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

Ryan Saul Brokers Indiana CCRC

Ryan Saul sold a 157 Unit CCRC in Evansville, Indiana. The 201,435 square foot building consisted of 80 Independent Living Units, 33 Skilled nursing Beds and 9 Villas on 73 acres. It opened in 1985 with an addition in 1999 (AL). In 2009, the first floor was converted to skilled nursing. The Seller was a not-for-profit trust created by a wealthy community member. The Buyer is a not-for-profit as well that hired an Indiana based operator. The operator will be able to leverage their efficiencies and operating model to improve the financial performance of the CCRC. The sales price was $12,500,000. For additional information, please contact Ryan Saul at 630/858-2501 or ryansaul@slibinc.com

REITs are here to stay.....For good!

REITs have been around for 50 years, but have most recently made their splash on the Seniors Housing industry.  The headlines have been dominated by the REITs making acquisitions.  A billion here, A billion there, a couple hundred million over there.  Traditional financing is having trouble competing with the rock bottom cost of capital of the REITs.  The REITs have their pick of the litter and have been buying high quality, cash flowing deals anywhere they can get their hands on them.  What happens when there aren't any portfolios left to purchase?  I believe we will start to see the REITs acquire high quality, individual assets to throw into the master leases of some of their existing portfolios. We are seeing capitalization rate compression and higher pricing simply from the blockbuster deals that the REITs are completing.

Senior Living Investment Brokerage has completed a number of deals with healthcare REITs.  We have relationships and access to all active REITs in Seniors Housing.  If you have thought about selling your nursing home, assisted living, independent living or CCRC, please contact me at Ryan Saul to talk about how we can access all of the REITs and maximize your return.