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.

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

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

Are you going to NIC?

In our industry, the annual NIC National Conference (www.nic.org) is the "go to" conference that everyone attends.  Whether you are an owner, lender, broker or just want to learn about the seniors housing space, it is a must attend.  I have been attending this conference for the last fourteen years and plan to do so again this year.  I can usually tell how our space is doing by the number of lenders attending.  After scanning the preliminary attendee list, it is obvious, based on the number of individuals attending from the various lenders and REITs, that the market is stronger than ever. 

 

If you have thought about selling, rather that speak to the REITs or owners direct, it would be a good idea to speak with Senior Living Investment Brokerage, Inc. to find out what your community is worth.  We have access to all the REITs and buyers with strong relationships with aggressive lenders.

Based on the number of capital providers attending NIC, contact Ryan Saul today to hear more about the market and to discuss the current value of your community.

Selling..Keep calm..Where to start?

So, you have thought about selling your seniors housing or long-term care community.  Now what? 

For most of our clients the stress and anxiety immediately sets in.  Put that fear to rest by working with a professional that handles hundreds of transactions.  Senior Living Investment Brokerage, Inc. is there to help you.  

Here is one tip.  As part of the process, take inventory of your community and what might need to be fixed or improved.  One of the biggest stresses is when someone points out the things wrong with your community.  Beat them to the punch and it will avoid a lot of unnecessary stress.  Make sure floors/carpets are clean, paint is touched up and it is a pleasant experience to walk the halls.  If you make a good first impression with the condition of the community, it will alleviate a lot of the tedious investigation.  What they see first will give them the impression of how the rest of the community is taken care of.

Contact Ryan Saul to discuss our sales process and other things you can do to alleviate stress.

Tom Rusthoven and Brad Clousing Sell Three Assisted Living Communities in Michigan

The three Assisted Living Communities are located within a mile of each other in Southeast Michigan. The buildings, constructed in 1985 and 1992, have a total of 78 units. One of the buildings is dedicated to memory care services. The transaction sold at an 11.9% capitalization rate for over $68,000 per unit. The Buyer is a regional owner operator planning to implement additional marketing resources to neighboring Ohio residents as a means to increase census from the current 65%. For additional information, please contact Tom Rusthoven at rusthoven@slibinc.com or Brad at clousing@slibinc.com or 630/858-2501.

The Price is Right....well, hopefully

It is extremely important to position a community at the best, most realistic price during the first market exposure.  In the sales process, once a property has been exposed to the most active, qualified Buyers, activity dramatically decreases to the less active, less qualified "bargain" Buyers.

Drawbacks of an Overpriced Property

Many Sellers feel that an overpriced property can always be reduced if it doesn’t sell.  The danger with this approach is that by the time the property is finally reduced to its market value, it may have been on the market so long that Buyers perceive it to be a “tainted” property.  Buyers then question how long the property has been on the market and why it hasn’t sold.  Their offer to purchase, based on that knowledge, may be below its actual value.  Senior Living Investment Brokerage uses market research and our vast knowledge of the Seniors Housing market to arrive at an ask price that is both realistic and fair to the Seller but also attractive to Buyers.  This pricing process takes into account a number of key factors including property location and condition, upside, financial indicators and sales comparables, as well as current activity.  We present realistic pricing and do not attempt to “buy” our assignments.

We do not over-promise pricing expectations and our marketing proposals do not exceed what the property can support in the open market.  Over the past three years we have sold our offerings for 96% of our initial market valuation.

Contact Ryan Saul to learn more about what your community is worth and how to get top dollar in today's market.

Brad Clousing and Jeff Binder Sell Two Residential Care Communities in Arkansas

Jeff Binder and Brad Clousing were selected to assist in the disposition of 2 Residential Care Facilities in Arkansas. Located approximately 85 miles from each other in the northern region of the state, the two communities offer a combined total of 102 units. Both buildings were constructed in 1997 and each consist of 51 units (45 private and 3 semi-private). Each building is on approximately 4.5 acres. At the time of the sale, the combined census had stabilized at 62%. The Seller was two separate but related entities. The Buyer is a regional owner/operator based in Missouri. They plan on increasing the license to Level II which will provide for additional reimbursement and census enhancement opportunities. For additional information, please contact Brad Clousing at clousing@slibinc.com or Jeff Binder at binder@slibinc.com

What a buyer can do

I am often asked by buyers of nursing homes and assisted living communities what they can do in order to "get the deal."  Well, there are a lot of things that a buyer can do in order to grab a seller's attention.  A little work up front can go a long way when that perfect opportunity comes up.  Here are a few things you can do in order to better your chances to get the deal.

1. Prepare a bio with company history and facilities owned and operated.  What is your mission?  Sellers want to know your philosophy and who they are leaving their property to.
2. Have your equity lined up.  Ask your personal banker to provide a letter referencing your financial strength and ability to provide the equity required for a transaction. 
3. Have your debt lined up.  Obtain letters from two lenders speaking to their interest to provide financing for you.
4. Put together a professional letter of intent with your logo.  The letter of intent should clearly state the purchase price, earnest money deposit, due diligence period and closing period.
5. Have your due diligence list ready so that a seller can anticipate the type of information that they will need to put together for you.
6. It might sound simple, but don't breach confidentiality and abide by the process that the broker and seller have established.  Meet timelines and provide all information that is requested.

If you would like to learn more about buying or selling a nursing home or assisted living facility, please contact Ryan Saul at Senior Living Investment Brokerage, Inc. at ryansaul@slibinc.com or 630-858-2501.

Ryan Saul Completes Indiana Nursing Home Sale For Record Price

Ryan Saul sold an 128 Bed Skilled Nursing Facility in Fort Wayne, Indiana. The facility has a stellar reputation for quality care which was reflected in the purchase price of over $100,000/bed. Although originally built in the 1970.s, the Seller had continually invested capital and upgraded the building. It is arguably one of the best SNF's in Indiana. The Seller was an Assisted Living owner/operator that purchased the SNF because it was adjacent to one of his ALF's. The Seller had recently sold his Assisted Living portfolio so he elected to sell the SNF. The Buyer, based in Chicago, aligned with a regional to operate the facility. The operator manages several properties in Indiana and Illinois. The 37,000 square foot building on 4.3 acres was built in the 1970's. The census at the time of sale was 84% with an 80% quality mix. The community sold at a 14.13% capitalization rate/1.4 GIM. For additional information, please contact Ryan Saul at ryansaul@slibinc.com or 630/858-2501.

Brad Clousing and Patrick Burke Sell a Florida Assisted Living Community

Brad Clousing and Patrick Burke recently sold a 50 Unit Assisted Living Community in Naples, Florida. The transaction was subject to the assumption of an approximately $3.3 million HUD loan and replacement reserve balance. The sale price of the 1997 building was $5,600,000. The census at the close of escrow was 80% and the cap rate was 3.7%. The Seller was a partnership based in Naples and operated by a related entity. The Buyer was a Memphis based partnership and will be operated by a Florida based management firm. The Buyer intends to improve census and operating margins through a dedicated focus on memory care. For additional information on this or other Senior Living Investment Brokerage transactions, please contact Brad at clousing@slibinc.com or Patrick at burke@slibinc.com 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