Toby Siefert Handles Pennsylvania Sale

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Senior Living recently sold a 10 unit memory care, 11 unit personal care and 4 unit independent facility in a rural area of Pennsylvania. The 1975 building is licensed for 44 beds. The census is 82% and consisted mostly of private pay residents but did have a few that are SSI and VA residents. The Seller is a non-profit entity with additional communities located throughout the state. This was their smallest community and it was currently operating in the red. A local, for profit owner/operator purchased the facility. The building is on 16 acres offering potential for expansion. For additional information, please contact Toby Siefert at 630/858-2501 or [email protected]

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Senior Living Investment Brokerage Completes Portfolio Sale

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Ryan Saul, Brad Clousing and Jeff Binder closed the second portion of the Hollinger Group portfolio. This portion of the portfolio consisted of 6 seniors housing communities located in New Jersey, Pennsylvania, Virginia and Maryland. The properties were built between 1986 and 2012 and totaled 299 beds. This portion of the portfolio sold for $54,475,000 at a 7.48% cap rate. The overall census was 94% and closed escrow at over $182,000 per unit. The Seller is exiting seniors housing to focus on rehab, LTACH and CCRC’s. The Buyer was Care Investment Trust who selected a strong, regional operator to manage the properties on their behalf. Senior Living had sold the first portion of the portfolio the previous month for $29,125,000 (see earlier blog post) bringing the total portfolio value to $83,600,000.

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Matthew Alley Sells Assisted Living Community in Texas

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Senior Living Investment Brokerage sold a 33 unit Assisted Living Facility in Texas. The property consists of 3 separate buildings on 5.36 acres built between 1987 and 2007. Despite the challenge of three buildings, Senior Living was able to procure a sale at a 10.8% cap rate. The census at the time of the sale was 91%. The Seller was an independent owner/operator. The Buyer is an independent owner/operator from Dallas/Fort Worth area. For additional information, please contact Matt Alley of Senior Living at 630/858-2501 or [email protected]

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Should I sell or lease my Senior Living Facility?

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When considering to exit the senior living industry, there are two main alternatives to consider, selling the facility fee simple, or leasing it to an operator.  There are advantages and disadvantages of each option.

The biggest advantage of selling an assisted living facility (or independent living facility) is an owner receives all of their cash up front and has no future financial liabilities or risk.  The owner no longer has the risk of the market going down in the future, new government regulations, overbuilding, etc.   The biggest disadvantage of selling is paying the capital gains tax, which can be substantial for those owners who have owned their facilities for a number of years.

Leasing, on the other hand, has the advantage of not having to pay a large sum of capital gains tax and the advantage of receiving monthly rent.  For those owners who do not need a large amount of cash upfront, leasing can provide a great residual income for years.    However, the disadvantages of leasing are many.  To begin with, an owner must find a quality tenant that has the operational and financial ability to run the facility for the length of the lease.   If the operator defaults on the lease, the owner could be in the position to have to take over the operations of the facility, which could be in poor condition.  Additionally, at the end of the lease, the owner still has to make a decision on what to do with the facility.  If the market is worse, and/or if there are new competitors in the area, the facility could be worth substantially less than at the beginning of the lease.

When the market to sell a senior living facility is good, like it is today, it typically makes more sense to sell and eliminate the risk of an operator defaulting and/or the facility being worth a lot less at the end of the lease.    However, when the market to sell is not as good (like it was in 2009-2010) it might make more sense to lease the facility to a quality operator.

For more information on different exit strategies, contact Jason Punzel at [email protected] or (630) 858-2501 x 233.

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