buy assisted living – Page 2

Over the past couple of years, we have seen capitalization rates (defined as Net Operating Income divided by Purchase Price) drop steadily to historically low levels, which in turn has led to purchase prices being driven upwards.

Now is the time to take advantage of this market and either exit the business through a sale entirely or divest of a few properties from your portfolio that do not fit with your current strategy.

Why is the market so strong right now? More so than any other factor, the market has been impacted by the increased availability of capital (both debt and equity) and the low cost nature of said capital. Interest rates are still at historically low levels, and while rates may creep up a bit, most analysts expect a measured increase.

During the Great Recession, transactions were mainly financed by three different methods: (1) all cash; (2) HUD financing; or (3) mostly public REIT financing. Community banks were only lending to their best clients on the most conservative of terms, and there were not a great deal of smaller, private REITs or private equity firms willing to support the acquisition of seniors housing facilities.

Over the past couple of years, community banks have become more aggressive as they are sitting on a large reserve of cash that they need to deploy and there has been a growth in the private REIT space. According to investment banking firm , Robert A. Stanger & Co., and reported by Seniors Housing Business, a handful of non-traded REITs devoted to seniors housing have amassed $6.4 billion in equity over the past few years. The availability of these capital sources has had a huge impact on the seniors housing acquisition market in the form of increased pricing.

The most recent example of this was a $30M nursing home portfolio that Senior Living completed in Texas. It was purchased by an independent, regional owner-operator and financed by a community bank out of Louisiana. Until recently, that size of transaction would have been almost certainly REIT financed or purchased by a large, national owner-operator.

If you have any questions on the topic of this post or would like a confidential valuation of part or all of your seniors housing portfolio, please contact Matthew Alley at 630-858-2501 ext. 225 or [email protected].

The post How additional sources of funds are impacting the seniors housing market appeared first on Senior Living Investment Brokerage.

National Investment Center (NIC) holds their main industry conference every Fall and a Regional conference every Spring, typically alternating between Florida and California. The NIC conferences are typically attended by REITs, private equity companies, operators, lenders, brokers and industry suppliers of the Seniors Housing Industry. The conference consists of speakers, educational sessions and a focus on networking meetings.

After recently returning from the Spring NIC conference in San Diego, I have a few observations:

The conference was well attended. The final attendee list showed about 1,000 attendees, which is an excellent turnout for a Regional conference.
The overall mood of the conference continues to be very upbeat in terms of buying, selling, financing and overall business operating fundamentals.
There is an abundant supply of capital, both debt and equity, available for acquisitions.
There is some concern that the sales market could be overheating as property values continue to increase.

Overall, I think the sales/acquisition market is in a good equilibrium with an ample supply of buyers, sellers and capital. It is probably more of a seller’s market at the given moment. However, given the low interest rates and lack of other attractive investments, it is still a good time for buyers as well.

If you are considering buying or selling a senior living community, please contact Jason Punzel at 630-858-2501 x 233 or [email protected].

The post NIC Spring Conference appeared first on Senior Living Investment Brokerage.

Ryan M Saul