Tom Rusthoven and Jeff Binder Represent Seller of ILF

Jeff Binder and Tom Rusthoven represented the Seller of an Independent Living Facility located in the Southwest. The selling entity was a non-profit owner/operator and the Buyer was a regional owner/operator. Although confidentiality was a priority for the Seller, Senior Living was able to procure multiple, qualified offers. Due to the confidential nature of the sale, the entities involved requested Senior Living Investment Brokerage not disclose any additional information. To discuss how we can assist you in the sale of your seniors housing property, please contact us at kief@slibinc.com

Will the New Owner Keep My Employees?

Will the New Owner Keep My Employees? 

One of the most common questions we get asked by potential sellers is, “Will the new owner keep my current employees?”  Of course the answer depends on the situation; who is the new owner, how well is the current facility operating, etc. 

Typically, if a facility is being ran well, there is a high probability that the new owner will keep the current employees.  To operate effectively, the community needs to have employees, and it is in the new owner’s best interest to not “rock the boat” if the current employees are doing their job well and have good relationships with the residents.

If a facility is not being operated well or is losing money, there is a greater probability that a new owner may change some employees.  However, this is not always the case.  Often times a community needs capital improvements, better management, or upgraded IT systems to improve and the current employees are doing a good job with what they have to work with.  In this case, the new owner will probably keep the current employees and work with them on improving the facility.

There is no guarantee on what the new owner will do.  When selling a facility, the current owner has to realize that changes will happen after the sale and sometimes the changes will effect employees.  However, most new owners have a strong desire to keep good employees that care for the residents and treat the facility as if it were their own.  Thus, new owners typically ask who the key employees are and wait to evaluate them for a few months before making any personal decisions. 

To discuss this question or other questions about selling your Seniors Housing Community, please contact Jason Punzel at 608-858-2501 x 233 or punzel@slibinc.com.

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.

Value Add vs. Stabilized Properties – How are they valued?

Value Add vs. Stabilized Properties – How are they valued?

For a property to be considered “stabilized”, it’s census and monthly (daily) rates must be similar to other properties in the market.  For example, if market occupancy is 92% and the average private pay rate for assisted living is $3,500/month, and if the property that is being analyzed has an occupancy of 93% and average rate of $3,400/month, the property would be considered stabilized.   In this case, the best way to determine its value is by using the Capitalization Rate method.  This involves using the Net Operating Income of the property (NOI) and dividing it by Cap Rate.  If a property has an NOI of $1,000,000 a year and the typical Cap Rate for this type of property is a 7.5%, then the property’s value would be $13,333,000.  This is a very straight forward method of analyzing the value of a property.

Where valuing a property becomes more challenging is when the property is not stabilized at the current market occupancy and rates.   For example, if a property is 100% occupied with an average monthly rate of $3,500, one might assume that it will be hard to maintain a 100% occupancy on a going forward basis, and therefore will reduce the revenue in their analysis to an amount closer to market occupancy, thus reducing its NOI and price from its current state. 

Likewise, if a property has an occupancy rate below market, for example 75%, the NOI of the property is probably very low or may even be negative.  However, the property still has value.  Depending on the quality and location of the property, it may have the potential to achieve a market occupancy rate, and therefore be worth significantly more than simply using the Cap Rate method to determine its value.  A new owner must identify what changes need to take place (capital expenditures, a new marketing plan, a new administrator, etc), the time, cost and likeliness of success to determine the potential future net operating income.   Typically, we see properties that are operating significantly below the market getting sold at a price somewhere between its current state (current NOI/Cap Rate) and its future value (potential NOI/Cap Rate).  The new buyer must be rewarded for solving problems and taking the risks involved in turning around a property.  However, the current owner will not sell unless they think they are getting a fair price for giving up the future upside.

Senior Living Investment Brokerage, INC works with many buyers for both stabilized and non-stabilized facilities and has a long track record of selling both types of facilities.  For a more complete analysis of the value of a property, please contact me at punzel@slibinc.com or Jason Punzel – 630-858-2501.

Jeff Binder and Matt Alley Broker Independent Living Facility

Matthew Alley and Jeff Binder sold an 131 unit independent living facility in Texas.  Senior Living Investment Brokerage was hired to confidentially market this attractive, three story independent living facility located in Longview, Texas.  The building, constructed in 1985 and 2010, is 102,350 square feet and offers a nice mix of studio, one and two bedroom apartments and offers ample amenities.  The property has a strong operating history, including several years at, or near, full census.  Additional care services are provided by a third party, unaffiliated home health agency.  The facility is on 4.52 acres with an additional 1.62 parcel of land included in the sale which could be used for future development.  The stable financial history, solid reputation and quality location helped secure multiple offers leading to a sale price of $13,000,000.  The buyer is a national owner/operator of seniors housing facilities.  Senior Living Investment Brokerage, Inc. was chosen to represent the seller for our reputation and ability to selectively market the facility in a confidential manner.  For additional information, please contact Jeff Binder at binder@slibinc.com or Matt Alley at alley@slibinc.com 

George Pappas Sells ILF/ALF in Montana

George Pappas has sold an assisted living facility and independent living facility that were currently in receivership.  The two facilities are connected.  The assisted living facility is 42 units and was built in 2000.  The independent liing facility is 198 units, built in 1966 and utilized a HUD 202 loan.  The ILF has a Rent Supplement contract with HUD that will expire June 1, 2015.  The property had previously been owned by Sunwest and was sold through the bankruptcy court.  The Buyer is a local real estate investor and this is his first seniors housing investment.  The propery sold for an 18% capitalization rate.  For additional information, please contact George Pappas at 630/858-2501 or pappas@slibinc.com

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.

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.

Jeff Binder, Brad Clousing and Ryan Saul Close Las Vegas Transaction

Ryan Saul, Brad Clousing and Jeff Binder have sold a 152 Unit Independent and Assisted Living Community in Las Vegas, Nevada. Constructed in 1986, the three story facility consists of 83 independent living units and 69 assisted living units. At the time of sale, census was near 88% but the facility was underperforming. Senior Living Investment Brokerage, Inc. was able to procure multiple offers from local, regional and national Buyers. The Seller is a national owner/operatorwho was making a strategic divestiture of a non-core asset. The Buyer is a national provider of senior housing services based in California. The Buyer will look to boost operational and financial performance through local economies of scale and referaal relationships. For additional information on this transaction or to request a confidential proposal, please contact Brad, Jeff or Ryan.

Ross Sanders Closes Independent Living Facility Transaction in Iowa

Ross Sanders of Senior Living's St. Louis office has sold a 16 unit Independent Living Facility in Iowa. The facility is located in one of the largest cities in Southeast Iowa and was constructed in 2000. The Seller was a Texas based investment group that purchased the asset out of foreclosure in 2006. The Buyer is a local seniors housing owner/operator who hopes to increase census and cut operating costs. The new owner will also have the opportunity to almost double the size of the existing facility on the vacant 3 acres included in the purchase. For additional information please contact Ross at 314/961-0070.

Pappas and Clousing Sell Washington Independent Living Facility

George Pappas and Bradley Clousing sold a 40 unit Independent Living Facility in Washington. Built in 1983, all of the units are one bedroom and are subsidized through HUD with a HAP contract that guaranteed all the rents. The facility is age-restricted to reseidents 55 and older. The Seller was the original developer and is exiting the seniors housing market. The Buyer, a regional non-profit, plans on renovating the building and utilized state and public funding to finance the acquisition and renovation. The facility sold for a 9.25% capitalization rate. For additional information, contact George or Brad at 630/858-2501.

Ryan Saul and Jeff Binder Sell Indiana Independent Living Facility

Jeff Binder and Ryan Saul have announced the sale of a 54 unit Independent Living Facility in Indiana. Originally developed in 2000 by a local hospital, the facility has been operated by a local nonprofit board since 2007. The management team was able to improve operations over the past 3 years and hired Senior Living Investment Brokerage, Inc. to sell the facility. At closing, the census was 100% with a waiting list. The Buyers plan on applying to license the facility for Assisted Living and also expand the facility to provide Skilled Nursing.
For additional information, please contact Ryan Saul or Jeff Binder.

Sale of CCRC Announced

Nick Cacciabando and Jeff Binder have sold a CCRC in Kansas for a national owner/operator. The campus is comprised of a 140 bed Skilled Nursing Facility, a 37 unit Assisted Living Facility and 82 units of Independent Living. The property was originally developed in 1988 and underwent extensive remodeling/renovation in 2006 and 2007. The impact of these improvements are being realized in the steadily improving financial and census reslts since completion. Census at the time of sale was 95% and the property sold at a 9% cap rate.

The Buyer is a Real Estate Investment Trust (REIT) which owns senior living properties throughout the United States.

Senior Living Sells LTC Facility in Dallas

Jeff Binder, Matthew Alley and Ryan Saul sold a 264 bed SNF/39 unit ILF in Dallas, Texas on September 30, 2009. The 206,000 square foot facility on 22 acres was originally developed in 1960 and has undergone various renovations over the years. The Independent Living is comprised of stand alone cottages on the campus grounds. The facility's census was 87% at the time of the sale and sold for 13.5% capitalization rate. If you have any questions regarding this transaction, please call Jeff, Matt or Ryan.

Senior Living Announces Sale of Skilled Nursing/Independent Living Facility

Nick Cacciabando of Senior Living Investment Brokerage, Inc. sold an 115 bed Skilled Nursing/40 unit Independent Living Facility in Southwestern Kansas. The facility was in receivership due to bond default and the Buyer utilized a 1031 Exchange. Financing was provided by a regional bank.

Grant A. Kief
Senior Living Investment Brokerage, Inc.

Recent Sales

Jeff Binder and Patrick Byrne sold a 47 unit Independent Living Facility in Southern Illinois on 7/2/09. It was built in three stages beginning in 2002 with the final addition being opened at the closing of the transaction. The facility sold for an 8.5% capitalization rate.

In a first for Senior Living Investment Brokerage, Brad Clousing has sold a fully accredited home health agency in Tampa Bay, FL. The agency received their accreditation in 2008 and had an average case load of 24 residents in 2009. Hopefully this will be the first of many for Brad and Senior Living Investment Brokerage. If you have any questions, please contact Brad at clousing@seniorlivingbrokerag.com

Grant Kief
Senior Living Investment Brokerage, Inc.