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.

Ryan Saul and Brad Clousing Sell Ohio CON

Brad Clousing and Ryan Saul have sold an Ohio Certificate of Need. The Seller had purchased a portfolio of facilities and elected to close one of the facilities located in Toledo due to poor census. The decision was made to sell the 100 Bed CON and the facility separately. The Buyer plans on developing a new campus at another nearby location that would include both skilled nursing and assisted living on the same campus. For additional information, please contact Ryan or Brad at 630/858-2501.

Brad Clousing Brokers Florida Skilled Nursing Facility

Brad Clousing has sold a 101 Bed Sarasota, Florida, Skilled Nursing Facility. This was the only skilled nursing facility owned by the Seller, a local non-profit organization. The Seller will continue to own and operate the adjacent assisted living facility and age-restricted apartments. Although occupancy has been an issue recently(61%), the facility was still profitable. The facility is in good physical condition and is competitive in the local market. The Buyer is a regional owner/operator of 6 other SNF's and plans to increase census and improve operating efficiencies. With the quality physical plant coupled with the favorable Sarasota market, the Buyer should be able to generate strong returns. The 44,651 sq. ft facility was built in 1967 with an addition in 1990. Brad was able to generate multiple offers by actively marketing the facility to qualified Buyers. Thje final sales price was $4,975,000 ($49,257/bed) which translated into a cap rate of 6.8% and a GIM of .9x. For additional information, please contact Brad Clousing at 630/858-2501 or clousing@slibinc.com

Seller Motivation

On every offering we bring to market, potential buyers are curious to know why the owners have decided to sell. As we reflect on the 40+ facilities we have sold so far this year, and the current active inventory, we find four common motivations for a sale. First, and probably most common, the subject property was not part of the owner’s core business niche. They acquired an assisted living facility when they actually specialize in skilled nursing, or vice versa. Other common reasons are when a small operator wishes to retire from the business altogether, or an operator who got into the business primarily as an investment vehicle, realizes that demand (and prices) is high and capital gains taxes are historically low. Lastly, for the larger multi-facility owners, it’s a good time to sell one or a few “outlier” assets in order to reinvest and strengthen their presence in their core geographic markets.

If you find yourself identifying with one of these categories, we have the experience to confidentially attain your investment objectives. Please contact Toby Siefert at siefert@slibinc.com or 630-858-2501 to have a confidential discussion of the market and its impact on your senior housing community.

Private Equity not so Private anymore

The Seniors Housing market is as strong as ever. Many private equity groups have been hunting for places to put money to work. While the debt crisis in Europe and lackluster economy has chilled private equity's interest in commercial real estate, Senior Housing continues to be a lucrative, safe bet. Capitalization Rates have remained stable despite volatility in other sectors/markets.

The biggest problem is that private equity looks for portfolio transactions versus smaller, one-off deals. The bigger the deal, the bigger the return. There is a shortage of those deals, if any out there.

I predict that smaller private equity funds are going to look for individual assets to purchase. They can buy individual properties at an attractive price, assemble a sizable portfolio one property at a time, then sell for a portfolio premium.

If you are an owner of nursing homes or assisted living facilities, now would be an ideal time to look into selling. Since private equity groups don't operate, a sale-lease back or sale-manage back transaction might be a good option. For those looking to sell and get out of the business, many private equity groups are already aligned with operators.

Please contact Ryan Saul at 630-858-2501 to discuss if now is a good time to sell.

Ryan Saul Announces Sale of Connecticut Skilled Nursing Facility

Ryan Saul has sold a 150 bed Skilled Nursing Facility for a not-for-profit hospital organization. Ryan was able to secure a Buyer that not only met the mission and operational values of the Seller, but was also financially qualified to complete the transaction. This was the only long-term care facility the hospital system owned. Although the census was strong, the facility's heavy expenses more closely resembled a hospital resulting in a large operating loss. The Buyer is a regional owner/operator which utilized Sabra REIT for the acquisition. The Buyer is an experienced Connecticut operator and specializes in turn-around opportunities. The census at sale was 90% with a 37% quality mix. For additional information, please contact Ryan Saul at 630/858-2501 or ryansaul@slibinc.com

Patrick Burke Sells Two Tennessee Facilities

Patrick Burke sold a 196 unit Independent Living Facility and a 52 unit Assisted Living Facility with Memory Care. The facilities were in receivership and sold through the U.S. Bankruptcy Court. The previous owner had struggled with occupancy and had not been able to reinvest capital into the buildings for several years. The buildings were adjacent to each other and shared a kitchen, maintenance crew as well as other expense items. There were numerous deferred maintenance issues at the facilities and the new owner was able to secure a line of credit to renovate the facilities. The Buyer, a regional operator out of the Southeast, plans on renovating both facilities and utilizing their marketing experience to improve census. Deespite their negative cash flow, Senior Living Investment Brokerage, Inc. contacted over 50 potential buyers and fielded multiple qualified offers. For additional information, please contact Patrick Burke at 630/858-2501 or burke@seniorlivingbrokerage.com

Sanders, Binder and Byrne Sell Two Iowa Facilities

Ross Sanders, Jeff Binder and Patrick Byrne sold two seniors housing facilities in the Des Moines, Iowa area- Genesis Senior Living Center and Regency Care Center and Assisted Living. Genesis Senior Living Center is an 80 bed Skilled Nursing Facility located in southern Des Moines. The facility was constructed in phases; 1962, 1975 and 2006. Regency Care Center and Assisted Living is located in Norwalk and consists of two separate buidings on the same campus; a 101 bed Skilled Nursing Facility and a 30 unit Assisted Living Facility. The SNF was built in 1976 with an addition in 1983 while the ALF was built in 2007. At the time of sale, the overall census for the entire portfolio was 83.3%. The sale price of $12,650,000 or $59,953/bed/unit translated to a 12.4% capitalization rate/1.22 GIM. The Seller was a regional owner. The Buyer intends on investing capital while improving operations and increase overall census. Senior Living Investment Brokerage was able to work with the Seller to implement a national marketing plan and field multiple qualified offers on the portfolio. For additional information, please contact Patrick Byrne, Jeff Binder or Ross Sanders at 314/961-0070.

Patrick Byrne and Nick Cacciabando Sell SNF Portfolio in Arkansas and Missouri

Nick Cacciabando and Patrick Byrne sold the 506 bed, 5 facility Pinnacle Healthcare portfolio. The transaction also included Pinnacle Healthcare's home office located in Arkansas. Four of the facilities are located in Arkansas and one is located in Missouri. The facilities were built between 1971 and 1988 and all have sound physical plants. The entire portfolio had struggled as recently as a few years ago but new management had improved the operations despite being relatively new to the seniors housing industry. This is the first purchase in Arkansas for the Buyer, Adcare Health Systems. They plan on using the home office to service current and future facilities in the region. The portfolio sold for $20,000,000 at a 12.1% capitalization rate. Adcare anticipates improved operations due to their management experience. Senior Living Investment Brokerage, Inc. was able to work with the sellers to implement and execute a marketing plan which in turn generated multiple offers on the portfolio. For additional information, please contact Pat Byrne or Nick Cacciabando at 314/961-0070.

Ross Sanders and Jeff Binder Sell 100 Bed Iowa SNF

Jeff Binder and Ross Sanders sold a 100 Bed Skilled Nursing Facility in northwest Iowa in a town of over 10,000 residents. At the time of the sale, the facility was underperforming and had a census of 35%. The Seller is a regional owner/operator who was one of the original investors in the facility. The Buyer will invest capital into the facility and work to increase the overall census. Constructed in 1970, the one story facility is comprised of approximately 27,781 square feet on 2.3 acres. The building is only partially sprinklered. For additional information, please contact Ross Sanders or Jeff Binder at 314/961-0070.

Industry Expert Steve Monroe - Good Time to Sell

Steve Monroe with Irving Levin Associates Inc., a recognized Seniors Housing expert, says all signs point to now being a good time to sell. Listen by clicking here:

Seniors Housing Update: 60 Seconds with Steve Monroe

Call Senior Living Investment Brokerage, Inc. to assist you with your selling needs.

www.seniorlivingbrokerage.com

George Pappas Sells 4 Facilities in South Dakota

George Pappas has sold a portfolio of four Assisted Living Facilities in South Dakota. Built between 1999 and 2003, the four facilities total 104 units/130 beds. At the time of sale, the overall occupancy was 85%. The Seller is looking to exit the seniors housing market. The Buyer is a regional operator looking for immediate savings with many of the larger cost centers. For additional information, please contact George at 630/858-2501 or pappas@seniorlivingbrokerage.com

Matthew Alley Sells 198 Bed SNF in Texas

Matt Alley has sold another Texas Skilled Nursing Facility outside of Houston. The four-story, 124,000 square foot facility was originally an acute care hospital from 1965 to 1996. The facility was converted to seniors housing in 1998. The 198 Bed facility was ownd by an independent owner from Texas and purchased by an owner/operator from New York. Senior Living is able to connect sellers and buyers from across the country. The purchase price was $7,800,000. For additional information please contact Matthew Alley at 630/858-2501 or alley@seniorlivingbrokerage.com

Sprint to the finish

As we head into the end of the year everyone seems to be talking about Medicare cuts and sluggish occupancy. However, the M&A market is as strong as ever. After a record number of closing in the first half of 2011, we experienced a wave of new inventory recently. The market continues to be strong. Debt and equity are looking for quality opportunities.

There is still a huge shortage of quality opportunities on the market.

I hear all the time, "Everything is for sale for the right price!" How do you know what your property is worth? I think you would be surprised. This might be the market to get your "right price."

If you have thought about selling, now is an ideal time to have us put together a confidential proposal to determine market value. Click this link Ryan Saul or call me at 630-858-2501 to discuss the current market.

The Stars Align (Once Again) for Senior Housing Sellers

We might not be back to the days of 2006 and 2007, but given the current market environment, there are a number of compelling reasons for senior housing owners to dust off their exit strategy playbook. The following is a summary of points to consider:

1. Capitalization Rate Compression – We have seen a continual compression of capitalization rates over the past 12 months. This has been fueled in part by three factors. First, the record low interest rates and return of lending to the acquisition market has compressed the cost of debt. Second, senior housing has been one of the least affected asset classes from the recession and therefore has been attractive from both a private and an institutional capital standpoint. This in turn, has created lower return requirements (REIT lease rates, equity return, etc.) lowering the cost of equity. Lastly, the shortage of quality inventory has created strong competition which has further compressed capitalization rates and increased prices for potential Sellers.

2. Favorable Tax Environment - In 2003, the long-term capital gains rate (top bracket) was reduced to 15% by President Bush and was extended through 2010 by the Tax Reconciliation Act. This rate was further extended through 2012 by Congress and President Obama on December 17, 2010. However, after 2012 that top rate will increase to 20%. In addition, if left unchanged, the new healthcare law will also impose a 3.8% payroll tax on the taxable income from a sale. This would bring the effective rate from 15% to 23.8%. If the property has been owned for a long period of time, it could provide an increasing incentive to make sure a sale is consummated prior to the end of 2012. With the nuances and timing of a senior housing transaction, it can take up to 8 or 9 months to reach the closing table. Much of this depends on the change of ownership process. Some states are as quick as 2 or 3 weeks, while some states can require time in excess of 120 days. It is important to plan ahead so that you, as a Seller, can take advantage of the tax environment.

3. Lack of New Construction – The lack of lending for new construction projects has created an increased demand for existing facilities. On the assisted living side of the business, a private pay, well-located facility, as small as 50 or 60 units will receive national attention given the lack of quality inventory available. On the skilled nursing side of the business, so long as the facility is priced accurately and is not located in an area with declining population, there is typically a very strong demand for the asset. Demand can vary from state to state. Aside from a few difficult states, if the facility is priced correctly we are typically seeing between 5 and 10 competitive offers on every skilled facility we have taken to market. The same can be said about private pay, well-located and well- run assisted living facilities.

In short, it is difficult to assess the best time to consider a sale. However, my opinion is that there are very compelling reasons for a Seller to consider coming off the sidelines.

Please contact me to discuss this topic in more detail. I would enjoy hearing your thoughts and would be more than happy to create a confidential proposal for you. You can contact

Brad Clousing at 630-858-2501 x 231 or via email at clousing@seniorlivingbrokerage.com.

Ross Sanders and Ryan Saul Handle Iowa SNF Sale

Ryan Saul and Ross Sanders of Senior Living Investment Brokerage, Inc. sold a 75 bed Skilled Nursing Facility in Grinell, IA. Constructed in 1965 and having gone through a number of renovations and additions over the years, the facility was in overall good condition. At the time of the sale, occupancy was approximately 44% with a Private Pay mix at 30%. No capitalization rate was applicable due to negative income at the facility. The Seller was a regional owner/operator based in South Dakota looking to divest of this underperforming asset. The Buyer is also a regional owner/operator with plans to invest additional capital into the facility, increase overall census and improve profitability through economies of scale. For additional information please contact Ross at 314/961-0070 or Ryan at 630/858-2501.

Senior Living Investment Brokerage to Sponsor NIC Conference

Senior Living Investment Brokerage, Inc. will again be sponsoring the National Investment Center's 21st Annual NIC Conference in Washington D.C. September 21-23, 2011. To schedule a meeting with one of our representatives while in D.C. please contact Grant Kief at 630/858-2501 or stop by our table Thursday evening at the reception. We look forward to seeing you there.

Brad Clousing Closes on Another Florida Assisted Living Sale

Brad Clousing has sold a 120 Unit Assisted Living Facility for a UK based owner/operator. This was the only Seniors Housing property they owned and were looking to exit the market in the United States. The facility consisted of 114 studio units and 6 one bedroom units. The facility, built in 2008, boasted over 63,000 square feet and has been very well maintained. The census at the time of sale was 69% The Buyer looks to improve census and rates-the current resident mix is primarily private pay. The Buyer is a regional owner/operator who completed the transaction with bank financing through a regional lender. Brad was able to exceed the Seller's expectations with a well implemnted marketing plan. For additional information, please contact BradClousing at 630/858-2501 or clousing@seniorlivingbrokerage.com

The Sky is Falling? Is it?

The stock market has 8 consecutive losing sessions. Could that continue? Sure.
Consumer spending is down.
CMS cut Medicare 11.1%.

All concerning, but just hold on for the ride. We all know what the Government giveth, the Government taketh away. It is only a matter of time before things swing to the positive. Deals are still closing and this is a great opportunity to look for opportunities to buy. When there is fear and concern in the market, it often means opportunity to purchase opportunistic deals.

With the market constantly changing, it is a good idea to have me put together a confidential proposal to determine the current market value for your facility. If you are sick of the constant ups and downs with this business and are considering selling your skilled nursing, assisted living or independent living facility, please contact Ryan Saul at saul@seniorlivingbrokerage.com or 630-858-2501.

Brad Clousing and Ryan Saul Sell 2 South Carolina Assisted living Facilities

Ryan Saul and Brad Clousing sold two Assisted Living facilities within 75 miles of each other in South Carolina. One facility had 48 units/62 beds and the other had 47 ALF units and 22 Independent Living villas for a total of 117 units. Overall census at the time of sale was 90%. The Seller is primarily a skilled nursing operator. The Buyer is a regional owner operator of assisted living facilites based out of Pennsylvania. The facilities sold at a 8.75% capitalization rate. The Buyer is utilizing conventional financing arranged through a regional bank. For additional information please contact Ryan or Brad at 630/858-2501.

Guest Blog - M&A of Long-Term Care Facilities in Texas

Mergers and Acquisitions of Long-Term Care Facilities in Texas – the Consummate Catch 22

By Cory Macdonald

Just as surely as death is inevitable, so too apparently is the trend toward consolidation in the long-term care properties industry.

Publicly traded companies and real estate investment trusts are rushing headlong into the marketplace to acquire privately held senior care chains and independent facilities. While most of these targets are being effectively managed and operated, their suitors recognize an opportunity to benefit from economies of scale. What’s more, long-term care facilities and the land they are built on can retain their value and actually appreciate in what is a very challenging real estate environment. Senior living and care facilities are an especially attractive growth market as more of the Baby Boomer generation approach retirement age. Baby Boomers moving into these care facilities is not a trend, it is the new normal.

So where are these companies shopping?

Florida and California, with their favorable demographics, have been popular states in the past. These days, whether because of market saturation or high real estate prices in other states, more and more companies are looking at Texas. If not the next frontier, Texas is a frontier for opportunity. In fact, over the last 12 months, dozens of companies have looked at Texas and some have actually started filling their cart.

Once at the checkout line, however, they have learned that closing such deals can be fraught with red tape. The primary challenge in Texas is that the application for licensure requires a level of disclosure that is higher than almost every other state in the country.

In particular, Texas requires the disclosure of all “owners” in a company, even owners of 5 percent or less – all the way up the ownership chain. Other ‘controlling persons’ must also be disclosed, but the state’s definition of what is a ‘controlling person’ is ambiguous. In the past, companies have come to us right before a deal is finalized, with the hope that transferring the licenses will be a short, final step. Unfortunately, we have to tell them that transferring the licenses is not an easy process.

Our first step in representing such a client is to contact the appropriate people at the state level and answer as many questions on the front end as possible. We then work with both the state and the federal government, through its Medicare agent in Texas, called “Trailblazer,” to get applications filed.

After the paperwork is filed, the state and Trailblazer will have questions. Outside legal counsel must know how to respond to questions about complex transactions that do not fit neatly into state and federal change of ownership forms. This means serving as translators, bridging the terminology gap between national deal-makers and local regulators.

The licensure and change of ownership process in Texas is complicated as it is, but it is also continually evolving to try to accommodate new ownership structures. For example, last summer the state changed the rules to clarify that when it comes to publicly traded corporations, shareholders and lenders aren't controlling persons’ for purposes of disclosure. If a new owner or a buyer did not know this ahead of time, they could have wasted a lot of time trying to figure out whether to disclose certain information about these groups.

This predicament for national companies is really a catch 22. On one hand, these challenges are not going to go away any time soon. On the other, neither is the value inherent in these properties.

It places a premium on finding outside counsel with experience and familiarity in working with these specific state entities, streamlining the acquisition process and allowing the company to move forward with what it does best – whether it is purchasing, managing or operating long-term care facilities.

Cory D. Macdonald is the lead attorney of the long-term care and retirement housing practice group at Davis & Wilkerson. He represents continuing care retirement communities, hospitals, skilled nursing facilities, physicians and other providers in a variety of issues including business formation, state licensure, Medicare/Medicaid certification, regulatory compliance, risk management, and the sale and acquisition of health care facilities.

8 seconds to sell

The importance of making a great first impression cannot be overstated, especially when it comes to presenting a product to buyers.

A VP of marketing for retail giant The Limited, Inc. has been quoted saying “In some malls we have seventy foot lease fronts. The customer, within eight-point-five seconds, is going to decide whether to walk into that store or just go past it.”

In my experience as a residential Realtor, I also found it true that clients would comment “this is the one,” within eight seconds of entering a home. The rest was just details.

How does this relate to senior housing? If owners are thinking about selling a facility, they need to know what buyers are expecting to see when they look at price per bed/unit, EBITDA, census, and payor mix. We want to counsel you ahead of time to make sure our offering package catches the attention of buyers within the “8 second” decision window.

Please contact Toby Siefert at siefert@seniorlivingbrokerage.com or 630-858-2501 to discuss what you should be working towards now to make the best first impressions later.