What is the optimum and/or minimum size for a Seniors Housing Community sale?

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When considering a sale, there is no minimum size for an assisted living facility (or independent living facility).   Different room counts will attract different types of buyers.  A REIT or large private equity company will not have an interest in a single, 16 unit assisted living facility.  Likewise, a local nurse typically will not  have the financial ability to buy a 100 unit assisted living facility.

As a company, we have found that most larger Buyers have a minimum threshold of 40 units for an assisted or independent living facility, with a preference of over 60 units.    However, there are exceptions to every rule.   If there are multiple smaller facilities (15-25) units on the same parcel, or nearby, often times larger Buyers are still interested.   We have also had a lot of success selling smaller communities (25-30+ units) that are in favorable locations in larger cities, newer, and specialize in higher end private pay residents who prefer a smaller setting.  Recently, we closed on a newer 25 unit assisted living community in the Portland area that sold for over $220,000/unit.   It was 100% private pay with high occupancy and excellent quality finishes.   Since there are so many variables that factor into a purchase decision by any Buyer, it is important to work with an expert in valuing and selling a senior living community to ensure the optimal pricing and terms.

For more information on what your senior living community could be worth, please contact Jason Punzel at [email protected] or 630-858-2501 x 233.

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How to Sell Assisted Living Facilities Faster (part 2 of 2)

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Deciding when to sell your assisted living facility (Independent Living Community or skilled nursing facility) can be a daunting task and there are many factors to consider.   However, once an owner decides to sell, typically they want to close as quick as possible.   As a company, Senior Living Investment Brokerage, Inc has sold more senior living and skilled nursing facilities than any other brokerage company over the past seven years.  Over the years, we have found a number of things an owner can do to help sell their senior housing community faster, below is the second half of our top six things to do to sell your facility faster:

4. Have your attorney get a preliminary title report when you list the property – After an offer has been accepted and the buyer is going through their due diligence period, title issues can often cause delays in closing. If a property has been owned for a long time, and no recent debt has been placed on the property, the title probably has not been reviewed by an attorney for years.  Old liens, mortgages, improper zoning are just a few issues that could come up.   By having an attorney review a title policy early on in the process, many of these issues can be resolved prior to the buyer’s attorney examining the title policy.

5. Have an ALTA survey completed ahead of time – An Alta survey, in conjunction with an attorney review of the title policy can help reduce possible delays in closing. A survey can reveal encroachments, easements and other issues on the site that a buyer may or may not have an issue with.   Having a survey that is already completed that a seller can show to a potential buyer will save time and make the closing process go smoother.

6. Fix any major capital items – All buyer’s will perform some type of building inspection and expect that the roof, foundation, mechanicals, etc are in good working order. As a seller, if you know there is something that needs to be fixed, it makes sense to do it ahead of time and not wait and hope a buyer won’t find it.

Many of the above suggestions will cost the seller both time and money ahead of time.  The seller must weigh the risk of spending their time and money with helping the closing go quicker.  Ultimately, if the seller is committed to selling, these expenses will be a good investment to ensure the smoothest closing possible.

For more information on selling your seniors housing property, please contact Jason Punzel at 630-858-2501 x 233 or [email protected].

The post How to Sell Assisted Living Facilities Faster (part 2 of 2) appeared first on Senior Living Investment Brokerage.

How to Sell Assisted Living Facilities Faster (part 1 of 2)

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Deciding when to sell your assisted living facility (Independent Living Community or skilled nursing facility) can be a daunting task and there are many factors to consider.   However, once an owner decides to sell, typically they want to close as quick as possible.   As a company, Senior Living Investment Brokerage, Inc has sold more senior living and skilled nursing facilities than any other brokerage company over the past seven years.  Over the years, we have found a number of things an owner can do to help sell their senior housing community faster, below is a list of the top six (3 will be in this blog and 3 will be in a future blog post):

  1. Price the community reasonably – Of all the things an owner can do to sell their senior housing community quickly, pricing it reasonably is the most important. Overpriced properties do not sell.   They tend to sit on the market for months as buyers do a quick analysis and pass.  Eventually, the seller drops their price to a reasonable market price.   Unfortunately, many buyers will not go back and re-look at the property or they wonder if the sell will have additional price drops.  Effectively the property becomes a stigmatized property.  Financially qualified buyers tend to be smart and know the market well.  They purchase properties that make financial sense and don’t get persuaded emotionally.  Over pricing a property in hopes to “get lucky” and find a buyer that will pay the higher price rarely works and usually ends up wasting time and often times can result in a lower price than if the seller priced the property reasonably from the beginning.
  2. Hire an experienced brokerage company – An experienced broker can help a seller price the property reasonably. It is important to make sure the brokerage company has a team of brokers that work together as a team to contact hundreds of potential buyers across the country quickly.  Additionally, most owners want a confidential sale of the seniors housing community and many brokers do not do a good job of this.
  3. Talk to an attorney and accountant ahead of time – Owners should talk to their accountant before the marketing process starts to make sure they understand the tax implications of the sale and decide if they want to consider a 1031 Exchange. Additionally, it is very important for a buyer to be working with an attorney who has specific experience in health care real estate sales.  Most brokers can recommend a good attorney if an owner does not already know one.  If an owner waits until offers start to come in to talk to their accountant and retain an attorney, it can slow down the process and make the seller look very inexperienced.

For more information on selling your seniors housing property, please contact Jason Punzel at 630-858-2501 x 233 or [email protected].

The post How to Sell Assisted Living Facilities Faster (part 1 of 2) appeared first on Senior Living Investment Brokerage.

Seniors Housing – Small buildings vs. Large buildings

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As a company, Senior Living Investment Brokerage Inc, sells all types of senior living and long term care communities.   One type of senior living community type we are seeing more of is the “pod” style of smaller buildings grouped together on a single parcel of land.   Thus, instead of having one 80 unit facility, there might be five, sixteen unit facilities with one of the facilities being a bit larger where more of the community activities take place.  There are some advantages and disadvantages to them.   We find that often times residents like the feel of the smaller facilities because they feel more like a home and it is easy for them to get to know the other residents.   From a marketing/occupancy standpoint, these types of facilities also seem to be attractive and often times enjoy very high occupancy.

The biggest disadvantage is staffing and efficiency.  Depending on the state and acuity level, often times these smaller facilities require a staff person to be in each facility 24 hours a day.   For only 12-16 residents, this can be very inefficient and costly.  Also, while each facility usually has its own kitchen, it can be very inefficient to have a cook in each facility or to cook in one facility and have to transport to the other facilities.   We often find that this type of community set up operates at an operating margin around 25% while a similar age/acuity level facility that has all of the residents under one roof might operate at a 32-35% margin.  Thus, it limits that maximum amount of cash flow a community can create, decreasing its value.   However, smaller facilities can be more attractive to residents and thus have great occupancy, some of the cash flow deficit may be eliminated.  While we see more buyers prefer the larger facility communities, both styles can be very effective in delivering great resident care and producing profitable returns for the owner.

To have Senior Living Investment Brokerage, Inc. help you analyze the value of your senior living community, contact Jason Punzel at 630-858-2501 x 233 or [email protected].

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