Brad Clousing and Patrick Burke Sell a Florida Assisted Living Community

Brad Clousing and Patrick Burke recently sold a 50 Unit Assisted Living Community in Naples, Florida. The transaction was subject to the assumption of an approximately $3.3 million HUD loan and replacement reserve balance. The sale price of the 1997 building was $5,600,000. The census at the close of escrow was 80% and the cap rate was 3.7%. The Seller was a partnership based in Naples and operated by a related entity. The Buyer was a Memphis based partnership and will be operated by a Florida based management firm. The Buyer intends to improve census and operating margins through a dedicated focus on memory care. For additional information on this or other Senior Living Investment Brokerage transactions, please contact Brad at clousing@slibinc.com or Patrick at burke@slibinc.com 630/858-2501

Ryan Saul Secures Buyer for Illinois Skilled Nursing/Independent Living Community

Ryan Saul has sold a 62 bed skilled nursing facility with 8 independent living units in the rural community of Walnut, Illinois. The facility, on 11.5 acres, has minimal staff turnover and great quality care. The skilled portion was built in 1977 and the independent portion of the building was built in 1998. This was a rare situation where the transaction was a stock sale. The Selling entity consisted of 26 stockholders from the local community. The buyer was currently managing the facility making them the best fit for a stock sale/purchase. For additional information, please contact Ryan Saul at ryansaul@slibinc.com or 630/858-2501.

What you can do to close faster

In case you didn't know already, we are in a Seller's market.  It is still important for Sellers to be organized and prepared for due diligence to ensure a faster close.  Utilizing a broker with experience and a well organized data room will save you time and money in the long run.  Here are just a few items that you can focus on in order to make due diligence easier on everyone:

1) Real Estate: Your building (physical plant) can often be the main focus of due diligence.  Before you start the sales process, make sure you have evidence of ownership entities and that you are zoned correctly.  Also, make a list of any Environmental issues that you are aware of and be prepared to correct these problems, if you haven't already.  The best thing that you can do is develop a plan in advance.  Make your own list of contractors in case you need them for things like roof, foundation, HVAC and Environmental.  Accompany the Buyer's professionals on the tours so that if the need comes up for you to get a second opinion, you can explain the issue to your contractors.

2) Personal Property: Make a list of inventory that is going to be excluded from the sale.  It is also a good idea to remove these items before going to market.  For instance, if there is art or a sculpture that has sentimental value, remove it so that a buyer doesn't think it is staying after the sale.  Also, look into your community name, entities, phone numbers, website/Email, etc. and find out what can be transferred and what notices are necessary.

3) Employee Matters:  Make sure that you run a report with all of your employees.  Know what your PTO liability is going to be and make a plan for how that is going to be paid out.  You might want to leave a credit for a buyer so that they can pay out employees.

4) Insurance/Litigation:  Contact your insurance agent and obtain a Loss Run report for the last five years.  Make a list of any outstanding litigation and potential liabilities that you are aware of that need to be identified in the Purchase and Sale Agreement. 

5) Surveys:  Put together state and federal health surveys and any POC for the last three years.  It is going to be important that you are in compliance and you are going to want to show a buyer you are in compliance and what you have done in order to stay in compliance.

6) Finances: Obtain a copy of your mortgage and note.  Make sure there is no lockout or prepayment penalty.  Contact your tax accountant and discuss your potential tax liabilities associated with a sale.  They might be able to give you advice on how to mitigate that liability on the front end as well.

For more information on how to sell your facility faster and at a top-of-the-market price, contact Ryan Saul at ryansaul@slibinc.com or 630-858-2501.

Can Interest Rates Go Any Lower?

Over the past several years, interest rates have been extremely low.  The 10 year US Treasury rate (a common benchmark for financial instruments) reached an all-time low in July, 2012 at 1.53% and today is around 2.64%, the Federal Funds rate has been close to 0% for several years.   The 10 Yr Treasury hit an all-time high in August, 1981 at 15.32% and has averaged 4.64% since 1870.  Many people assume interest rates have to increase since they have been the lowest that most can remember.

However, it is possible that might not be the case.  Japan’s 10 Year Treasury rate has fluctuated between .5%-2% from 1998-present and is currently at .59%.  Japan had an incredible economic run for years that ended in a deep recession in the early 1990s, leading to historically low interest rates for almost two decades.  However, unlike the US, Japan has suffered a declining population, bouts of deflation and near constant recessions over the past 20 years. 

While Japan is an example that American interest rates COULD continue to stay low, or even decline, the odds are certainly greater that they will increase.   America has an increasing population, is the world’s technology leader, has the best University system in the world and is still the world’s largest economic and military power.  As long as America’s economy grows, interest rates will eventually raise back to the long term average.  Thus, now is a great time to consider selling.

For a complete analysis on how interest rates can affect your community’s value, both now and in the future, contact Jason Punzel – punzel@slibinc.com

Nick Cacciabando Sells Kansas Retirement Community

Nick Cacciabando has sold a 54 bed Skilled Nursing Facility and 40 unit Residential Care Facility. Census at the time of sale was 94.7% and the capitalization rate was 9.9%. The communities were family owned and operated by a local owner/operator. These were the Seller's only remaining long term care/seniors housing communities as they are retiring from the business. The Buyer is a regional owner/operator with numerous properties and their headquarters are nearby. This was a strategic acquisition as they have a significant presence in Kansas and are hoping to realize operational efficiencies through economies of scale. For additional information, please contact Nick at nbando@slibinc.com or 314/961-0070.