Brad Clousing and Ryan Saul Announce Sale of Two Florida Assisted Living Facilities

Brad Clousing and Ryan Saul handled the sale of two Assisted Living Facilities in Southwest Florida, March 1, 2010. The facilities had 184 units combined (92 units each) and were built in 1999. For the Seller, it was a strategic disposition. The Seller, a national skilled nursing operator, had purchased these assets as part of a portfolio transaction that included skilled nursing facilities. The Buyer is a regional operator based in Florida who utilized conventional financing arranged through a regional bank. The properties sold for a 5.46% capitalization rate. For additional information, please contact Ryan or Brad.

Time to Sell?

Is now a good time to sell? We are experiencing a lack of properties available across the country. Many buyers of assisted living and skilled nursing have been sitting on the sidelines waiting for the right opportunity to get back in the M&A market.

Local and regional lenders are active in the market and are currently looking to place loans. If you have ever thought about selling, I believe now is an ideal time. Capital gains and interest rates are going to increase. Take advantage of limited supply available with high demand in the market to maximize your pricing. I am available for a confidential proposal to help you determine the current market value for your facility.

Contact me via Email by clicking here (Ryan Saul).

Sincerely,

Ryan Saul
Managing Director
Senior Living Investment Brokerage, Inc.

Brad Clousing and Jeff Binder Close Washington, D.C. Sale

This Skilled Nursing Facility was a strategic disposition that simply did not fit into the long term investment strategy of the Seller. The Buyer is a regional operator and assumed the existing HUD insured financing. The facility had struggled with survey issues in the past and the rate environment in Washington, D.C. can be somewhat unpredictable.

The 296 bed facility was built in 1982 and is 136,142 square feet. It sold for a 14.1% capitalization rate/.50x GIM. This was the first D.C. Skilled Nursing Facility to sell in 10 years.

If you would like additional information, please contact Brad or Jeff.

Capital Gains Tax Increases – how does this affect my senior housing facility?

Long-term capital gains, defined by assets held for more than one year, are taxed at a lower rate than short-term gains. Under President George W. Bush, this rate was reduced in 2003 to 15% for individuals outside of the lowest two income tax brackets. These reduced tax rates are effective through 2010. If they are not extended before the end of this year (and the current administration has shown no desire to extend), they will expire and revert to the rates in effect before 2003, which were generally 20%.

What does this mean to the senior housing industry? If the capital gains tax rates are increased as is expected in 2011, we will see an uptick in transaction activity in 2010 as current owners attempt to maximize their after-tax return on investment. Of course, much of the transaction activity will depend on lending community, but I believe that we will see current owners push their transactions through to close by the end of this year. This will cause more quality inventory to come on the market.

How does this impact the potential sale of my facility? As an example, if an owner has a cost basis of $3 million and will be selling his/her facility for $5 million after fees, the owner will be on the hook for $2 million in capital gains. If the 2010 tax rate continues to be 15%, the owner will be obligated to pay $300,000 in taxes if the transaction is completed in 2010. If the 2011 tax rate increases to 20%, the owner will have to pay an additional $100,000 in taxes if the transaction is completed after December 31, 2010.

Since typical senior housing transactions can take 6-8 months or longer to close, now is a great time to explore selling your senior housing facility. Senior Living Investment Brokerage, Inc. had a record year in 2009 in an uncertain economy. 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

Senior Living Announces Chicago SNF Sale

Ryan Saul and Michael Brundage sold a 313 Bed Skilled Nursing Facility in Chicago. Senior Living was able to procure 10 offers on the facility. In addition, the transaction took 82 days from listing engagement to closing. The Seller was a regional owner/operator and the Buyer, located on the East Coast, was seeking an opportunity to expand into the Midwest. The price per bed was over $71,000 even though the facility had negative cash flow. The 72,432 square foot building on 1.15 acres had a census of 64%. The facility enjoys an excellent reputation and a great location.

Ryan Saul and Jeff Binder Sell Wisconsin SNF

Senior Living Investment Brokerage successfully sold a 161 Bed Skilled Nursing Facility in Northern Wisconsin for the second time in six years. Originally sold in 2005 while in bankruptcy, the Buyer was attracted to the favorable bed price, potential for improving Medicare census and challenge of a turnaround situation. This was the only facility the Seller owned in Wisconsin and they had achieved their goal of turning the facility around. The Buyer is a regional operator and this acquisition will improvew their economies of scale. The Buyer utilized HUD Lean financing.

2010 Outlook Encouraging

What tough market? 2008 was one of the most challenging M&A markets on record. Despite the difficult market, SLIB had a record breaking year. We represented 25% of all reported transactions. 2009 is expected to surpass 2008 and our market share should reach close to 40% for 2009. A recent surge in Seniors Housing sales has improved my outlook for continued recovery and strength in 2010. Investors, owners and operators are re-entering the market after sitting on the sidelines. We are experiencing a shortage of properties available. Smaller, relationship lenders are the debt vehicle of choice (and often the only option). HUD is an option, but the backlog of applications and a "use it or lose it" by the end of the year vacation policy for HUD employees is causing a longer than expected HUD LEAN process.

If you have thought about selling, now is a great time to explore this option. With the lack of supply available, demand alone is driving activity and pricing. I am available to put together a confidential proposal to determine market value.

“It's tough to make predictions, especially about the future.” – Yogi Berra

Contact me via Email at Ryan Saul.

Sincerely,
Ryan Saul
Managing Director
Senior Living Investment Brokerage, Inc.