Ryan Saul Sells Another Indiana Skilled Nursing Facility

Ryan Saul has sold a 43 Bed Skilled Nursing Facility in Indiana. The 18,097 square foot property was built in 1960. This facility is unique in that it is one of only three facilities in the country that serves those afflicted with an advanced neurological disorder called Huntington's Disease. This is the only facility in the Midwest that focuses on residents with Huntington's disease and it attracts residents from throughout the Midwest and is supported by Huntington's Disease specialty doctors. The Seller is a non-profit organization based on the East Coast which is strategically divesting of the property to concentrate on their operations in the East. The Buyer is based in Indiana and will continue to cater to HD residents while at the same time improving expenses through economies of scale and will also be enrolled in the IGT (Inter Governmental Transfer) program which will positively impact the cash flow moving forward. At the time of the sale the facility had negative cash flow yet Ryan was able to secure multiple offers. For additional information, please contact Ryan at 630/858-2501 or ryansaul@slibinc.com

Cap Rates

How Cap Rates Are Determined

A cap rate is calculated by dividing the net operating income of a property by the purchase price.   The cap rate would equal the rate of return on equity if a property was bought with all cash and the net operating income stayed the same for the next twelve months.    As cap rates increase, the purchase price decreases, and vice versa.  

The cap rate is a measure of risk.  Typically, the higher the cap rate, the riskier the asset is.  Cap rates for skilled nursing facilities typically range between 11-15%, where-as assisted living facilities typically range from 7-10%.  However, why does one assisted living facility sell for a 7% cap rate and another one sells for a 10% cap rate?

Typically, newer, larger facilities located in larger, growing,  metropolitan  areas sell at lower cap rates than older, rural facilities.   Other determinates are the income/occupancy history of a property.  Those properties that have a history of high occupancy and consistent earnings sell for lower cap rates than properties that have struggled in the past.   

Outside factors also determine cap rates such as interest rates, availability of debt and equity capital and general economic conditions. 

The first step in determining value is to engage an experienced professional to assist in the valuation and analysis of your property/properties.  Please contact us if you would like a no-obligation market analysis.   

Jason Punzel, Senior Associate.  punzel@slibinc.com

Nick Cacciabando Brokers Iowa SNF

Nick Cacciabando has sold a 75 bed Skilled Nursing Facility in Iowa. The facility was owned and operated by the same family since it was developed in 1966. This was their only long term care/seniors housing facility and they are retiring from the business. The Buyer utilized a 1031 Exchange in purchasing the facility. This was a strategic acquisition for the Buyer as they have over 10 facilities in Iowa. Census at the time of sale was 85% and the sale resulted in an 8.9% capitalization rate. For additional information, please contact Nick Cacciabando at 314/961-0070 or nbando@slibinc.com

Portfolio Sales

Pricing Premiums for Portfolios vs. Single Asset Sales

As a company, we value many senior living and skilled nursing facilities both as portfolios and single asset sales.  Often times we get asked the question if there is a premium to sell a portfolio of facilities instead of an individual facility.  In general, the answer is “yes”.  However, it depends on the size of the single asset vs. the size of the portfolio, the location of the portfolio and the make-up of the portfolio. 

In general, portfolios are more attractive to buyers if they are in the same general geographic location, are similar in size and quality and are either mostly seniors housing or mostly skilled nursing.  A portfolio is easier to manage and will fit the acquisition criteria of a buyer better when it is more homogeneous.

When comparing prices of an individual asset vs. similar assets that are in a portfolio of multiple assets we typically see a premium of 5-15% for the portfolio.  A portfolio allows a buyer to deploy more capital at once, achieve greater economies of scale, makes it easier to enter a new geographic location, and often allows for more attractive financing terms. 

Whether you own one community or several, the first step in determining value is to engage an experience professional to assist in the valuation and analysis of your property/properties.  Let us know if you would like a no-obligation market analysis.  

Clousing, Saul and Binder Sell Georgia Assisted Living/Memory Care Community

Brad Clousing, Ryan Saul and Jeff Binder teamed together to sell a 93 unit Assisted Living/Memory Care community in north central Georgia. The community consisted of 74 assisted living units and 19 memory care units on 15 acres. The community consists of 2 buildings, built in 2011 and 2012, an additional 20 unit expansion permitted and graded overlooking a private lake. The property leased up ahead of schedule and was fully stabilized by April of 2013. The Seller is a local developer of which this was their first seniors housing development. The Buyer is a national REIT and the asset will be operated by their affiliated operating company. Senior Living Investment Brokerage was able to procure a sale price of $236,833 per unit at a 7.5% capitalization rate.

Jason Punzel Presents at the Pacific Northwest Investors Conference

On November 14th, Jason Punzel presented at the Pacific Northwest Investors Conference held in Vancouver Washington.  Jason's topic was on valuing Senior Housing and Skilled Nursing Facilities.   The event was hosted by the Oregon Health Care Association and the Washington Health Care Association. The event was attended by owners, investors, lenders, brokers and industry specialists.  Jason can be contacted at punzel@slibinc.com

Jeff Binder Sells Missouri Skilled Nursing Facility

Jeff Binder was able to procure multiple offers on a 120 bed Skilled Nursing Facility that had struggled with census and had negative cash flow. The Seller is a national owner/operator that chose to exit the Missouri market. The Buyer is an Illinois-based owner/operator looking to add to their existing portfolio in the state of Missouri. Due to the confidentiality of this sale, please contact Jeff at binder@slibinc.com or 314/961-0070 for additional information on this transaction or on how he can assist with marketing your community.