Skilled Nursing Sale Handled by Patrick Byrne and Jeff Binder

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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 [email protected] or Patrick Byrne at [email protected] 314/961-0070.

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Is “Price Per Unit” a Good Valuation Metric for Senior Living

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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 valuing a senior living community?

In 2015 the average price per unit for Class A Independent Living Facilities was $248,500 and Class B wa $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.

Because of the wide range in prices, we strongly recommend that owners focus more on cap rates and internal rates of return when valuing their properties.   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.

To discuss the value of your Senior Living or Skilled Nursing Facility please contact Jason Punzel at 630-858-2501 x 233 or [email protected]  or Joy Goebbert at 630-858-2501 x 230 or [email protected].

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REITs slowing down – Is the Seniors Housing Market?

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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.

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