Take a Number

In a SNF transaction, it is commonplace for the buyer to assume the seller's Medicare Provider Agreement.  Of course there are exceptions, but they are rare as each of our 25 SNF transactions in 2011 saw the Provider Agreement passed to the buyer.  In fact, the assumption of the Medicare Provider Agreement is also assumed by CMS, as the Medicare Provider Enrollment application (CMS-855A Form) states: "A CHOW typically occurs when a Medicare provider has been purchased (or leased) by another organization.  The CHOW results in the transfer of the old owner's Medicare Identification Number and Provider Agreement (including any outstanding Medicare debt of the old owner) to the new owner."  If the purchaser (or lessee) elects not to accept a transfer of the provider agreement, then the old provider agreement would be terminated, and the purchaser or lessee is considered a new applicant.  Given the inherent successor liability issues associated with such an assumption, it begs the question "why don't more buyers terminate the agreement and apply for a new provider number?"  Well, CMS has made this very difficult from an operational perspective; these types of initial surveys have been given less priority over the standard annual survey and routinely take more than six months to occur.  In fact, we have heard of instances of this taking over one year to complete.  Until an operator obtains Medicare certification, it will not be able to charge for Medicare residents.  So, the impact, or risk, of going through the recertification process is directly related to the facility's Medicare exposure (mix-revenue dependence) - those with a significant portion of their census/revenues tied to Medicare would be more averse to terminating the existing agreement.  It is paramount for each buyer of a SNF to receive appropriate consultation and direction when considering whether or not to assume the seller's Medicare Provider Agreement.  

Matt Alley Creates Fund Raiser for Africa New Life

http://yourseason.suntimes.com/clark/11938668-393/ww-souths-matt-alley-lends-expertise-to-great-cause.html

Market have you down...stock market?

Tuesday saw the biggest one day drop in the stock market in 2012. Are you sick of losing a percentage of your net worth in one day because of some bad economic news? Why not take advantage of the low cost of capital? Why not buy a nursing home, assisted living facility or independent living facility? Now is a great time. There is lending available. There is great demand from potential residents. Unlike stocks, you have some control and say in your profitability. Sellers should take advantage of the strong demand, lack of supply and current capital gaines tax structure! We all know there is change coming down the pike. Take advantage of the great market today.

Call Ryan Saul at 630-858-2501 to learn about what your propery is worth or to learn about what we have for sale.

Bradley Clousing, Ryan Saul and Matthew Alley Handle Alabama Portfolio Sale

Senior Living Investment Brokerage, Inc. sold four facilities on two separate campuses for Mercy Medical, a local non-profit. Mercy Medical has been strategically divesting their assisted and skilled nursing assets to focus on their hospice and PACE programs. Senior Living Investment Brokerage assisted Mercy Medical in the sale of all seven of their assisted living and skilled nursing assets. These four assets are located on two different campuses, one in Daphne, Alabama, and one in Fairhope, Alabama. The Daphne site is approximately 37 acres and consists of a 60 unit ALF and a 64 unit Memory Care- SCALF. The facilities were built in phases between 2001 and 2005. The Fairhope site sonsists of a 95 unit ALF (1987-2002) and an 18 unit ILF villa community built in 2005. The Buyer assumed $2.0 million in projected life-care contract liabilities and also assumed a long-term ground lease as part of the transaction.
The Buyer was a joint venture between a regional operator from Texas and a REIT. The census at the time of sale was 70%. The sales price was $19,300,000 ($81,435/unit) at a 7.65% cap rate. For additional information, please contact Matt Alley, Ryan Saul or Brad Clousing at 630/858-2501.

Ryan Saul, Toby Siefert and Patrick Burke Sell Pennsylvania ILF/ALF

Toby Siefert, Ryan Saul and Patrick Burke sold a 94 unit/120 bed Independent Living and Assisted Living facility in Pennsylvania. Originally built in 1927, the facility was extensively renovated in 1998 and converted to ILF/ALF. Even though the facility is licensed for 120 beds, it is configured with nearly all private rooms resulting in a census upon sale of 42%.
In 2010, The Pennsylvania Department of Public Welfare placed a ban on admissions as well as increased staffing requirements at the facility citing care related issues. The property lost almost $1,000,000 annually in 2010 and 2011. The Seller, a group of TIC investors, hired an experienced management company to address the issues. The new management company was able to remove the ban on admissions and begin focusing on repairing the image of the facility and turn around the facility in terms of profitability. Although the facility was losing ($500,000) annualy at the time of sale, Senior Living Investment Brokerage was able to work with the Seller to obtain a price of $5,800,000 or $61,700/unit. 3.67 GIM.
For additional information, please contact Toby, Ryan or Pat at 630/858-2501.

Matthew Alley and Jeff Binder Announce Texas Sale

Jeff Binder and Matthew Alley have sold a pair of Skilled Nursing Facilities in Texas. The facilities, located in the same city, are a 120 bed facility built in 1994 and a 108 bed facility built in 1970. The Seller is an local, independent Texas owner/operator. The Buyer is an owner/operator from New York that already owns several facilities in Texas. One of the facilities is profitable while the other is a non-performing facility. The facilities sold for $5,250,000. This transalates to .84x GIM or $23,025/bed. For additional information, please contact Matt Alley- alley@slibinc.com or Jeff Binder- binder@slibinc.com

Housing Improving?

It is exciting to see the economy improve. It has been a stressful couple of years. Thankfully, the long-term care and seniors housing market has remained resilient during this time. I believe that when we see housing improve and unemployment under control, the economy is going to take off. What is making the difference? The credit market is loosening. Borrowers are able to obtain lending and interest rates are at all time lows. As people keep their head above water by taking advantage of low interest rates and gain meaningful employment, consumer confidence will take off.

What does this mean for long-term care and seniors housing owners? All of those potential residents that have been holding off moving in for as long as they can will start to gain confidence in their wealth and take advantage of care that is at their disposal.

If you are thinking of buying a nursing home, assisted living facility or independent living facility, take advantage of the low cost of capital. If you have thought about selling, now would be a great time while demand is surpassing supply.

Please contact me at ryansaul@slibinc.com to learn more about what we have for sale or to talk about selling in today's market.