Toby Siefert and Patrick Burke Sell Virginia Assisted Living Community

Patrick Burke and Toby Siefert represented the Seller of a 48 unit Assisted Living Community I Virginia located about 20 miles outside of Richmond. The Seller had struggled with occupancy and profitability for several years. The Buyer is a joint venture including a national operator and a private equity group. The new ownership group plans to invest upwards of $1,000,000 renovating the facility and converting it to all memory care. For additional information, contact Toby or Patrick at 630/858-2501.

Pennsylvania Personal Care Home Sold by Ryan Saul and Toby Siefert

Toby Siefert and Ryan Saul recently sold a 38 unit Personal Care Facility in Pennsylvania. The 28,277 square foot building built in 1965 consists of 38 units/60 beds on 11.4 acres. It is a well maintained community that was renovated in the late 1990's. The facility had a consistent track record of high census (98% at closing) and is 100% private pay even though the building has mostly semi-private rooms. Rents average $2,200/unit. The Seller was a regional seniors housing owner/operator that sold to focus on their 10 other/larger communities and to develop CCRC's. The Buyer was a Pennsylvania-based operator growing their portfolio. This was a strategic acquisition that fit well with their smaller, profitable communities. The property sold at a 1.3x GIM/11.6% capitalization rate. For more information, please contact Ryan at ryansaul@slibinc.com or Toby at siefert@slibinc.com 630/858-2501

Toby Siefert and Ryan Saul Complete Skilled Nursing Sale in Pennsylvania

Ryan Saul and Toby Siefert recently sold a 97 Bed Skilled Nursing Facility in Pennsylvania. The Seller was a regional not-for-profit that had engaged Genesis Healthcare to manage the community. The property had bond financing and the hold on the bond was achieved. It was a mutual decision by the owner and the bondholder to divest of the community. The property was not in a core market of the owner or manager. The Buyer was a regional owner with other seniors housing properties in Pennsylvania. The 24,000 square foot building was built in 1967 and 1972 on 0.69 acre. The census at the time of sale was 89.9% Senior Living Investment Brokerage was able to procure multiple offers for the Seller. For additional information, please contact Toby or Ryan at 630/858-2501.

Closing Costs

Most clients realize that when they sell their seniors housing or long term care asset, they will incur a number of transaction-related closing costs.  Having a good understanding of these costs up front through a dialogue with your broker, attorney, and accountant, can help you calculate the net proceeds upon a sale, and ensure it makes sense to go out to the market.  The last thing any party to the transaction wants is an unexpected expense that jeopardizes the viability of the deal.  Here are some closing costs and credits that often figure into the equation:

-Pre-payment penalties on loans (confirm the loan is not in a lockout period).

-Legal Fees

-Accrued Paid Time Off (“PTO”) – Buyer is typically credited accrued employee benefits at the time of sale 

-Transfer Tax 

-Recording Fees  

-Property Tax – All property taxes need to be brought current 

-Tail Insurance

-Brokerage Fees

-Escrow Basket – It is not uncommon for Buyers to set aside an Indemnification Escrow Holdback for a period of time (range from 6 months to 3 years) and depends largely on the perceived potential liability. 

-Refundable resident deposits

-Prepaid items: RE taxes, insurances, benefits, leases, P&I (credits)

Each State is different, so it is important to also talk to your legal and tax advisors.  To discuss the value of your community in today’s market so you have a baseline gross figure to work from, please contact Toby Siefert at 630-858-2501 ext. 235 or siefert@slibinc.com

Jeff Binder and Toby Siefert Sell Portfolio in the Northeast

Toby Siefert and Jeff Binder have sold 7 Skilled Nursing Facilities in the Northeast. The portfolio consisted of over 750 beds and was in receivership. At the time of sale, the overall census was 91%. GIM of .58X and a capitalization rate of 10.5%. This was a confidential sale. For additional and/or detailed information, please contact Toby at 630/858-2501 siefert@slibinc.com or Jeff at 314/961-0070 binder@slibinc.com

Retrades Defined (and what it means for you):

Retrades have become a relatively common occurrence in seniors housing M&A.  For those readers who are fortunate enough to have not experienced this, a retrade is renegotiating the agreed upon purchase price - oftentimes at the point after the buyer has completed due diligence and earnest money is about to become non-refundable.  Retrades are often linked to some unexpected decline in census or performance, or findings in the physical plant which will require major expense.  These retrades are much easier to negotiate than the times a buyer asks for a reduced price and it appears that they didn’t do their homework on the front end, or never planned on following through on their offer price which secured the deal.

There are two hurdles that retrades create: 

1. Seller’s Sales Expectations: If we are under contract on a facility for $12 million and before closing the buyer asks for a retrade down to $10.5 million and the deal falls apart, the Seller will never forget that at one time their facility was “worth” $12 million, even if all the other market feedback was $10-10.5 million.  The original buyer set an unrealistic sales expectation that can be very difficult to duplicate.

2. Wasted Time:  When a buyer retrades to a lower price, oftentimes our firm already had multiple offers in that lower range, only now we may be closing in on year-end or other deadlines and/or both sides have a significant investment into the deal.  

What does this mean for Sellers?  One benefit of working with Senior Living Investment Brokerage is to utilize our knowledge of who closes deals at or near the original terms and who “ties” deals up.  However, too many times the reason we have to deal with a retrade is because the seller “took their hands off the wheel” once the deal was under contract.  A Seller needs to run the community as if they weren’t selling- right up until the day of closing.

What does this mean for Buyers?  We have already experienced clients who request that potential buyers put up non-refundable earnest money at the time of signing the LOI.  That doesn’t fly in today’s market, but we can see things moving that direction, even if only a “token” amount is non-refundable.  As more and more buyers enter the market, sellers are looking for ways to differentiate between Lookers and Closers.  

For more information, contact Toby Siefert at siefert@slibinc.com or 630-858-2501