Patrick Burke and Ryan Saul Sell a Wisconsin ILF/ALF

Ryan Saul and Patrick Burke sold a 59 unit Independent Living and Assisted Living Facility located in Green Bay, Wisconsin. Originally built in 2004, the facility underperformed due to low rents and historical census aroound 65%. In 2006, the owner defaulted on their loan with a regional bank. In 2007, a court appointed receiver was assigned which hired an experienced seniors housing operator that began offering additional services, increased census and raised rents. Through a well implemented marketing plan, Senior Living Investment Brokerage was able to field multiple, qualified offers on the facility. The facility ultimately sold for $2,600,000 which translates into a 1.5% capitalization rate/4.8 GIM (no, the numbers are not transposed). Senior Living specializes in assisting owners/sellers in the sale of distressed assets. For additional information, please contact Patrick or Ryan at 630/858-2501.

Slow time of year? I think not.

I was hoping to slow down, catch up on paperwork and read a good business book this holiday season. That isn't happening. A lot of clients wisely use this time to have a confidential proposal done. That is just fine with me. With all this activity, that means 2012 should be another record year. We are working on a number of closings over the next two weeks and our proposals have increased dramatically. If you were frustrated by the lack of deals out there to purchase over 2011, hold on, I think 2012 will be the year of opportunities. If you have thought about selling, now is a great time to have me do a confidential proposal to see what your property is worth.

Please call me at 630-858-2501 or Email Ryan Saul at ryansaul@slibinc.com to discuss.

Merry Christmas from the IRS

Based on a recently released IRS Memorandum, buildings that provide housing to seniors in communities that offer a variety of services are now classified as residential rental property. This includes facilities offering independent living, assisted living, and nursing care. There is no requirement stating a kitchen must be present in each unit in order to be eligible for the classification.

The benefit of the residential rental property classification is that a senior living building can be depreciated over a 27.5 year period instead of the 39-year period that applies to nonresidential rental property. Most owners do not hold a building long enough to full depreciate an asset. Therefore this increased basis will allow for additional tax shelter for owners.

In fact, even if your building is already being depreciated at the 39-year period you can reduce the depreciable life to 27.5 years. A Form 3115-Change in Accounting Method can be filed in order to make the correction. This change could translate into large tax savings and/or deferrals in the current year and on a go forward basis.

Please contact Bradley Clousing at (630) 858-2501 or clousing@slibinc.com for additional information or for a referral to a senior housing specific accounting firm.

Patrick Byrne and Jeff Binder Sell Missouri Assisted Living Facility

Patrick Byrne and Jeff Binder sold a 40 Bed/28 Unit Assisted Living Facility located in Saint Louis County. Originally constructed a short-term rehabilitation facility, it was purchased and renovated into an assisted living facility by a non-profit organization affiliated with a Catholic based organization. In recent years, the funding for the facility had diminished and a decision was made to close the facility in June, 2011. Senior Living was tasked with repositioning and marketing a vacant building which had lost value upon closure. After only 3 weeks of marketing, Senior Living identified 3 bidders on the property. The Buyer intends on reopening the facility after some minor physical plant changes and redecorating. The Buyer will focus on the private pay market. Built in 1984 and located in a working class community, the 17,864 square foot facility sold for $1,200,000 or $30,000/bed. For additional information, please contact Pat or Jeff at 314/961-0070.

Matthew Alley Sells Another Pair of Texas SNF's

Matt Alley has sold two Texas Skilled Nursing Facilities located in Abilene and Waco. They are both 120 beds and specialize in dementia care. The facilities were owned by a non-profit organization based in Austin. The Seller specializes in Continuing Care Retirement Communities and these were there only stand alone skilled nursing facilities. Built in 1994 and 2004, these high quality facilities were profitable with an average 85% census, but should enjoy the benefits of being part of a large regional operator. The Buyer is a publicly traded REIT specializing in healthcare. The REIT will be leasing the facilities to an operator headquartered in Maryland that operates several SNF's in Texas. The facilities sold for over $59,000/bed at a 10.4% capitalization rate. For additional information, contact Matthew Alley at 630/858-2501 or alley@slibinc.com

Demand Demand Demand Demand - Oh, and Supply

Did you know that here in the US one baby boomer is turning 65 every eight seconds?? That is a shocking statistic. That rate is going to continue for the next 20 years!

With the lack of construction financing over the last several years my guess is that there is going to be a significant shortage of Seniors Housing and long-term care facilities across the country. What does that mean for you?

Current facilities, especially those with land to expand, are going to be extremely valuable. Now would be an ideal time to look into selling your seniors housing or long-term care facility. You might be tempted to wait and time the top of the market. However, what happens if/when interest rates skyrocket? Waiting could result in that appreciation being wiped out with interest rate increases that erode buying power. We know the market is strong today and there is very little product available. With the low cost of capital and the current demand, now is also an ideal time to purchase. Call Ryan Saul(630-858-2501) or Email me to discuss the value of your facility.