Is Now a Good Time to Sell?

This is the question that I am asked most often in my conversations with owners and operators of senior housing communities.  The answer is never simple and depends on several factors.  What are some of these factors?

 

1. Is it a strong market?  The answer is a resounding yes.  There is more debt and equity to be placed now than in recent memory and not enough inventory on the market to keep up.  Simple supply and demand theory leads to higher pricing.  

2. How is my facility performing?  While that answer is different for every community, it is likely that as the summer is almost over and the fall is beginning, your community is operating at its peak levels for the year. 

3. When do I want to close?  Many potential sellers want to sell before the beginning of a new year in order to reduce partial year paperwork, i.e. cost report, prorations, capital gains tax treatment.  It typically takes 3-4 months to close, so if you want to close by year end, now is an ideal time to list your facility.

4. Is the cost of capital low?  When the cost of debt (interest rates) and equity (internal rates of return) is low, buyers can afford to pay a higher price for obvious reasons.  Interest rates are near historical lows and with the economy improving, there is risk in those rates increasing.  Equity internal rates of return are also very competitive right now.  All of this leads to low costs of funds for buyers and lower cap rates for sellers!

Although I don't have a crystal ball, there may never be a better time to consider a sale of your long-term care or senior housing community.  For a complete analysis of what your community is worth, contact Matthew Alley – alley@slibinc.com or (630) 858-2501

Matthew Alley Sells Another Texas SNF

Matt Alley has sold another Skilled Nursing Facility in Texas. The property consists of 199 licensed beds/165 usable beds. The facility was built in 1963 with an addition in 1973 and most recently remodeled/upgraded in 2011. The facility enjoys a strong census (84%) but is reliant upon Medicaid residents(80%). The single story building consists of 47,250 square feet and is located approximately 90 miles east of Houston. The property sold for a 13.3% capitalization rate/1.03 EGIM. The Seller was a regional owner/operator. The Buyer is an owner/operator from the Dallas/Ft. Worth area with several facilities throughout Texas. For more information, please contact Matthew Alley at alley@slibinc.com or 630/858-2501.

Matthew Alley Sells a Texas Skilled Nursing Facility.

Matt Alley has sold a 115 bed skilled nursing facility in East Texas. The multi story, 57,500 square foot building was originally constructed in 1919 and the census at the time of sale was 72%. The Seller is a national operator headquartered on the East Coast. The Buyer is an owner/operator located in Central Texas already operating several facilities throughout the state. The transaction was funded by a local community bank. For additional information, please contact Matt Alley at alley@slibinc.com or 630/858-2501

Matthew Alley and Nick Cacciabando Sell 100+ Beds in Texas

Nick Cacciabando and Matt Alley sold 100+ Medicaid-certified beds in Texas. Under Texas regulations, the Buyer will be able to utilize a 25% increase in Medicaid beds when building a new nursing home. The Buyer is a developer that also owns several Skilled Nursing facilities in Texas and has plans to build a new facility and benefit from the additional beds issued by the state. For additional information on how Senior Living can assist you in the sale or purchase of Medicaid beds in a CON state, please contact Matt at alley@slibinc.com or Nick at nbando@slibinc.com

Matt Alley and Jeff Binder Sell Texas Skilled Nursing Facility

Jeff Binder and Matt Alley have sold an 80 bed Skilled Nursing Facility outside San Antonio. The facility was operated by a regional operator from San Antonio and owned by a trust. The facility has enjoyed a solid census with a favorable payor mix. It is a single story building built in the 1960's. The Buyer is a publicly traded REIT with other facilities in Texas and the new operator is out of San Antonio. Senior Living Investment Brokerage, Inc. was able to procure multiple, qualified offers for the trust. For additional information, please contact Matt at alley@slibinc.com or Jeff at binder@slibinc.com

Matt Alley Sells Texas CON

Matt Alley has sold a 56 bed Medicaid Certificate of Need in Texas.  The buyer is a developer located in East Texas with several facilities in Texas.  The buyer will benefit from the additional Medicaid beds that the state issues when a new facility is built.  For additional information please contact Matthew Alley at alley@slibinc.com or 630/858-2501

Matt Alley and Ryan Saul Sell Texas Skilled Nursing Portfolio

Ryan Saul and Matthew Alley have sold 3 Skilled Nursing Facilities in Texas,  The facilities combined for a total of 337 beds.  They were operated by a regional operator based in San Antonio and owned by a trust.  The Buyer is a publicly traded owner/operator with other facilities in Texas.  The properties are older (one built in 1940 while the other two were built in the 1970's) and the new owner will invest in the communities and hope to increase cash flow by improving operating efficiencies.  There is also room for improvement in census at two of the facilities.  For additional information, please contact Matt or Ryan at 630/858-2501.

Selling in a strong market

As debt and equity has become easier to access, the market for senior housing facilities has strengthened with cap rates, gross income multiples and per-bed numbers improving over the past 12 months.

There have been new investors entering the industry to take advantage of higher cap rates found in most other real estate sectors.  They have partnered with strong regional or local operators in order to acquire both cash-flowing and turnaround facilities.

What does this mean for an owner/operator?
The time has not been better to sell your senior housing facility.  While the uncertainty of "Obamacare", Medicaid reimbursement changes and concern over the future of Medicare undoubtedly weighs on all current operators, there continues to be aggressive buyers that are willing to purchase facilities at top dollar. 

What are the risks in holding?
An increase in interest rates, a retreating of debt and equity from the healthcare industry, major regulatory changes and cuts in reimbursement are all risks that could negatively affect your facility's value.

If you are considering selling your facility, take advantage of the current strong market.  Senior Living Investment Brokerage, Inc. provides non-binding marketing proposals.  We would be privileged to work with you in the sale of your facility.

Contact me via email at alley@slibinc.com or phone at (630) 858-2501.

Matthew Alley
Managing Director 

Matt Alley Sells Another Texas Skilled Nursing Facility

Matthew Alley has sold an 110 bed skilled nursing facility in Western Texas.  The facility is in a rural area and is the only facility in the county.  The one-story, 33,600 square foot building was constructed in 1996.  At the time of sale, the census was 82% and the facility sold for a 12.5% capitalization rate.  The facility was operated by a regional operator out of the Dallas-Fort Worth area and owned by a publicly traded REIT.  The Buyer is an owner/operator from Central Texas with several facilities throughout the state.  The purchase was financed by a local community bank.  For additional information, please contact Matt Alley at 630/858-2501 or alley@slibinc.com 

Impact of Tax Hikes on Senior Housing M&A Market

After the American public spent much of 2012 contemplating the uncertainty in Washington, President Obama and Congress were able to engineer a last-minute deal that addressed the President's campaign to raise tax rates on wealthy Americans and avoided the revenue side of the Fiscal Cliff.

Tax rates were raised on incomes above $400,000 for single earners and $450,000 for married couples, which I will define as the "top tax bracket".  It also blocks spending cuts, also known as "the sequester" for two months, which sets up a whole new negotiation at the end of February.  How that might affect Medicare and Medicaid reimbursement is a topic for another time.

What does this mean to the senior housing M&A market? For earners in the top tax bracket, capital gains tax rates will increase from 15% to 20%.  As of now, there will also be a 3.8% tax on capital gains for the Affordable Care Act, which is more commonly known as "Obamacare". These increases in capital gains tax rates led to a flurry of transactions being completed in the fourth quarter of 2012.

This uptick in activity has led to very little senior housing inventory being on the market currently, with many sellers opting to list their properties in the latter half of 2012, as opposed to wait until 2013 in order to lock in more favorable tax treatment.

How can this help sellers of senior housing facilities? The change in tax treatment for sellers has not affected buyers' appetite for acquisitions, as there is still a great deal of equity and debt financing available for strong operators throughout the country.  With many aggressive buyers at the table and little inventory available, simple supply & demand economics would suggest that the first half of 2013 will see an increase in pricing for senior housing facilities.

As a potential seller, what should I do? While there is still a lack of quality inventory on the market, it might make sense to pull the trigger on selling your senior housing asset.  I believe that as the year goes on, more owners will try to take advantage of strong pricing multiples, which will lead to a greater supply and less attention to each specific listing.

If you are interested in selling or are just curious of your facility's value, Senior Living Investment Brokerage, Inc. provides non-binding marketing proposals.

We sold over $260 million in senior housing facilities in 2012.  We would be privileged to work with you in the sale of your facility.

Contact me via email at alley@slibinc.com or phone at (630) 858-2501.

Matthew Alley
Managing Director

Matthew Alley and Patrick Burke Sell 2 Texas Assisted Living Facilities

Pat Burke and Matt Alley have sold a 38 unit ALF (licensed for 60) and a 30 unit ALF (also licensed for 60) in Southeastern Texas. Located next to each other, one of the facilities focused on Alzheimer care.  The Seller is a local independent owner/operator.  The Buyer is headquartered on the East Coast and owns several facilities in Texas.  The facilities sold for $6.750,000 ($99,250/unit).  The census at the time of sale was 77% and the transaction sold at a 10.3% cap rate.  The new owner expects to take advantage of increased marketing and expense management to further improve the financial performance.  For additional information, please contact Matt Alley or Patrick Burke at 630/858-2501.

Matt Alley Closes Another Texas Transaction

Matthew Alley has sold a 120 bed skilled nursing facility in Texas.  The Seller was a local owner/operator.  Matt was able to utilize the Senior Living Investment Brokerage, Inc. database/network to procure numerous offers on the facility.  The Buyer is from the East Coast and this is their first facility in Texas.  Due to the confidential nature of this offering, additional information is not available publicly.  For additional information on this transaction, please contact Matt Alley at 630/858-2501 or alley@slibinc.com

Matt Alley Sells 52 Medicaid Beds in Texas

Matt Alley recently represented a local non-profit group in the sale of 52 Medicaid beds in Williamson County, Texas.  The buyer is a developer located in Texas.  The buyer will also have the opportunity to benefit from an increase of 13 additional Medicaid beds upon development of a new facility per the State of Texas allowing a 25% increase in the number of beds for new development projects.  For additional information, please contact Matt Alley at alley@slibinc.com or 630/858-2501.

Matthew Alley and Jeff Binder Announce Texas Sale

Jeff Binder and Matthew Alley have sold a pair of Skilled Nursing Facilities in Texas. The facilities, located in the same city, are a 120 bed facility built in 1994 and a 108 bed facility built in 1970. The Seller is an local, independent Texas owner/operator. The Buyer is an owner/operator from New York that already owns several facilities in Texas. One of the facilities is profitable while the other is a non-performing facility. The facilities sold for $5,250,000. This transalates to .84x GIM or $23,025/bed. For additional information, please contact Matt Alley- alley@slibinc.com or Jeff Binder- binder@slibinc.com

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

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

Matthew Alley Sells Another Texas Skilled Nursing Facility

Matt Alley sold a 154 Bed Skilled Nursing Facility in in West Texas. Even though the facility had negative cash flow, Matt was able to procure multiple offers on the facility and close the transaction with a Buyer from California. The new operator intends to modify the marketing campaign to increase census and focus on expense management to improve the facility's financial performance. The facility was built in the 1970's and is in fair condition. For more information please contact Mattat 630/858-2501 or alley@seniorlivingbrokerage.com

Payor Mix is the Key!

The recession has caused state tax receipts to decline dramatically, which has forced many states to face large budget gaps. Medicaid has become the largest line-item on many states' budgets. This has caused many states to look towards Medicaid reimbursement as an area for cuts to close that gap.

What does this mean to the senior housing industry? As states contemplate cuts large and small (up to 34% has been rumored in certain states), we believe that there will be a flood of capital into Skilled Nursing Facilities that rely largely on Medicare and Private Pay residents. We also believe that there will be more of an interest in Private Pay Assisted Living Facilities as these Medicaid cuts are finalized.

How is the Senior Housing M&A market currently? We believe that there is more equity and debt financing available in this market than there has been for the past couple years. Public and private REIT's have been sitting on a great deal of capital during the recession and are now looking to deploy that cash into senior housing facilities. Additionally, there are more lending options (i.e. bridge financing, more aggressive conventional lending) for acquirers to take advantage of than there were over the past 24 months.

What should I do to set my facility up for a successful sale at maximum value? The current acquisition market is still very "cap rate driven". It is important to maximize profitability, while maintaining a strong payor mix. Given the current environment, capital is flowing much more aggressively into properties that have a high Private Pay and Medicare census.

How does this impact the potential sale of my facility? If you have an Assisted Living, Independent Living, or Skilled Nursing Facility with a strong payor mix, it is a great time to explore selling your senior housing facility.

Senior Living Investment Brokerage, Inc. sold approximately $300 million in transaction volume in 2010 and $90 million in the first quarter of 2011.

SLIBCO provides non-binding marketing proposals, whether you’re interested in selling soon or are just curious of your facility’s value.

Contact me via email at alley@seniorlivingbrokerage.com

Matthew Alley
Senior Vice President

Matthew Alley and Jeff Binder Sell Texas CCRC

Jeff Binder and Matthew Alley sold a 142 Unit/178 Bed Continuing Care Retirement Community in Southeast Texas. Constructed in 2001, the community consists of 40 Independent Living Units, 78 Assisted Living and Adult Day Care Beds and 60 Comprehensive Nursing Beds. The 132,487 square foot facility is on 12 acres and census at the time of sale was 94%. The Seller was a local regional medical center and the Buyer is a publicly traded REIT and will be operated by a local regional operator. Senior Living fielded 8 bona fide offers from owner/operators across the country. For additional information please contact Matt or Jeff.

Matthew Alley Sells Texas Portfolio

Matthew Alley sold six skilled nursing facilities in Texas for $68,500,000. The portfolio consisted of 894 skilled beds with 54 assisted living units and 17 independent living units at one of the locations ($76,620/bed/unit). The facilities were at 80% census. The facilities, built between 1986 and 2009, were the last six owned by a regional owner/operator. Matthew had been hired to sell six facilities for this group previously. Because of his success and the relationship, he was hired to sell the remaining properties in the portfolio. For additional information, please contact Matthew at 630/858-2501 or alley@seniorlivingbrokerage.com