow will HAVE to continue through the marketing, due diligence and closing timeline, which could take an additional 3-6 months.

Conclusion:

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.

www.seniorlivingbrokerage.com

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February 15, 2017
Brad Goodsell

‘Upside’ Factors That Really Matter to Senior Living Buyers?

When considering the sale of a senior living property, it is understood that each senior living property presents its own unique opportunities and (challenges).

As such, what are some of the predominant ‘upside’ factors that matter most to perspective buyers?

At Senior Living Investment Brokerage, we help sellers take an objective approach, while also anticipating the perspective of a potential buyer.  Our approach helps to ensures a smooth transaction and that we achieve a top of the market price for your property.

SeniorCommunityWhen evaluating a property, the primary ‘upside’ factors that are of interest to a buyer are that which affect NOI, that of; staffing optimization, increasing census, increasing private pay residents, rate increases and expense management.

Secondary factors of upside that senior living buyers may consider include, is there room for expansion?  Expansion can take on a variety of approaches, both in the types of services offered (i.e.: Assisted Living, adding a Memory Care component), increasing the number of beds/units within the current building or actual construction of a new building.

Another important upside factor to consider is that of current staffing levels.  Is the property over-staffed, and are the right people assigned to the appropriate role?

Additional ‘upside’ cost savings may include economies of scale for a buyer already operating in the area, or the rebidding of food services and other vendors.  Rent increases could also be considered, depending on the current census, and historical increases of the property, while considering rates of the local market and competitors.

Conclusion:

The purchase of a senior living property is complex transaction, with many factors to consider, including that of how to best help maximize their investment in senior living, while taking into account upside factors.

Contact Information:

To discuss how we can assist you with the sale of your Senior Living Community, contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property valuation analysis for you.

January 16, 2017
Jason Punzel

Food in Seniors Housing

Food in Seniors Housing – By Jason Punzel

In touring hundreds of Senior Living Communities and talking with their owners, one common theme, “How important food quality is in Seniors Housing”, continues to come up.   As seniors age, their ability to do the activities they once loved to do declines.  Also, many of the basic things they are used to doing such as driving, traveling, going out to dinner, and physical exercise are no longer an option.  However, eating at their senior housing community continues to be an activity they have a degree of choice in and can continue to enjoy.

A quality dining experience does not have to be expensive.   Most seniors are not looking to drink fine wine and eat filet every night.  Nor does a quality dining expense have to cost hundreds of thousands of dollars in capital expenditures.   However, it does require good, experienced chefs, quality produce and meats, a reasonable variety of food choices, and cordial wait staff.  A 24-hour coffee/juice bar is also a nice benefit.

Conclusion:

The key to a quality dining experience does not have to be expensive, but it does have to be a top priority.  Understanding how important it is to seniors’ living experience is the first step in doing so.

For more information about dining costs and ideas, contact Jason Punzel at punzel@slibinc.com or 630-858-2501 x 233.

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January 3, 2017
Brad Goodsell

When Is the ‘Right Time’ to Sell A Senior Housing Property?

When is the right time to a sell a senior housing property?  This can literally be the million dollar question, with an answer that puts everyone on the edge of their chair!

So, in an effort to limit the drama, there is no single ‘right’ answer to this question, as the mysterious ‘crystal ball’ eludes us as well.

The circumstances of each senior housing property sale vary.  There are numerous factors  that can  affect when is the ‘right time’ to sell, such as preferred sale price, local market conditions, property condition, and even buyer financing constraints.  Another important factor to consider are interest rates.  As interest rates  have been starting to creep up recently, cap rates in-turn trend higher, equating to lower sale prices for sellers.  With this in mind, now may be an ideal time to consider selling.

With nearly 20 years in business at Senior Living Investment Brokerage, we’ve determined that it is always best to start the process of determining if the timing is right, by offering a complimentary and confidential property valuation to the perspective seller.  In doing so, we can provide the owner of the senior housing property with an honest, thorough, and accurate assessment of their property’s value, given the factors listed prior.

With this valuation in-hand, the owner can now make an educated decision on if, and when to list their property, and what can reasonably be expected as a sale price.

Conclusion:

The right timing to sell a senior care property is an individual decision, however having realistic price expectations can help to provide guidance.  At Senior Living Investment Brokerage, our only focus is the sale of senior living and skilled nursing properties, in a timely, confidential manner.

Contact Information:

To discuss how we can assist you with the sale of your Senior Living Community, contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property valuation analysis for you.

December 19, 2016
Jason Punzel

How long does it take to sell an Assisted Living Community?

How long does it take to sell an Assisted Living Community? – by Jason Punzel

One of the most common questions we get asked as brokers is, “How long does it take to sell an Assisted Living Community (or Skilled Nursing, Independent Living, Memory Care)?

It’s been our experience, while selling nearly 100 properties annually, that most transactions take 4-6 months, from start to finish.  While each transaction process is unique, there are multiple phases involved in each sale process.

The process starts with us, as brokers, making confidential phone calls to financially qualified buyers throughout the country.   Senior Living Investment Brokerage has 15 brokers that work together to cover buyers throughout the country.  Unlike many other firms, we market facilities with complete confidentiality, never sending out email blasts or posting listings on our website.

If a buyer is interested, a confidentiality agreement is sent for the buyer to sign before they receive an Offering Memorandum.  An Offering Memorandum is a 20-page marketing document that highlights the property, location, demographics, financials and competition.  We also prepare an online secured data room to disperse additional documentation such as floor plans, site plans, environmental studies, detailed financials, etc.  Upon reviewing the Offering Memorandum, the buyers have many questions that we work with the owners to answer.

This initial marketing process takes about 3-4 weeks and the buyers will start submitting offers in the form of Letters of Intent (LOIs).   Typically, 4-7 financially qualified buyers submit LOIs.  After discussing positives and negatives of each LOI with the sellers, we prepare counter offers for the best 3-4 LOIs, asking the buyers to submit their “best and final” offer 1-2 weeks later.   During this period, these buyers will take a physical tour of the facility, conduct more detailed due diligence and ask additional questions.

After receiving the best and final offers, the seller chooses the offer they prefer and signs the LOI.   A Letter of Intent is a non-binding 3-4 page document that details all of the business terms of the offer.   The next step is negotiating the legally binding Purchase Agreement (also called a Definitive Agreement or Purchase and Sale Agreement/PSA).  This document is 30-50 pages long and is heavily negotiated by the attorneys of the buyer and seller.   Negotiating the PSA takes between 2-4 weeks.  Upon signing the Purchase Agreement, the Due Diligence process officially starts and is 30-60 days.

The Due Diligence process is the time in which the buyer conducts third party tests (survey, appraisal, environmental study, property condition report), additional site visits with their team, and thoroughly reviews the financial statements.   During the due diligence period, the buyer’s earnest money is completely refundable and the buyer can terminate the Purchase Agreement if they choose.  Although rare, there are occasions that a buyer cannot get financing or discovers something in the third party reports that they deem as significant enough to terminate the transaction.   This is one reason why it is so important to choose a broker with significant experience to help determine which buyers have a good track record of closing.

Conclusion:

Upon the expiration of the due diligence period, the closing takes place within 30-60 days.   Some buyers apply for their license during the due diligence period and some buyers wait until the expiration of the due diligence period.   Most states take between 30-90 days from the time the buyer submits their application to issue a license.   There are also ways for the buyer to temporarily use the sellers’ license until they receive their license.   When closing on an Independent Living Community, there is no license required and the closing can take place as soon as 15 days after the end of the due diligence period.  Thus, from the start of marketing to closing, the process takes about 4-6 months.

If you would like to discuss the time line to close your Senior Living Community in more detail, please contact Jason Punzel at punzel@slibinc.com or 630-858-2501×233.

 

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November 21, 2016
Brad Goodsell

Timeline for selling a Senior Living Community?

One of the most frequently asked questions by a seller of a senior living community is, “what is the process and timeline for selling a senior living community?”

The transaction process of selling  senior living communities is complex, incorporating the sale of both the real estate and actual business.  With the ultimate timeline for each transaction of a senior living property varying, based on factors including licensing, buyer financing, environmental surveys and capital improvements, the typical timeline from start to finish is 3-6 months.

Senior Living Sale Timeline
Timeline for Sellling a Senior Living Community

At Senior Living Investment Brokerage (SLIB), we sell over 90 properties nationally each year, and have found the previously mentioned transaction timeline of 3-6 months to be standard.

It is worth noting that a 3-month timeline from start to finish is very aggressive, while the more typical transaction is somewhere between 4-5 months, with anything over 6 months being a prolonged transaction cycle.

During the process, there are two core components of the listing and subsequent sale of a senior living community, which to be aware of; the marketing period (4-8 weeks), the closing period (8-12 weeks).

To break each down; the marketing period of the assignment involves the preparation of the offering memorandum, confidential phone calls, not emails, to qualified buyers, and thereafter responding to buyer inquiries, receiving Letters of Intent, property tours, and ultimately selecting a final offer with a preferred buyer.

Once a preferred buyer has been selected, the closing period consists of contract negotiation, due diligence process, licensing, transition phase and actual closing of the transaction.

Closing

When considering the selling a senior living community, it is important to be aware of all factors involved in the process of the transaction.  Senior Living Investment Brokerage, Inc. can assist from start to finish, providing a realistic timeline and lending our vast industry experience during each step, to ensure a successful outcome.

Contact Information

To discuss how we can assist you with the sale of your Senior Living Community, contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property valuation analysis for you.

November 21, 2016
Jason Punzel

Re-trading in the Senior Living Sales Process

Re-trading in the Senior Living Sales Process – by Jason Punzel

Often times, we get asked about buyers “Re-trading in the Senior Living Sales Process.”   Re-trading is a term used by the industry when a buyer asks for a price reduction during the Due Diligence process.  Buyers can vary widely on their philosophy on re-trading and how they use this tactic.   Some buyers intentionally make higher priced offers to get the property under contract and then find excuses to try to reduce the price or re-trade.  This is why it is so important to use a broker that has significant experience in the industry to help sellers choose a buyer with a good reputation in closing transaction and not re-trading.

The Due Diligence process is the time in which the buyer conducts third party tests (survey, appraisal, environmental study, property condition report), additional site visits with their team, and thoroughly reviews the financial statements.

There are times the property condition report (PCR) could detect that the property has a defect, such as a bad roof, HVAC, etc.   While it may be considered a re-trade for the buyer to ask the seller for a credit to fix the defect, it is generally considered as a legitimate request from the buyer.  Most sellers are accommodating in either fixing the problem or crediting the buyer at closing.

Other reasons why a buyer could ask for a price reduction are because the census drops, Net Operating Income drops, they have a market study conducted and find out there is significant competition in the area, the appraisal comes in lower than the purchase price, etc.  Buyers can use these reasons as justification for a price reduction, sometimes as much as 10% of the purchase price.  While each request must be evaluated on its own merits, many of these situations are simply the buyer trying to find an excuse to reduce the price.

Conclusion:

Understanding the reputation and track record of the buyer is vital in a successful sales transaction.   Almost all buyers will tell a broker and seller that they never re-trade and are great buyers to work with.   However, the only way to truly know is past history.   As a firm, Senior Living Investment Brokerage, Inc. has closed close to 1,000 communities in the past 20 years and knows which buyers have good track records and which do not.

For more information on selling your Senior Living Community, contact Jason Punzel at punzel@slibinc.com or 630-858-2501×233.

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October 28, 2016
Brad Goodsell

What Does Confidential Senior Housing Listing Really Mean?

Specific to the seniors housing market, confidential, is a common term used throughout the transaction process.  But what should, or more importantly does confidential really mean, during the course of a senior housing listing and subsequent sale?

Most seniors housing brokers will make some mention of how they work confidentially to market a listing, however reality is often a very different case, varying greatly by broker and brokerage firm.  An example of this is often found on websites featuring a brokerage’s listings…listing a ‘confidential’ property on a website.  Yes, you read that correctly!

Another example of a seniors housing listing confidentiality breach, is that of mass-marketing a property through email.  I know firsthand that this happens, why, because I am the recipient of many such emails.

When considering selling a senior housing property, each seller should consider their level of appetite for news of the pending sale reaching the local community, greater marketplace, residents and existing staff.  As such, true confidentiality ought to be expected and required.  With this in mind, Senior Living Investment Brokerage (SLIB) takes a unique approach, holding fast to true confidentiality in each senior housing listing process.

At SLIB our process is truly confidential, from start to finish.  It begins with initiating personal phone calls, not emails, to gauge interest of financially qualified buyers by providing a generic property description.  If interested, prospective buyers are then forwarded a confidentiality agreement.  Only upon receipt of this signed agreement does Senior Living Investment Brokerage disclose full property details.

While our approach takes more time and effort, it has proven over time to be more effective, while also keeping the integrity of our relationships paramount.

Closing

In the world of senior housing listings and transactions, confidential, can mean many things to many people.  It is up to seller to confirm their chosen brokerage’s approach to this essential issue.

Contact Information

To discuss how we can assist you with the sale of your Senior Living Community, contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property valuation analysis for you.

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October 26, 2016
Matt Alley

Private Healthcare REITs are Still Active Buyers

Private Healthcare REITs are Still Active Buyers

As Ryan Saul blogged in July (http://seniorlivingbrokerage.com/reit-buyers-quiet/) and Senior Housing News commented on this week (http://seniorhousingnews.com/2016/10/19/senior-housing-ma-continues-decline/), Seniors Housing M&A activity has dipped over the past couple of quarters due to decreased activity among the majority of Public Healthcare REITs.

According to Bill Kauffman, NIC’s senior principal, the main reason that the transaction market has slowed “has been the drop in buyer volume from the publicly traded companies – mainly the three big REITs (Ventas, Welltower and HCP).”

How does the Public Healthcare REITs Slowing Down Affect Asset Pricing?

For the large institutional level portfolios, this could impact the pricing and capitalization rates as cost of funds have increased for Public Healthcare REITs.

For the Single Facility and Small Portfolio Owners, There is Good News.  

With likely Buyers of single facility and small portfolios (Private Healthcare REITs and owners), there has been a transaction volume in the 3rd quarter of 2016 of over $1 billion for the 13th quarter in a row.  According to Kauffman, “there is a large amount of private capital searching for yield given the continual low interest rate environment”.  Private Healthcare REITs and owners are still active buyers.

If you are an owner of a single facility or small portfolio, now is a great time to consider selling your asset(s).  The Private Healthcare REITs and Owners are still aggressively pursuing assets like yours.  I would be happy to prepare a complimentary confidential marketing proposal of your facility or portfolio.

At Senior Living Investment Brokerage, Inc., we have a long track record of independent seniors housing sales and serving the needs of independent owner-operators.  We have completed several transactions recently for single facility and small portfolio operators.

If you have any questions on the topic of this post, please contact Matthew Alley at 630-858-2501 ext. 225 or alley@slibinc.com or http://www.matthewalley.com

matthew-alley-sm

 

October 17, 2016
Jason Punzel

Moderate Income Assisted Living

Moderate Income Assisted Living by Jason Punzel

There tends to be a trend in new construction of seniors housing communities to focus on very high end Private Pay residents that have the ability to pay $4,000+/month for independent living and $6,000+/month for assisted living.  Additionally, many older communities have a high percentage of Medicaid residents and thus focus on keeping costs and capital projects to a minimum while keeping occupancy high and still providing needed services to their residents.   However, there seems to be a hole missing in the marketplace servicing moderate income assisted living Private Pay residents who have the ability and desire to pay a moderate monthly amount, without the highest end amenities.

Today, construction costs average close to $200,000/unit in seniors housing, not including land.   Including land, construction costs can easily top $300,000/unit or more in “high barriers to entry markets” where land costs are at a premium.  However, often times as brokers, we sell nice facilities in the suburbs that may be struggling a bit with occupancy for $100,000-$150,000/unit.   These facilities are typically 10-20 years old and may have been the nicest facility in the market place when they were built, but are now caught in between high-end Private Pay communities with all of the latest amenities and much older Medicaid communities.  A solution may be to focus on moderate income assisted living residents.

If the newest communities are charging $6,000/month and Medicaid reimburses at $2,500/month, a moderate income assisted living community may decide to charge an average of $3,500/month.  With a cost basis of $120,000/unit, with high occupancy, this community should be able to operate at very solid gross margins and still provide nice services and care levels for its residents.  The key would be to target those residents that don’t have the ability or desire to live in the newest community with all of the latest amenities, but are happy with a nice community, a private room and bath, with a reasonable amount of activities.  While new capital projects would be kept at a minimum, the owners would focus on maintaining the building at its current level.

Conclusion:

While it would be difficult to develop new communities that would focus on moderate income assisted living, there are many facilities that are 10-20 years old that could be bought for a much lower cost per unit.  If these communities are run efficiently with high occupancy, they could do a very good job of serving the moderate income assisted living market and still be profitable for their owners.

Contact Information:

For more information on how Private Pay vs. Medicaid residents affect the value of your community, contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.Sunnyhill

October 6, 2016
Ryan Saul

Will Labor Effect Seniors Housing?

labor
Will Labor Effect Seniors Housing

Will Labor Effect Seniors Housing? My guess is the answer is yes. Labor shortages is a real challenge for Seniors Housing operators. I’m hearing more and more that agency and temp workers, which is costly, is becoming standard in most buildings.  I can’t get through a discussion about buying or selling without labor being brought up.  Job gain has been strong across the country.  Unemployment is hovering around 4.9%.  It is getting increasingly difficult for Seniors Housing Owners to find and attract quality employees.  It isn’t just the care givers.  It is difficult to find and retain quality executive directors and department heads.  While the front line workers are the key to success, it starts with quality leadership.

Ways operators are overcoming the labor challenges

Owners are targeting more experienced workers.  Many of them could retire, being vested or having retirement savings secure.  However, they love what they do and have more experience than anyone.  Owners are finding ways to bring those individuals in a leadership or ownership sharing capacity.

Many are offering retention bonuses for front line, entry level positions.  The longer employees stay with less turnover, the more owners are saving money.

Bottom line not hurting yet

Thankfully, wages have not increased with reduced unemployment. This is more true for front line, entry level positions.  This is primarily due to older. more experienced workers retiring and being replaced by younger, cheaper labor.

What does this mean for you?

There is no doubt that labor is going to be a challenge for many years to come.  If you have thought about selling nursing home or selling assisted living now is the time.  Take advantage of the great market with low interest rates and capital available.  Everyone is waiting for the shoe to drop on the market.  Act now before that shoe drops.

Contact Ryan M. Saul, Managing Director at Senior Living Investment Brokerage, Inc. for a confidential proposal or to discuss the market in general.

 

September 28, 2016
Brad Goodsell

Does Using a Seniors Housing Broker Really Matter?

Everyone is looking to save money, whether at the grocery store, shopping online or selling real estate, saving a ‘buck’ is often the name of the game.  When considering selling a senior living community, the temptation to list a property without a broker, or use a low fee unproven brokerage, can be tempting.  However, it is also important to consider the benefits of listing with a proven seniors housing broker, that provides a track record of past successes within your market.

Senior Housing Broker
Senior Housing Broker

An experienced seniors housing broker, working as part of an established brokerage, can provide access to a qualified pool of buyers with known financial resources.  This is something that is often unavailable to those without a background in seniors housing brokerage.

Some of the benefits of working with an established seniors housing broker include; creative marketing plans to aggressively present the ‘upside’ of your community to qualified buyers, creating a market, and thus maximizing a sale price.  Additionally, if a broker works within a larger collaborative brokerage team, the team will make direct contact with prequalified buyers presenting the property in a professional approach.

Upon procuring qualified offers, brokers will also help a seller select the most attractive offer, considering any contingencies, buyer financing and track record of the acquiring entity.  This can prove invaluable when navigating the complicated transaction of a senior living community, as both the building and business are being sold. We understand the highest offer is not always the best offer.

Conclusion

It is important to consider all the factors within a potential sale, as no two transactions are exactly identical.  While brokerage fees vary, an experienced seniors housing broker can return many times that amount in creating a controlled competitive bid environment for your community, while helping to guide you step by step throughout the process to ensure a timely, smooth and favorable outcome.

Contact Information

To discuss how we can assist you with the sale of your Senior Living Community, contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property analysis for you.

September 21, 2016
Grant Kief

Texas Skilled Nursing Facility Sale

Texas Skilled Nursing Facility Sale

Matthew Alley of Senior Living Investment Brokerage, Inc. recently handled a Skilled Nursing Facility Sale in Midland, Texas. The building comprised of 106 skilled nursing beds. The main building was constructed in 1963 and the therapy building was added in 1996. The skilled nursing building is approximately 31,824 square feet and the therapy building is approximately 1,065 square feet. The facility is situated on approximately 2.627 acres of land.

Property Location

Midland is located 26 miles northeast of Odessa, 116 miles south of Lubbock and 149 miles southwest of Abilene in Midland County.

Transaction Overview

At the time of the sale, the census for the skilled nursing facility was 74%. The property had negative EBITDAR so a capitalization rate is not applicable. The Gross Income Multiple was .50X for the Texas skilled nursing facility sale.

The Seller is a Texas based owner operator that focuses on skilled nursing. The Buyer is an independent owner operator headquartered in the Dallas Fort Worth area. Matt Alley was able to procure several qualified offers while overcoming the negative EBITDAR in this Texas Skilled Nursing sale.

Contact

For additional information on this Texas Skilled Nursing sale or to discuss the sale of your seniors housing property, please contact Matthew Alley of Senior Living Investment Brokerage, Inc. at 630/858-2501 or alley@slibinc.com

September 19, 2016
Jason Punzel

Private Pay vs. Medicaid

Private Pay vs. Medicaid – By Jason Punzel

There is often a debate within assisted living as to what model to use, Private Pay vs. Medicaid.   For newer properties in affluent areas, it is very easy to accept only Private Pay residents.  Additionally, for older building in rural or less affluent areas, often times Medicaid is the only payor source that allows an owner to keep their community full with residents.

The debate between Private Pay vs. Medicaid really comes with communities that are 10 – 20 years old, in moderate income areas, that might be over built.  Often times a community starts out as all Private Pay when it is built, but as the community ages and new competition is built, future Private Pay residents go to the new community, leaving the existing community with lower occupancy.  This community must now decide on how to attract new residents to keep occupancy high and often decides to start accepting Medicaid, which typically has 30-50% lower rates, with the idea that a full community with some Medicaid is better than a community with all Private Pay, but low occupancy.  With lower revenue coming in, there is less money to complete new capital projects which results in less Private Pay residents wanting to go to this community and thus, an increasingly higher rate of Medicaid residents.

Different Markets for Assisted Living Communities:

When a community faces lower occupancy because it is no longer the newest community in the market place, it must decide what their future strategy will be.  It might be to do a major capital improvement so it can compete with other newer facilities for Private Pay residents, or to focus more on “middle class” Private Pay residents providing a nice facility with activities and services, but at more moderate rates than the high cost provider that is focusing on the highest end amenities.  The goal would be to keep the community at a very high occupancy at moderate prices.  The final decision might be to allow the community to accept a high percentage of Medicaid residences, while keeping capital projects, amenities and extras at a minimum.  Of course, the community would still strive to give all the needed medical and personal assistance, but extras would be limited.

Conclusion:

It is important for owners to honestly assess where their community fits in the market place and adjust accordingly so it can achieve a high occupancy, be profitable, while providing for the needs of the residents.

Contact Information:

For more information on how Private Pay vs. Medicaid residents affect the value of your community, contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com.

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September 6, 2016
Brad Goodsell

Senior Living Community Sale, Do First Impressions Matter?

Senior Living Community Sale, Do First Impressions Matter? 

When considering selling a senior living community, do first impressions matter?  Sure, we’ve all heard that you only have one chance to make an impression, but does this apply to real estate?

Senior Living Community Sale
Senior Living Community Sale

During the course of touring properties being readied for sale, I’ve seen all conditions of communities, old and new, well cared for and in need of some much needed TLC.  As such, I believe first impressions do matter and give a lasting ‘picture’ of a given property.

Like most people, I notice the appeal of the landscaping, condition of the parking lot, and even the exterior trim of the building, all before entering the property.  These factors and many others, raise (or in some cases lower) my opinion of the community before even stepping one foot inside.

Regardless of if you’re considering listing your property, making seemingly small improvements can provide a cost-effective refresh.  For instance, power washing the building exterior and sidewalks, adding soft scape and flowers to prominent walkways, and applying touch up paint to doors and entry walls can help refresh a property, making it look well cared for, and possibly more attractive to a potential buyer, not to mention the residents of the community.

Closing

While you will ultimately need to decide what updates you’re willing to make, based on budget, goals and community needs, some basic enhancements can be made at a nominal cost.  The appearance of your community makes a lasting impression, it’s up to you to decide if it will be a good impression, ultimately impacting the sale price.

Contact Information

To discuss how we can assist in your Senior Living Community sale, please contact Brad Goodsell of Senior Living Investment Brokerage, Inc. at 630-858-2501 or goodsell@slibinc.com.  We are available to prepare a no obligation property analysis for you.

 

August 29, 2016
Grant Kief

Memory Care Sale

Memory Care Sale procured by Brad Clousing

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.

Sale Overview

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.

Contact

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 clousing@slibinc.com

August 24, 2016
Grant Kief

Marwood Rest Home Sale

Marwood Rest Home Sale

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.

Building Specs

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.

Contact

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 siefert@slibinc.com

August 23, 2016
Jason Punzel

Are Cap Rates in Rural Locations Higher?

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.

Contact Information:

To discuss how capitalization rates and future assumptions effect the value of your senior living community, contact Jason Punzel at 630-858-2501 or punzel@slibinc.com.

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August 23, 2016
Ryan Saul

Medicare PPS rates increase

Medicare PPS Increase
Medicare PPS Increase

Medicare PPS Increase

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.

Here is the fact sheet from CMSFACT SHEET

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.

Contact

Please contact Ryan Saul of Senior Living Investment Brokerage, Inc. for a confidential proposal that will help you in your decision making process.

August 22, 2016
Grant Kief

Senior Living Investment Brokerage Ranked #37 in USA

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.

Additional Information

Additional information can be found at:

http://nreionline.com/brokerage/2016-top-brokers?view=row&page=37

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 kief@slibinc.com or 630/858-2501

August 10, 2016
Grant Kief

Michigan Skilled Nursing Sale

Michigan Skilled Nursing Sale

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.

Contact SLIB

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 rusthoven@slibinc.com or call TOm at 630/858-2501

August 8, 2016
Grant Kief

Skilled Nursing Facility Sale

Skilled Nursing Facility Sale in Georgia

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.

Buyer/Seller Summary

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 ryansaul@slibinc.com or Bradley Clousing at clousing@slibinc.com 630/858-2501

July 29, 2016
Grant Kief

Personal Care Home Sale

Personal Care Home Sale

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.

Contact

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 clousing@slibinc.com or 630/858-2501

July 28, 2016
Grant Kief

Residential Care Facility Sale

Residential Care Facility Sale by Patrick Byrne

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.

Contact SLIB

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 byrne@slibinc.com or 314/961-0070

July 28, 2016
Grant Kief

Ryan Saul Featured Speaker

2nd Annual Interface Seniors Housing Midwest Conference

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?

http://www.cvent.com/events/2016-interface-seniors-housing-midwest/event-summary-48e392e9cac94ac1a3afaf5a576a358a.aspx

Contact

For additional information, contact Ryan Saul at ryansaul@slibinc.com or Brad Clousing at clousing@slibinc.com 630/858-2501

July 26, 2016
Jason Punzel

Pro-Forma vs. Actual Senior Housing Financial Statements

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.

Conclusion:

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.

Contact Information:

For more information about analyzing the financials of your senior living community, contact Jason Punzel at 630-858-2501 or punzel@slibinc.com.

Front View

July 20, 2016
Ryan Saul

REIT buyers are quiet

REIT Buyers Quiet
REIT Buyers Quiet

REIT buyers are quiet.

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.

July 12, 2016
Grant Kief

Skilled Nursing Lease

Skilled Nursing Lease

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.

Breakdown

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.

Contact

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 ryansaul@slibinc.com or Patrick Burke at burke@slibinc.com. Senior Living Investment Brokerage, Inc. 630/858-2501

July 6, 2016
Jason Punzel

Senior Living Facility Obsolete?

Senior Living Facility Obsolete?  By Jason Punzel

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.

Conclusion:

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 punzel@slibinc.com  or Joy Goebbert at 630-858-2501 x 230 or goebbert@slibinc.com.

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July 1, 2016
Ryan Saul

Non-Core Properties Present Best Buying Opportunities Today

Non-Core Properties Present Best Buying Opportunities Today

I recently participated on a panel that discussed where the most opportunities are today.

Ryan Saul Sell Assisted Living

Here is a link to read more about the latest Seniors Housing News and what is driving deal velocity.  Senors Housing Midwest Conference Article

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.

June 30, 2016
Matt Alley

Independent Seniors Housing Sales

Independent Senior Housing Sales

Independent seniors housing sales are one trend that I have seen in ten years as a Broker with Senior Living Investment Brokerage, Inc.  Independent (or “mom and pop”) owner-operators are having more difficulty running their long-term care or seniors housing facility in a profitable manner than in the past.  This is leading to an increasing number of independent seniors housing sales.

I believe that several factors have led to the squeeze that independent operators have felt recently.

Technological Disadvantage

As systems have gotten more complex (and more expensive), the larger regional and national operators have been able to afford the best systems for reimbursement, payroll, employee benefits, etc.  It is common for a larger party to take over a facility run by an independent operator and be able to increase their Medicaid and Medicare reimbursement strictly from an upgrade in systems.

Marketing Ability

Larger regional and national operators have the ability to smooth marketing expenses over multiple facilities in a similar market.  If an independent operator owns only one community, it is often cost-prohibitive to hire an employee solely focused on marketing. The marketing responsibility typically falls on the owner, executive director or business office manager, who are all in charge of a multitude of daily responsibilities.

Recent Legislation

The passage of the Affordable Care Act has made it more expensive for many independent operators.  The mandatory offering of health insurance can squeeze already thin margins and make it very difficult to expand the employee base.  If the federal minimum wage is increased, that may make this effect even more dramatic.

Increased Development

The recent boom in development of long-term care and seniors housing facilities throughout the country (especially in urban and suburban markets) has made it more difficult on independent operators.  Increased development has led to a greater supply of newer facilities on the market, which doesn’t allow for independent operators to compete on a physical plant level.

Stress Levels 

The amount of time and energy it takes to run a senior living facility independently as well as the overall emotional and physical stress can be overwhelming. Owners are often wearing many hats and handling responsibilities beyond their own.  A lot of owners are aging out as well having owned facilities for 20+ years.

These factors as well as others are making it more difficult for independent owner-operators to be profitable and compete. If you are an independent owner-operator considering your options, I’d be happy to prepare a complimentary confidential marketing proposal of your facility or portfolio.

At Senior Living Investment Brokerage, Inc., we have a long track record of independent seniors housing sales and serving the needs of independent owner-operators.  We have completed several transactions recently for single facility operators.

If you have any questions on the topic of this post, please contact Matthew Alley at 630-858-2501 ext. 225 or alley@slibinc.com or www.matthewalley.com

June 22, 2016
Grant Kief

Seniors Housing Portfolio Sale

Seniors Housing Portfolio Sale

Tom Rusthoven of Senior Living Investment Brokerage, Inc. recently represented a a regional owner operator with their Seniors Housing portfolio sale. The Pines Seniors Housing portfolio sale was a total of 9 Assisted Living and Memory Care Communities located in Detroit’s northern suburbs and extended communities. The total Seniors Housing portfolio sale consisted of 188 licensed units offering quality care to their respective, local communities. The Assisted Living and Memory Care Communities were built between 2005 and 2015. The purchase price was $30,800,000 or $162,000 per unit.

Professional Representation

Tom Rusthoven was able to procure multiple, qualified offers on the Assisted Living and Memory Care portfolio on the Sekker’s behalf. The Seller was a local regional owner operator with an eye on taking advantage of the current, aggressive capital markets. The Buyer selected, is a West Coast based national REIT that partnered with an East Coast operator. Both national entities are currently expanding their presence in Michigan. Tom was able to introduce them to their first acquisition in the state.

Confidential Sale

Throughout the Seniors Housing portfolio sale, Senior Living Investment Brokerage, Inc. was able to keep the transaction confidential to preserve the reputation of the facilities with the staff and within their respective markets.

Additional Information

For additional information on this Seniors Housing Portfolio Sale or other confidential opportunities currently available, please contact Tom Rusthoven of Senior Living Investment Brokerage, Inc. at rusthoven@slibinc.com or 630/858-2501

June 17, 2016
Grant Kief

Memory Care Facility Sale

Memory Care Facility Sale

Jason Punzel recently facilitated a Memory Care Facility sale located in California. The community is located about 70 miles north of Sacramento and 20 miles south of Chico. The first phase of the memory care community was built in 2002 and was extensively renovated and expanded in 2008. The community consists of a 33 unit, 55 bed main building and a 3 unit, 5 bed smaller building next door for a total of 36 units and 60 beds. The census at the time of sale was 50 residents. The property encompasses 2.5 acres and has an additional 2.5 acres (5 acres total) for future expansion.

Sale Overview

The Memory Community Sale was $5,950,000 or $165,300 per unit. The capitalization rate at the time of sale 9.0%.

Senior Living Investment Brokerage, Inc. Seller Representation

The Seller is a local owner operator who is retiring from the business. The Buyer is a local owner operator that owned two additional memory care communities nearby and is working on expanding his regional footprint.

Contact Jason Punzel

For additional information on this Memory Care Facility Sale or for a valuation on your seniors housing property, please contact Jason Punzel of Senior Living Investment Brokerage, Inc. at punzel@slibinc.com or 630/858-2501

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June 15, 2016
Grant Kief

Independent Living Sale by SLIB Team

Confidential Independent Living Sale

Independent Living Sale in the Northwest recently completed by Jeff Binder, Matthew Alley and Jason Punzel. At the direction of the parties involved in this transaction, Senior Living Investment Brokerage, Inc. agreed to keep the name and location of this Independent Living sale confidential. The Independent Living sale consisted of 110 units originally built in 1972. The 83,000 square foot building on approximately 5 acres of land, consisted of a variety of resident unit types including companion suites, studio units, as well as one bedroom and two bedroom units. The census at the time of sale was 74%.

Seller Representation

Senior Living Investment Brokerage, Inc. represented the Seller in the Independent Living Sale. The Seller is a national operator headquartered in Portland looking to divest of this non performing asset. The Buyer is a real estate owner headquartered in Canada. The Independent Living Community will be managed by a well respected national operator.

Contact Senior Living Investment Brokerage, Inc.

For additional information on this confidential Independent Living sale or on how Senior Living Investment Brokerage, Inc. can assist your company with a seniors housing sale, contact Jeff Binder at binder@slibinc.com 314/961-0070 or Matthew Alley at alley@slibinc.com or Jason Punzel at punzel@slibinc.com 630/858-2501

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June 13, 2016
Grant Kief

Assisted Living Community Sale

Assisted Living Community Sale

This transaction consists of two assisted Living communities with a total of 86 units located in two different towns in South Dakota. They are about an hours drive from one another. The first assisted living community is comprised of a total of 60 units. It is approximately 25,663 square feet and is situated on approximately 1.9 acres of land. It was originally constructed in 1995 as a purpose built assisted living community. The other assisted living community is comprised of a total of 26 units. It is approximately 15,800 square feet and is situated on approximately 4.73 acres of land. It was originally constructed in 1997 as a purpose built assisted living community. Both properties have been very well maintained and enjoy good reputations in their respective markets. The MSA population of the first community is approximately 150,000 and the population of the county where the other community is located is approximately 26,000. The census at the time of sale was 53% and the combined communities were losing over $600,000 (EBITDA) annually.

Seller Representation

Despite some of the challenges in marketing properties with negative cash flow, Senior Living Investment Brokerage, Inc. was able to implement an effective marketing plan on behalf of the Seller and procure a qualified Buyer for the two assets and close in a timely manner. The Seller was a local hospital network seeking to divest of the assisted living communities in order to focus on their core business. The Buyer is a Private Equity group based in Southern California. They secured Northstar Senior Living to manage the properties on their behalf.

Contact Senior Living Investment Brokerage, Inc.

For additional information on this Assisted Living Community Sale or on how Senior Living Investment Brokerage, Inc. can assist you with the sale or purchase of an assisted living community, please contact Jason Punzel of Senior Living Investment Brokerage, Inc. at punzel@slibinc.com or 630/858-2501

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June 10, 2016
Grant Kief

Skilled Nursing Facility Sale

Skilled Nursing Facility Sale in Alabama

    Skilled Nursing Facility sale recently facilitated in Alabama by Brad Clousing and Ryan Saul of Senior Living Investment Brokerage, Inc. The transaction consists of a 117 Bed Skilled Nursing Facility located in the city of Daphne, Alabama. Daphne is a thriving suburb located 11 miles northwest of Mobile, Alabama. The skilled nursing facility was constructed in stages with original construction in 1966 and additions in 1986, 2001 and 2004. The building consists of approximately 97,173 square feet over three stories.

    Medical Office Building

    The Skilled Nursing Facility sale also included a free standing medical office building. More than half of the medical office building was recently leased to a nationally recognized teneant. The newly executed lease will provide additional revenue going forward for a the new owner.

    Seller Representation

    The Seller purchased the property in 2011 with intentions to grow their skilled nursing portfolio through additional acquisitions in Alabama. However, skilled nursing facility sale opportunities and growth options did not materialize. At the time of sale, this was their only Alabama operations so the decision was made to sell in order to focus on future growth in other regions of the country where they had other skilled nursing operations. The Buyer is an Alabama based not-for-profit organization with strong local ties. They have plans to build on the strong Medicare census and to continue to expand upon their Alabama presence and reputation. They will also be able to reduce expenses and grow census through economies of scale. Senior Living Investment Brokerage, Inc. procured multiple qualified offers for this Skilled Nursing Facility sale and despite delays due to survey and tenant negotiations on the medical office building, the transaction was able to close within five months from commencement of marketing.

    Sales Overview

    The 117 bed skilled nursing facility sale was at 86% census at close of escrow. The cap rate was 4.6% at a 1.1X gross income multiple. Senior Living Investment Brokerage, Inc. was able to procure a sales price of close to $105,000 per bed for the Seller.

    Contact Info

    For additional information on this Skilled Nursing Facility Sale or to inquire how Senior Living Investment Brokerage, Inc. can assist you with your investment objectives, please contact Brad Clousing at clousing@slibinc.com or Ryan Saul at saul@slibinc.com 630/858-2501

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June 8, 2016
Grant Kief

Personal Care Community Sale by Brad Clousing

Personal Care Community Sale

Personal Care Community Sale recently in Georgia by Brad Clousing of Senior Living Investment Brokerage, Inc. This transaction consists of a 41 unit Personal Care Community sale located in Cumming, Georgia. Despite a bankruptcy and a transition in ownership, the asset has performed well under the current interim management company. The asset had experienced volatile swings in performance over the previous twelve months. The census at the time of sale was 80%, the capitalization rate was 8.0% with and EGIM of 2.8X. The property was originally constructed in 1997 and consists of 22,945 square feet. The ultimate sale price was for over $80,000 per unit based upon 41 beds.

Change of Ownership

The bed capacity during the due diligence period was increased to 50 beds and the Buyer has plans for a major cosmetic renovation of the physical plant. The Seller was a California based investment firm that purchaased the asset as part of a non performing loan portfolio acquisition and subsequently foreclosed on the borrower. Senior Living was able to procure a Midwest based regional operator as the Buyer. With their experience with operating personal care homes as well as the increase in bed capacity to 50, the asset should produce future strong perormance and subsequent returns.

Contact

    For additional information on this Personal Care Community sale or to inquire about other opportunities within the seniors housing market, please contact Brad Clousing of Senior Living Investment Brokerage, Inc. at clousing@slibinc.com or 630/858-2501

June 7, 2016
Grant Kief

Assisted Living Sale in Georgia

Assisted Living Sale in Georgia facilitated by Brad Clousing and Jeff Binder of Senior Living Investment Brokerage, Inc. The transaction consists of a 38 unit assisted living sale located in Acworth, Georgia. Acworth is a rapidly growing and strong demographic sub market near Atlanta. The asset was built in 2014 and boasts high end finishes constructed under the new Georgia Assisted Living Licensure standards. The property leased up quickly given the property’s positive reception within the local community and the well planned building with quality finishes combined for 95% census at the time of the assisted living sale.

Transaction Overview

Senior Living Investment Brokerage, Inc. was able to procure multiple qualified offers by implementing a strong marketing effort on behalf of the Seller. The 38 unit assisted living sale was built in 2014 and encompassed 38,646 square feet. The sales price, reflected by the quality construction and care, was $8,400,000 or over $221,000 per unit. The cap rate at the time of sale was 7.75% with a gross income multiple of 3.9X. The Seller was a partnership looking to redeploy assets to new development opportunities. The Buyer was a REIT with the asset to be operated under a long term lease agreement by their affiliate company.

Contact Info

For additional information on this Assisted Living sale or to inquire about the value of your seniors housing property, contact Brad Clousing at clousing@slibinc.com 630/858-2501 or Jeff Binder at binder@slibinc.com 314/961-0070.

June 6, 2016
Grant Kief

Senior Living Investment Brokerage Sale of ILF/MC Community

Senior Living Investment Brokerage Sale of ILF/MC Community
Senior Living Investment Brokerage Sale of ILF/MC Community

Senior Living Investment Brokerage, Inc. recently facilitated the sale of an 88 unit Independent Living and Memory Care Facility in Texas. The community is comprised of 56 Independent Living units and 32 units/36 beds of Memory Care. The asset is approximately 73,000 square feet and is situated on approximately 24.03 acres of land. The property is located in a town 46 miles southwest of Dallas in Johnson County. The property was originally built in 1988 and renovated in 2003. The overall census at the time of sale was 99%. The cap rate on this sale was 8.9% and the EGIM was 3.17X.

Seller Representation

Matthew Alley of Senior Living Investment Brokerage, Inc. represented the Seller in the transaction. Matt was able to procure multiple qualified offers on the Seller’s behalf. The Seller of this seniors housing community is a local, independent owner operator. The Seller was operating under a forebearance agreement with their lender. The Buyer chosen is a hospital provider headquartered in the Dallas Fort Worth metroplex and owned by funds managed by an investment advisor. For additional information on this sale or to discuss how Matthew Alley of Senior Living Investment Brokerage, Inc. can assist with the sale of your Seniors Housing property, contact Matt at 630/858-2501 or alley@slibinc.com

June 6, 2016
Jason Punzel

Have Senior Housing prices peaked?

Have Senior Housing prices peaked? by Jason Punzel

Recently, I spoke at the Washington Healthcare Association’s (WHCA) annual conference.  I have spoken there three times on the general state of the senior housing and skilled nursing sales market.   For the first time, I had to say that the data shows that pricing has peaked.   According to the National Investment Center (NIC), prices peaked in mid-2015.   As a firm, Senior Living Investment Brokerage, Inc. sells 90+ facilities each year and we have a very good pulse on the market.  Our data would support this conclusion.  On a facility that we would have received six offers a year ago, we now might receive four.   Prices seem to be down approximately 5%.  However, when analyzing pricing over the past six to eight years, today’s prices are still very good.

Conclusion:

The million-dollar question (quite literally!) is, where is pricing going in the future?  Prices are still very good and there are still many buyers with plenty of access to capital.  However, the Federal Reserve has come out recently talking about increasing rates again, which could push up the rate on the ten-year treasury, increasing borrowing costs.   If interest rates continue to rise, we could see a further decline in pricing.   However, we don’t see a dramatic decline in the next 6-12 months.   There are too many good buyers with plenty of capital to invest.   Occupancy is steady and new construction in most markets is not out of line.  Beyond 12 months, it is very difficult to predict and prices could change much more.  For any owner thinking about selling in the next several years, now might be a very good time.

For a market valuation on your senior living or skilled nursing facility, please contact Jason Punzel at punzel@slibinc.com or Joy Goebbert at goebbert@slibinc.com, 630-858-2501.

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June 3, 2016
Grant Kief

Skilled Nursing Facility Sale

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Skilled Nursing Facility Sale

Skilled Nursing Facility Sale recently by Matthew Alley of Senior Living Investment Brokerage, Inc. in Texas. The transaction consisted of a 110 bed skilled nursing facility comprised of 53 semi-private resident rooms and 4 private resident rooms. The asset is approximately 37,043 square feet and is situated on approximately 6.123 acres of land. The community is located approximately 30 miles from Odessa, Texas and is a smaller , more rural town. The skilled nursing facility was built in 1996 and the census at the time of sale was 67%.

Sale Overview

The Skilled Nursing Facility sale was $5,000,000 or $45,455 per unit. The cap rate for the sale was 14.9% and the gross income multiple was 1.21. The facility is enrolled in the UPL Program in Texas which is supplements the Medicaid rate. This program produces approximately $384,000 in revenue annually but is not included in the EBITDA calculation.

Senior Living Investment Brokerage, Inc. Seller Representation

The Seller is an owner operator from Central Texas. This was their only skilled nursing facility in West Texas. The Buyer is an operator headquartered in the Dallas Fort Worth area and they operate several skilled nursing communities in this region. The will improve the operations by utilizing their economies of scale.

Contact Matthew Alley

For additional information on this Skilled Nursing Facility Sale or to inquire as to how Senior Living Investment Brokerage, Inc can assist your company with acquisitions or dispositions of seniors housing assets, please contact Matthew Alley at alley@slibinc.com or 630/858-2501 or www.matthewdalley.com

June 2, 2016
Grant Kief

Skilled Nursing Acquisition $40,000,000

Skilled Nursing Acquisition coordinated by Brad Clousing and Patrick Byrne of Senior Living Investment Brokerage, Inc. recently in Florida. This transaction consists of three skilled nursing communities located in the desirable Florida markets of Clewiston, Lakeland and St. Petersburg. Each community features quality physical plants with considerable upgrades to each asset. Palm Terrace of Clewiston, located in Clewiston, Florida, is licensed for 155 beds and was constructed in 1978 wih an addition built in 1995 with extensive renovations in 2005 and 2012. Palm Terrace of Lakeland, located in Lakeland, Florida, is licensed for 185 beds and was built in 1960 with renovations in 1980, 1990 and most recently in 2014. Palm Terrace of St. Petersburg, located in St. Petersburg, Florida, is licensed for 96 beds and was originally built in 1946 and 1964 with recent significant capital improvements including major upgrades to the dining and all common areas.

Midwest Buyer

For this Skilled Nursing acquisition, the real estate and operations were offered separately. The operations sale was the result of a Chapter 11 Bankruptcy unrelated to these particular buildings performance. The real estate Seller was an Illinois based private investment group. The Buyer elected to purchase both portions of the transaction during a formal bidding process and they were able to write offers on both separately. The Buyer, a partnership between an Illinois based owner operator and an Ohio based capital group, plan to utilize their extensive operating experience to improve margins, decrease bad debt write offs, improve the Medicare census and in turn, quickly improve the bottom line performance of the portfolio. Their local operations will be overseen by an experienced Florida operator that has prior knowledge of these particular properties. CapitalSource and Contemporary Healthcare Capital provided the financing for the assets.

Overview

The three skilled nursing acquisition consisted of a total of 436 beds. The census at the time of sale was 85%. The sales price was $40,000,000 at 1 10% cap rate. For additional information on this skilled nursing acquisition or to discuss how Senior Living Investment Brokerage can assist you with an acquisition or the disposition of a seniors housing property, please contact Brad Clousing at clousing@slibinc 630/858-2501 or Patrick Byrne at byrne@slibinc.com 314/961-0070.

June 1, 2016
Grant Kief

Skilled Nursing Facility Sale by Senior Living Investment Brokerage, Inc.

Skilled Nursing Facility Sale conducted recently by Toby Siefert, Nick Cacciabando and Pat Byrne of Senior Living Investment Brokerage, Inc. in Connecticut. This was the third facility acquired as part of a four facility portfolio sale by a Canadian based skilled nursing facility owner. The Buyer and Seller had agreed to close escrow on each facility as the change of ownership for each property was approved by each state. With the closing of this skilled nursing facility sale, their is only one deal left to close which is in Vermont. The skilled nursing facility transactions in Massachusetts and New Jersey closed in 2015. This three story facility was built in 1972 and is 61,085 square feet. The facility is licensed for 162 beds and there are 2 private resident rooms, 28 semi private resident rooms and 26 four bed resident rooms. The census at the time of sale was 80% with a 16.2% quality mix. The most notable area of upside is increasing not only the census but the quality mix back to levels achieved in previous years when the skilled nursing facility demonstrated positive net operating income. At the time of the sale, the facility was experiencing a negative EBITDA of over ($1,000,000). The gross income multiple was .34X at the time of sale. Senior Living Investment Brokerage, Inc. was able to procure multiple qualified offers for the four skilled nursing facility portfolio which benefited the Seller because there was minimal interest in acquiring this particular skilled nursing facility as a single asset. The Buyer is a newly formed partnership of owners based in New York that will also operate the portfolio of skilled nursing facilities. For additional information on this Skilled Nursing Facility sale or to inquire how Senior Living Investment Brokerage, Inc. can assist you or your company with acquisitions or dispositions, please contact Toby Siefert siefert@slibinc.com, Nick Cacciabando nbando@slibinc.com or Pat Byrne byrne@slibinc.com.

May 31, 2016
Grant Kief

Assisted Living and Memory Care Community Sale

Assisted Living and Memory Care Community Sale in Florida conducted by Brad Clousing of Senior Living Investment Brokerage, Inc. The transaction consists of an Assisted Living and Memory Care Community located just outside the Tampa MSA. The community features 30 assisted living units and 21 memory care units. The 44,000 square foot building was originally constructed in 1963 and completely renovated in 2008. The census at the time of sale was 95%. Although the community is not purpose built, the building underwent extensive renovation in 2008 giving it the look, feel and functionality of a purpose built assisted living and memory care community. The physical plant and large resident floor plans provide for potential double occupancy and an increase in the bed capacity for future revenue growth. The Seller was a local owner operator looking to exit the market. The Buyer is a private capital group that partnered with a regional operator. The 9.4% capitalization rate was higher than current market rates given the immediate cap ex needs, deferred maintenance and inconsistent operating trends. Senior Living Investment Brokerage, Inc. was able to procure multiple qualified offers within weeks of commencing marketing and was able to negotiate the Assisted Living and Memory Care Community Sale at over $100,000 per unit on the Seller’s behalf. For additional information on this Assisted Living and Memory Care Community Sale, please contact Brad Clousing of Senior Living Investment Brokerage, Inc. at 630/858-2501 or clousing@slibinc.com

May 27, 2016
Grant Kief

Skilled Nursing Sale in Georgia

Skilled Nursing Sale recently handled by Brad Clousing in Georgia. This transaction consists of a 102 Bed Skilled Nursing sale in Pineview, Georgia. The community has been leased at a rate of $50,000 per month for 10 years. The Skilled Nursing Community benefits from limited competition in the area, stable operations and an excellent reputation in the surrounding area. The tenant is an experienced Georgia operator. The Landlord was the previous owner/operator seeking to exit Georgia operations and focus on their Florida portfolio. The asset was built in 1967 with an addition and renovation in 2013. The census at the time of sale was 67%. For additional information on this Skilled Nursing Sale or to inquire about other opportunities, please contact Brad Clousing of Senior Living Investment Brokerage, Inc. at 630/858-2501 or clousing@slibinc.com

May 25, 2016
Grant Kief

Seniors Housing Sale in Alabama

Seniors Housing sale handled by Brad Clousing of Senior Living Investment Brokerage, Inc. in Alabama. The transaction consisted of three Assisted Living and Independent Living Communities located in Auburn, Alabama. All three assets are purpose built and benefit from close proximity to each other as well as a total of 84 SCALF beds which are very difficult to acquire in Alabama. Azalea Place was built in 1999 and features 72 units. Camellia Place, also constructed in 1999, features 58 units and is licensed for 42 SCALF beds. Magnolia Place, constructed in 1996, features 53 units and is also licensed for 42 SCALF beds. The Seller, East Alabama Medical Center (EAMC), was looking to exit the assisted living market in order to focus on core operations. The Buyer is a partnership between a national equity investor and an Alabama based operator. They intend on making a significant investment into the physical plants at each location. The assets will be re-branded and re-positioned in the market. Additionally, there will be a heavy focus on programming and staffing efficiencies. The three Assisted Living Portfolio totaled 183 beds and sold for $16,531,500. The overall census was 85% and the Gross Income Multiple was 2.8X. For additional information on this seniors housing sale or on how Senior Living Investment Brokerage, Inc. can assist you with a purchase or sale, contact Brad Clousing at clousing@slibinc.com or 630/858-2501.

May 23, 2016
Grant Kief

Assisted Living Community Sale in Georgia

Brad Clousing, Managing Director of Senior Living Investment Brokerage, Inc. recently orchestrated an Assisted Living Community Sale in Nashville, Georgia. The asset features 12 assisted living units and 14 memory care units in the 18,603 square foot building. Originally built in 1997, the physical plant underwent an extensive renovation in early 2015 and the lease up began in August of 2015. The sale also included additional land for future potential expansion. The transaction was strucured as a sale leaseback. The seller also recently sold another community locatd approximately 25 miles south of this property in a sale leaseback transaction as well. The Buyer is a publicly traded REIT. The community was fully occupied at the time of closing and will benefit from the additional land for expansion of 20 to 24 units. The sales price for the 26 unit building was $2,700,000 which translates to $103,846 per unit. The cap rate was 11.3% and the Gross Income Multiple was 2.4X. For additional information on this Assisted Living Community Sale or how Senior Living Investment Brokerage, Inc. can facilitate the confidential sale of your seniors housing community, contact Brad Clousing at 630/858-2501 or clousing@slibinc.com

May 20, 2016
Grant Kief

Assisted Living Community Sale

Assisted Living Community Sale in Georgia conducted by Brad Clousing of Senior Living Investment Brokerage, Inc. The transaction consists of an Assisted Living Community sale in Valdosta, Georgia. The asset features 78 assisted living units and 31 memory care units. The building consists of three distinct areas: Laurel Oaks, which was constructed in 1978, Willow Wood, constructed in 2009 (both of which offer assisted living services), and The Elms, constructed in 2013 which offers memory care services. The Seller converted the entire building from a personal care home to the newer assisted living license as part of the renovation in 2013. The Assisted Living Community sale was structured as a sale leaseback transaction. The Seller has another assisted living community for sale currently under contract located approximately 25 miles north of this assisted living community. This transaction is a sale leaseback as well. The Buyer is a publicly traded REIT. For more information on this Assisted Living Community sale or how Brad can help you with the valuation and sale of your seniors housing property, contact Brad Clousing of Senior Living Investment Brokerage, Inc. at clousing@slibinc.com or 630/858-2501

May 19, 2016
Grant Kief

Skilled Nursing Portfolio Sale

Ryan Saul and Patrick Burke of Senior Living Investment Brokerage, Inc. were engaged to handle a Skilled Nursing Portfolio sale in of three facilities in Colorado (1) and Utah (2). The Seller is a private owner based in Illinois that is exiting the seniors housing business. Although the Seller is an experienced owner/ operator, these three assets proved to be difficult to operate from Illinois as the Colorado and Utah skilled nursing market became more competitive and a “hands on” operation was necessary. The Buyer is a real estate owner in the Midwest that leased the communities to seasoned operators in Colorado and Utah. The Colorado Skilled Nursing Facility was built in 2013 and is 154 beds on 1.63 acres. The census was the best of the portfolio at 70% and had a 32% quality mix. The first Utah Skilled Nursing Facility was built in 1999 and is 120 beds on 4.7 acres. The census for this community was 58% with an impressive 39% quality mix. The second Utah Skilled Nursing Facility was built in 2001 and is 180 beds on 2.48 acres. The census for this facility at the time of sale was only 47% but boasted a 28% quality mix. The Skilled Nursing Portfolio sale was $31,780,000 at a favorable 8.69% cap rate and a 1.4 Gross Income Multiple. Senior Living investment Brokerage, Inc. was able to procure multiple qualified offers on this Skilled Nursing Portfolio sale within the first weeks of commencing marketing. For additional information on this Skilled Nursing Portfolio sale, please contact Ryan Saul at ryansaul@slibinc.com or Patrick Burke at burke@slibinc.com of Senior Living Investment Brokerage, Inc. 630/858-2501

May 18, 2016
Ryan Saul

Nursing Home Sales lead to poor quality – I think not

I ran across this article that attempted to draw the conclusion that nursing home sales are bad for the industry and results in poor quality. I think not.

Repeated nursing home sales linked to poor quality

nursing home sales

We often sell nursing homes that are in trouble and need a new owner. The residents need a nursing home to sell and a new owner. There are many more success stories of nursing homes that sell resulting in better care moving forward. There are a lot of holes in this article and I am confident that the previous history, prior to a sale, is being captured in the results. Also, it takes time to turn a property around and change the culture from providing questionable care to improving quality and the reputation. If you have a troubled nursing home it just might be time to sell. If you specialize in providing quality care, you might be the ideal candidate to buy a nursing home and turn it around. Contact Ryan Saul from Senior Living Investment Brokerage, Inc. for more information.

May 18, 2016
Grant Kief

Assisted Living Sale Procured by Patrick Burke

Assisted Living sale was recently handled by Patrick Burke of Senior Living Investment Brokerage, Inc. The transaction consisted of a 48 unit/ 96 bed Assisted Living Community which included Memory Care units. The facility is licensed for 64 Adult Care Home Beds and 32 Special Care beds. The property was built in 1984. Located in Greensboro, North Carolina, the community was purchased by its current owners in 2004. The property is three stories with 16 units/ 32 beds on each floor. All of the units are 315 square feet with a private bathroom with a shower. Each room can accommodate two residents using twin bedding. The occupancy based on private and semi-private resident rooms being utilized was 71/ 83 occupiable beds or 85%. The facility is approximately 50% Private Pay and 50% Medicaid. There have been many changes in the reimbursement on both the Adult Care and Special Care beds which caused the Net Operating Income to recently decrease. The Seller was a father and son who were not the operators of the facility. Due to the recent uncertainty with Medicaid reimbursement, the partners made a decision to sell their only seniors housing asset. Senior Living Investment Brokerage, Inc. was able to procure several pre qualified offers on the Assisted Living Community. The cap rate was not applicable to the $3,650,000 sales price due to the underperformance of the property. The GIM for the facility was 1.81X. The Buyer is a national owner/ operator who currently has an operating presence in North Carolina. They new owners plan on spending upwards of $500,000 upgrading the facility and also utilizing their marketing expertise couple with their economies of scale to improve census and net operating income. For additional information on this transaction or for an analysis of the value of your Assisted Living Community, Memory Care Community, Independent Living Community, Skilled Nursing Facility or CCRC, please contact Patrick Burke at burke@slibinc.com or 630/858-2501.

May 17, 2016
Grant Kief

Skilled Nursing Sale Handled by Patrick Byrne and Jeff Binder

Skilled Nursing Sale recently handled by Patrick Byrne and Jeff Binder of Senior Living Investment Brokerage, Inc. The Skilled Nursing sale was a rare opportunity to acquire two facilities consisting of 360 beds within 50 miles of St. Louis. Senior Living Investment Brokerage, Inc. was able to procure double digit offers within weeks of commencing marketing of the properties and ultimately selling the two Skilled Nursing Facilities above the stated list price. The first Skilled Nursing Facility at 240 beds, is one of the larger SNF’s in the state. Due to original construction in 1977 coupled with a saturated north county market, the census consistently hovered around the 60% range. With a planned infusion of capital, the new owner hopes to improve the quality mix and gradually grow into a higher, more stable census. The original building was constructed in 1919 in the other facility, but the resident rooms were located in wings constructed in 1971 and 1977. This facility also struggled to maintain census but was profitable due to low expenses. The census at the tme of sale was 70%. Both facilities are primarily Medicaid facilities. The properties sold for a combined price of $39,000 per bed but many in the market evaluated the package at a lower functional bed count. But the draw of the upside in the balance of beds was enough to overcome the lack of profitability and the recent downward trend in the operations. The combined cap rate at the time of sale was 5.9%. The Seller was a local estate which was liquidating assets and the Buyer is a large Midwest operator. The sales price for both properties was $14,000,000. For additional information on this sale or on how Senior Living Investment Brokerage, Inc. can assist you with the disposition or acquisition of seniors housing properties, please contact Jeff Binder at binder@slibonc.com or Patrick Byrne at byrne@slibinc.com 314/961-0070.

May 12, 2016
Jason Punzel

Senior Housing Valuation

Senior Housing Valuation by Jason Punzel

According to the Senior Care Acquisition Report 2016, the average price per unit for Assisted Living Facilities in 2015 was $189,200 and for Independent Living Facilities it was $192,900.   However, is this really a good metric for senior housing valuation?

In 2015 the average price per unit for Class A Independent Living Facilities was $248,500 and Class B was $138,300.   We currently have a Class C, 110-unit Independent Living Community under contract in the Pacific Northwest that will sell for less than $40,000/unit.  As a company, last year we sold Skilled Nursing Facilities from $10,000-$130,000+/bed and Assisted Living Communities from $20,000-$300,000+.  There are some older facilities in rural areas that have negative EBITDA which may not have any interested buyers and thus have little, if any value.  Additionally, there are facilities in downtown areas of San Francisco, Seattle and New York for example that would sell for $500,000+/unit if they were actively marketed by Senior Living Investment Brokerage, INC today.

Conclusion:

Because of the wide range in prices, we strongly recommend that owners focus more on cap rates and internal rates of return for senior housing valuation.   Ultimately, buyers are interested in a return on their investment and they will use these metrics to determine the price they will pay.   The price per unit then becomes the result of and not the cause of the price.

Contact Information:

To discuss senior housing valuation please contact Jason Punzel at 630-858-2501 x 233 or punzel@slibinc.com  or Joy Goebbert at 630-858-2501 x 230 or goebbert@slibinc.com.

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May 3, 2016
Ryan Saul

REITs slowing down – Is the Seniors Housing Market?

sell assisted living

We all read the reports that REITs slowing down their investment in Seniors Housing and nursing homes but Is the Seniors Housing market? Clearly they have been driving the market for the past few years with billion dollar and multi-million dollar transactions . However, is the overall Seniors Housing market slowing down? I don’t think so.

The dollar volume and mega portfolio transactions might be off from the record years, but the overall market is thriving.

The Real Estate Investment Trusts (REIT) heavy in nursing homes and assisted living have been met with record pricing.  In addition, their cost of capital has increased.  Both these factors have led to the REITs slowing down their activity.  Consequently, we have seen an adjustment in pricing.  Pricing might have adjusted slightly down, but it still remains near record levels. The average price-per-unit for Seniors Housing in the first quarter stood just under $170,000 per unit. That is a 5% quarterly decline and approximately 1% lower than the average price-per-unit of 2015.  This adjustment in pricing has created opportunity for buyers, not using REITs, to acquire communities.  If you have been trying to buy nursing home or buy assisted living, now is your time.  Interest rates are still at historic lows.  Lenders have capital and are aggressively looking to place it, especially in long-term care and Seniors Housing.  So, if you have thought about sell assisted living or selling nursing home, contact Senior Living Investment Brokerage to match you up with the thousands of active buyers we are in contact with on a regular basis.

I believe 2016 is going to be the year of the nursing home and individual sales of assisted living.  Nursing homes are still trading between 12%-13% capitalization rates and the cost of capital is in the 3%-5% range.  This offers significant opportunity.  Over $100 billion of nursing home assets across the United States are still privately owned, prime for acquisition.

If you have thought about buy or sell assisted living or buy or sell nursing home, contact Ryan Saul to discuss your options.

April 29, 2016
Grant Kief

Independent Living Community Sale Handled by Jason Punzel

Front = Woodlands

Jason Punzel of Senior Living Investment Brokerage, Inc. recently handled an Independent Living Community sale in Washington. The community consists of a 98 unit Independent Living Community with a mix of apartments and cottages on a beautiful 24 acre site. The property was built in phases between 1986 and 2003. It is located just off of Interstate 5 halfway between Portland and Seattle adjacent to a medical center. Senior Living Investment Brokerage, Inc. procured four offers from Regional and National buyers. The Buyer selected is a public REIT with a national presence. They will be leasing the property to a regional operator. The new operator has plans for major capital improvements and future expansion of additional units and services. The census at the time of sale was 95% and the cap rate was 8.7%. For additional information on this or other transactions completed by Senior Living Investment Brokerage, Inc. contact Jason Punzel at 630/858-2501 or punzel@slibinc.com

April 28, 2016
Grant Kief

Ryan Saul Drives Independent Living Sale

sell independent living

Ryan Saul recently procured A Buyer for an Independent Living sale in Ohio. The 120 unit community is located in one of the most affluent suburbs of Cleveland. The community was originally built as an assisted living community in 1979. When the Sellers purchased the building in 2007, they renovated the property in 2007 and 2008 and elected to operate it as an Independent Living Community rather than provide adult care and services. The Buyer plans on continuing to operate the building as Independent Living but based on the original assisted living construction, they have the option to convert the building to assisted living or Medicaid Waiver in the future. The Seller is a private owner based in California and the Buyer is a private owner headquartered in Kentucky. The census at the time of sale was 88% and the capitalization rate was 6.71%. For additional information, please contact Ryan Saul of Senior Living Investment Brokerage, Inc. at 630/858-2501 or ryansaul@slibinc.com

April 27, 2016
Grant Kief

Ryan Saul & Patrick Burke Sell Seniors Housing Portfolio

Front page

Ryan Saul & Patrick Burke Sell Seniors Housing Portfolio in Illinois. The portfolio consists of four Supportive Living Facilities (SLF) in Illinois. SLF is a classification of Assisted Living. Illinois developed the Supportive Living Program as an alternative to nursing home care for low income older persons and persons with disabilities under Medicaid. By combining apartment style housing with personal care and other services, residents can live independently and take part in daily decision making. The Department of Healthcare and Family Services has obtained a “waiver” to allow payment for services that ae not routinely covered by Medicaid. There is a Certificate of Need (CON) on SLF beds, which provides a barrier to entry and value protection for existing communities.

All the properties were built between 2002 and 2006 and were comprised of between 128 and 139 beds. The average census was 73%. Two of the properties are located in Chicago and the other two are located in Rockford and Robbins. The cap rate at the time of sale was 9.4%.

The Seller is a private owner based in Illinois that is exiting the Seniors Housing business. The Buyer is a private owner with other Supportive Living Facilities in Illinois.

For additional information, contact Patrick Burke or Ryan Saul of Senior Living Investment Brokerage, Inc. at 630/858-2501

April 26, 2016
Grant Kief

Matthew Alley Sells Medicaid Beds

Matthew Alley Sells Medicaid Beds
Matthew Alley Sells Medicaid Beds

Medicaid Bed Sale

Matthew Alley of Senior Living Investment Brokerage, Inc. sold 13 Medicaid Beds to a local developer in Williamson County, Texas. Williamson County is located just north of Austin, Texas, and is a highly desirable market.

Sale Overview

The Medicaid Bed Sale was $195,000 or $15,000 per bed.

Senior Living Investment Brokerage, Inc. Seller Representation

The Seller is a local non-profit group that had placed the beds on “replacement status” shortly before the transaction closed. The Buyer is an owner operator based in New York and operates a facility in the county. The Buyer can benefit from an increase of three additional Medicaid beds when developing a new facility according to the State of Texas allowing a 25% increase for new development.

Contact Matt Alley

If you would like more information on this transaction or have Medicaid Beds you would like to sell, please contact Matthew Alley of Senior Living Investment Brokerage, Inc. at alley@slibinc.com or 630/858-2501 or www.matthewdalley.com.

April 25, 2016
Grant Kief

Toby Siefert Procures Residential Care & Skilled Nursing Facility Buyer

Senior Living Investment Brokerage, Inc. recently procured a Residential Care & Skilled Nursing Facility Buyer for a community in Maine. The community was family owned and operated by the same family for over 30 years. The family was ready to retire except for the administrator who was retained by the Buyer. The property was built in 1970 and 1979 and was comprised of 47 skilled nursing beds and 66 residential care beds. The building also had accommodations for 12 adult day care beds. The overall census at the time of the sale was 98%. Senior Living Investment Brokerage, Inc. was able to procure a Buyer based out of New York. For additional information, contact Toby Siefert at siefert@slibinc.com or 630/858-2501

April 22, 2016
Ryan Saul

Minimum Wage Increase to Hurt Seniors Housing Investment?

Increasing the minimum wage will obviously have an impact on the overall economy. Senior Living Investment Brokerage, Inc. is concerned with how such an increase will change the nursing home and senior living market. It is competitive for quality staff. If minimum wage increases will workers making the same money choose a job in the restaurant or retail industry with very little stress or will they choose to care for the most frail people with extreme responsibility, stress and demands?

Owners will need to increase expenses to take care of residents while the rents and reimbursement have been slow to increase.  The increase in minimum wage is one thing, the shortage of quality workers is another.  Owners will need to find the right mix between paying a living wage and remaining affordable to residents.  Applying this strategy will help keep quality staff and a good reputation.  If you take care of employees and you take care of residents, the bottom line should take care of itself.

If you are fed up with the constant changes in the assisted living, memory care and nursing home business and want to sell, please contact Ryan Saul for a confidential discussion about how to sell nursing home or sell assisted living.

April 22, 2016
Grant Kief

Brad Clousing and Ryan Saul Handle Confidential Assisted Living Sale

Senior Living Investment Brokerage, Inc. handled a Confidential Assisted Living Sale in Ohio recently. The sale consisted of two assisted living communities. One of the communities is 71 units, built in 1984 and is approximately 52,291 square feet on 3.92 acres. The other assisted living community is 76 units, built in 1989 and is approximately 53,382 square feet on 5.36 acres. Overall census was 82%. Senior Living was able to procure multiple offers while maintaining confidentiality. The Buyer is a private owner based in Kentucky. All other information on this transaction is confidential. For information on how Senior Living Investment Brokerage, Inc. can assist you with a confidential sale or purchase of a seniors housing community, contact Ryan Saul or Brad Clousing at 630/858-2501

April 21, 2016
Grant Kief

Ryan Saul and Jeff Binder Sell Seniors Housing Community

Ryan Saul sell seniors housing

Ryan Saul and Jeff Binder Sell Seniors Housing Community in Iowa. Senior Living Investment Brokerage , Inc. was hired to sell a Skilled Nursing and Residential Care Facility (SNF/RC) and an Independent Living Community (ILF). Construction was 1965 – 2003 for the SNF/RC and in 1936 and 1986 for for the ILF. The 160 bed SNF is approximately 68,457 square feet on 8.52 acres. A portion of the building lacked a sprinkler system. Census at the time of sale was 35%. The ILF is approximately 45,553 square feet on 5.41 acres. The occupancy of the ILF at the time of sale was 74%. The communities are within a half a mile of each other. The Seller was a public REIT that divested a non-core, under-performing asset. The Buyer is an operator based in Indiana. They own other communities in Iowa so they plan on gaining operating efficiencies on expenses and leverage a strong regional leadership team. They plan to invest in the skilled nursing facility physical plant to attract residents an increase census. They will also need to install a complete sprinkler system in the SNF. For additional information on this seniors housing community or to discuss other seniors housing opportunities, please contact Ryan Saul at ryansaul@slibinc.com or Jeff Binder at binder@slibinc.com of Senior Living Investment Brokerage, Inc.

April 20, 2016
Grant Kief

Matthew Alley Closes on Assisted Living Transaction

Assisted Living Transaction
Assisted Living Transaction

Assisted Living Facility Sale

Matthew Alley of Senior Living Investment Brokerage, Inc. recently closed on a 60 unit Assisted Living facility in Kingsland, Texas. Kingsland is 65 miles northwest from the downtown Austin. The facility was built in 1997 and is located on a total of 7.87 acres. The property has maintained a census around 73% for the past couple of years.

Sale Overview

The Assisted Living transaction was $3,785,000 or $63,083 per unit.

Senior Living Investment Brokerage, Inc. Seller Representation

The Seller was a Texas based owner operator that focuses on skilled nursing. The Buyer is an independent owner operator headquartered in the Dallas/Fort Worth metropolitan area.

Contact Matt Alley

For additional information on this assisted living transaction or on other transaction completed by Matthew Alley, please contact Matt at 630/858-2501 or alley@slibinc.com or www.matthewdalley.com.

April 19, 2016
Grant Kief

Jason Punzel Sells Independent Living Communities in Washington

Senior Living Investment Brokerage, Inc recently sold two Independent Living Communities in Washington. One of the Independent Living community is 38 units and was built in 1986 while the other property is 43 units and was built in 1987. Senior Living Investment Brokerage was able to procure multiple offers from local, regional and national buyers. The Buyer chosen is a regional operator headquartered in the Pacific Northwest. The Buyer will manage the communities and plans to invest in capital improvements at both locations. The cap rate was 11.7% with an average census of 90%. For additional information on this Independent Living Community or to inquire as to how Senior Living Investment Brokerage can assist you, please contact Jason Punzel at 630/858-2501 or punzel@slibinc.com

April 18, 2016
Grant Kief

Senior Living Investment Brokerage Handles Assisted Living Sale

Patrick Burke, Bradley Clousing and Toby Siefert of Senior Living Investment Brokerage, Inc. recently closed on an Assisted Living Sale in Virginia. The Assisted Living sale consists of 42 units, 33,480 square feet on 5.3 acres in the scenic Appalachian Mountains of Southwestern Virginia. Of the 42 units, 28 have private bathrooms and 14 units have shared baths btween the resident rooms. The community includes 12 units dedicated to Memory Care. The purpose built building was originally constructed in 1989 with an addition in 1994. The building underwent a major renovation in 2014. Once the improvements were completed, the lender/bank (Seller) did not allow the building to reopen as it was clear ownership was headed to default. As a result, the asset was vacant at the time of sale and had not reopened after the renovations were completed. The Buyer is a Virginia based assisted living and skilled nursing operator with five other locations throughout the State. Licensing was approved upon change of ownership and the new owner hopes to open and lease up the community in 2016. For additional information on this Assisted Living sale or to inquire as to how Senior Living Investment Brokerage can assist you with your investment goals, contact Toby Siefert, Brad Clousing or Patrick Burke at 630/858-2501.

April 15, 2016
Grant Kief

Jason Punzel Closes Assisted and Independent Living Sale

Jason Punzel recently closed on an Assisted and Independent Living Sale in Washington. The 107 Unit community is located in an affluent suburb of Seattle. The property was built in phases in 2000 and 2004 with additional land for future expansion. The census at the time of sale was 90%, the cap rate was 6.94% and the sale price per unit was over $215,000. Senior Living Investment Brokerage, Inc. was able to procure six qualified offers from regional and national operators. The ultimate Buyer was a REIT based on the east coast that plans on investing over $1,000,000 in capital improvements to make the property a “best in class” community in the area. The Seller was a local owner operator retiring from the business. For additional information on this Assisted and Independent Living sale or how we can assist you on procuring a sale of your property, contact Jason Punzel of Senior Living Investment Brokerage, Inc. at punzel@slibinc.com or 630/858-2501

April 14, 2016
Grant Kief

Senior Living Investment Brokerage, Inc. Sells Skilled Nursing Facility

Toby Siefert, Nick Cacciabando and Pat Byrne of Senior Living Investment Brokerage, Inc. closed on the second skilled nursing facility of a four facility sale. This community was located in Massachusetts with the New Jersey transaction already closed and sales in Vermont and Connecticut pending. The entire portfolio consisted of 436 beds at $27,000,000. The Buyer and Seller agreed to close on each individual facility as the change of ownership for each location was approved. This 1976 constructed skilled nursing facility consists of 73 beds in a one story, 18,541 square foot property. The census at the time of sale was 76% with a 20.8% quality mix. of the 73 beds, there are 13 semi-private resident rooms, 1 three-bed ward and 11 four-bed wards. At the time of sale, the EBITDA was ($41,489). Despite these challenges, Senior Living Investment Brokerage was able to procure multiple offers for the portfolio as a whole. For additional information, contact Senior Living Investment Brokerage, Inc. Toby Siefert at 630/858-2501. Pat Byrne or Nick Cacciabando at 314/961-0070

April 13, 2016
Grant Kief

Matthew Alley Represents Skilled Nursing Facility Sale

Skilled Nursing Facility Sale
Skilled Nursing Facility Sale

Skilled Nursing Facility Sale

Matthew Alley of Senior Living Investment Brokerage, Inc. procured a 62 Bed Skilled Nursing Facility Sale in Texas. Of the 62 Skilled Beds, 49 are dually certified. The building, originally built in 1964, is approximately 13,043 square feet on approximately 3.31 acres of land. Located 40 miles from San Antonio, the census at the time of sale was 48%.  Despite this obstacle, Matt was able to procure multiple offers on the Seller’s behalf.

Sale Overview

The Assisted Living transaction was $3,785,000 or $63,083 per unit.

Senior Living Investment Brokerage, Inc. Seller Representation

The Seller was a private owner operator and the Buyer is also a private owner operator seeking to expand their existing portfolio in South Texas.

Contact Matt Alley

For additional information on this Skilled Nursing Facility sale or to request a confidential proposal to determine the value of your seniors housing community, contact Matthew Alley of Senior Living Investment Brokerage, Inc. at 630/858-2501 or alley@slibinc.com or www.matthewdalley.com.

April 12, 2016
Grant Kief

Senior Living Investment Brokerage Sells Two Eastern Pennsylvania Communities

Toby Siefert and Matthew Alley of Senior Living Investment Brokerage, Inc. recently sold two Seniors Housing Communities in Eastern Pennsylvania. The first property consisted of 118 Personal Care units and 12 Independent Living units consisting of 58,800 square feet on 4 acres. Originally constructed in the 1960’s with updates and additions through 2004. Census was 85% all of which is private pay. The other community, in the same city, has 98 Personal Care units and 13 secured Memory Care units consisting of 44,525 square feet originally constructed, expanded and renovated between 1987 and 2000. Census was 66% and all the residents are private pay. The cap rate at the time of sale was 6.8%. The Seller is a private owner exiting the business. This was their only seniors housing communities. This is the first acquisition by the Buyer. The principal is creating a new company but has significant experience as an operator of seniors housing. The new owner will focus on marketing to drive census and increase margins with plans to re-finance to a HUD mortgage after stabilizing census. For additional information on this transaction or how Senior Living Investment Brokerage can assist you, contact Matthew Alley or Toby Siefert at 610/858-2501 www.slibinc.com

April 11, 2016
Jason Punzel

Do Rising Interest Rates Impact the Value of my Senior Living Community?

Do Rising Interest Rates Impact the Value of my Senior Living Community? By Jason Punzel

Over the past several years, interest rates have remained extremely low.  The 10 year US Treasury rate (a common benchmark for financial instruments) reached an all-time low in July, 2012, at 1.53% and today is around 1.8%, the Federal Funds Rate has been close to 0% for years and the Fed made its first rate increase this past December.   The 10 Yr Treasury hit an all-time high in August, 1981, at 15.32% and has averaged 4.64% since 1870.   Thus, there is a high likelihood that interest rates will increase as they revert back to the historic mean.

Interest rates are a measure of an investor’s desired rate of return.   An interest rate, or a rate of return, is made up of three components, risk, inflation, and time value of money (allowing someone else to use your money).   The theoretical risk free investment is a US Treasury or FDIC insured savings account/CD.   Thus, all other investments can be benchmarked by these indexes.  The greater the perceived risk of an investment, the greater the spread, or “risk premium”, will be for that investment over the US Treasury.   Today, average capitalization rates (rates of return/risk premium) for assisted living facilities are around 7.5%, or about 500 basis points above the 10 US Treasury.   This is the risk premium investors place on assisted living versus the alternative of investing in a “risk free” US Treasury bond.   When the rates increase on US Treasury bonds, typically cap rates increase on senior living communities (or any investment), assuming the risk premium stays the same.

To determine the value of a senior living community, the Net Operating Income (NOI) is divided by the Cap Rate.

Net Operating Income (NOI) /Cap Rate = Value  – (the higher the cap rate, the lower the value).

Thus, as interest rates, and cap rates increase, values go down.  Below are several examples:

NOI = $600,000, Cap Rate = 7%, Value = $8,571,429

NOI = $600,000, Cap Rate = 8%, Value = $7,500,000

NOI = $600,000, Cap Rate = 9%, Value = $6,667,000

Conclusion:

As you can see, for every 1% increase in the cap rate, the value drops by over 11%.   Thus, if interest rates continue to rise over the next several years, it could dramatically affect pricing.   If an owner has a desire to sell their community anytime in the next several years, now might be an opportune time.

Contact Information:

For a complete analysis on how interest rates can affect your community’s value, both now and in the future, contact Jason Punzel, Senior Living Investment Brokerage, INC, at 630-858-2501 x 233 or punzel@slibinc.com

April 11, 2016
Grant Kief

Toby Siefert Hired to Sell Skilled Nursing Facility in the Northeast

Senior Living Investment Brokerage Hired to Sell Skilled Nursing Facility

Toby Siefert of Senior Living Investment Brokerage, Inc. recently sold a 30 Bed Medicare/Medicaid Certified Facility in Northern Vermont. Senior Living Investment Brokerage, Inc. was hired to market the community because it was the smallest property in the owner’s portfolio and did not fit their investment objectives. The site did not offer the opportunity for expansion. The physical plant was older and had certain limitations. Census at the time of sale was 81% with a quality mix of 50%. The Buyer is a local family that owns and operates a seniors housing/long term care community in the same town. For additional information on this transaction or questions regarding the value of your seniors housing/long term care facility, please contact Toby Siefert of Senior Living Investment Brokerage, Inc. at 630/858-2501 or siefert@slibinc.com

April 8, 2016
Grant Kief

Ryan Saul Announces Illinois Skilled Nursing Facility Sale

Ryan Saul of Senior Living Investment Brokerage recently announced a Skilled Nursing Facility sale in Illinois. The sale also included a rehab company, in-house therapists and a staffing company. The 106 bed community was originally built in 1972 with a 16 bed, 10,000 square foot addition completed in 1985. The therapy wing was added in 2008 and an interior renovation was completed in 2009. The entire facility is comprised of approximately 40,933 square feet and is in 4.89 acres. At the time of the execution of the sales contract, occupancy was 93% on 100 functional beds and the contract price was $13,500,000. But based on a census MAC clause, the final sales price was adjusted by ($127,358). The Seller was a family owned business exiting the long-term care industry. Due to current market M & A conditions, they made the decision now was an ideal time for them to divest of their skilled nursing facility and retire.The Buyer, a private family based organization, was also based out of Illinois and owns and operates a nearby skilled nursing facility. The Buyers intend on doing an expansion to the current building with all private suites. The quality mix at the time of sale was 98%. The transaction closed at an 8.23% cap rate, 0.70 GIM and over $126,000 per bed. For additional information on this Skilled Nursing Facility Sale or for a confidential analysis of your seniors housing property, contact Ryan Saul of Senior Living Investment Brokerage, Inc. at 630/858-2501 or ryansaul@slibinc.com

April 6, 2016
Grant Kief

Skilled Nursing Facility Sale

Skilled Nursing Facility Sale
Skilled Nursing Facility Sale

Skilled Nursing Facility Sale

Matthew Alley of Senior Living Investment Brokerage, Inc. recently closed on a Skilled Nursing Facility Sale in Texas. The sale consisted of a 51 bed Skilled Nursing Facility that had recently closed. Prior to closing of the facility, the census was 45.5%. The property, consisting of 17,545 square feet on 2 acres and built in 1970, is in a rural community approximately 100 miles west of Fort Worth.  The Buyer of the property owns the only other Skilled Nursing Facility in this rural town and many of the residents moved to the Buyer’s facility. The Medicaid beds from this facility were transferred to the Buyer at closing.

Sales Overview

The Assisted Living Facility transaction for $850,000, which was $16,667/bed and 0.65x revenues.

Senior Living Investment Brokerage, Inc. Seller Representation

The Seller is a private owner/operator and the Buyer is a regional owner/operator headquartered out of Houston.

Contact Matthew Alley

For additional information on this Skilled Nursing Facility Sale or for a valuation on your seniors housing property, please contact Matt at 630/858-2501 or alley@slibinc.com or  www.matthewdalley.com.

April 5, 2016
Grant Kief

Senior Living Investment Brokerage Sells Skilled Nursing Facility Portfolio

Toby Siefert, Nick Cacciabando and Pat Byrne of Senior Living Investment Brokerage, Inc. recently sold a four facility portfolio of skilled nursing facilities in the Northeast. The Buyer and the Seller agreed to close on each facility separately as the change of ownership for each location was approved. A 105 bed skilled nursing facility in New Jersey was the first facility to transfer ownership. The property was originally constructed in 1963 and there is additional land on site for future expansion. The property consists of 44,652 square feet with 5 private resident rooms and 50 semi-private resident rooms. The census was 76% with a quality mix of 29.7%. The building had been well maintained with over $1.7 million in CapEx between 2010 and 2013. Senior Living Investment Brokerage, Inc. procured multiple offers for the portfolio as well as for individual facilities within the portfolio. It was in the Seller’s financial interest to sell the properties as a portfolio. The sales price for this property was $9,900,000. For additional information, please contact Senior Living Investment Brokerage, Inc. at 314/961-0070 for Pat Byrne or Nick Cacciabando or 630/858-2501 for Toby Siefert.