Senior Living Announces Sale of Skilled Nursing/Independent Living Facility

Nick Cacciabando of Senior Living Investment Brokerage, Inc. sold an 115 bed Skilled Nursing/40 unit Independent Living Facility in Southwestern Kansas. The facility was in receivership due to bond default and the Buyer utilized a 1031 Exchange. Financing was provided by a regional bank.

Grant A. Kief
Senior Living Investment Brokerage, Inc.

Why Hire An Exclusive Broker?

If you are anything like me, you would not consider selling your home without the assistance of a trustworthy real estate professional. In our line of business, however, we often encounter owners of Nursing Homes and/or Assisted Living facilities who are reluctant to engage a professional to effectively market their properties. It is surprising that while most people willingly engage an agent in the sale of their home in order to obtain top dollar for their valued asset, others attempt to sell a multi-million dollar business on their own, running the risk of leaving a significant amount of money on the table.

The exclusive representation provided by Senior Living Investment Brokerage (“Senior Living”) creates a value for property owners that far outweighs the fees associated with entering into such an arrangement.

An exclusive representation agreement with Senior Living consists of two basic principles:

1) The owner agrees to sell the property and to list it only with Senior Living.

2) Senior Living commits its full expertise, experience, and resources to aggressively and confidentially market the property and to loyally represent the owner throughout the entire transaction.

Why Engage Senior Living With An Exclusive Agreement To Sell Your Senior Housing/Long-Term Care Community?

1) Confidentiality. When working with multiple brokers, they may not understand the importance of controlling to whom the information is sent and the intricate nature of facilitating confidentiality throughout the marketing process. We only contact potential buyers directly via an initial telephone conversation. Only upon receipt of an executed Confidentiality Agreement is any specific property information disclosed.

2) Higher price. Professional representation by Senior Living, a specialized company, exposes the property to a much larger market of buyers, thus increasing the price by more than the fees.

3) Sends a Message to the Market. Engaging Senior Living sends a strong message to the marketplace that, not only is the owner committed to selling the property, but that the likelihood of a successful closing is better. Therefore, more investors will devote time to the offering and ultimately bid higher on the property.

4) Establishes Pricing Expectations. This saves the owner time, effort and energy in that he or she will not have to fulfill numerous requests for information only to learn that the prospective purchaser’s price expectations are not in line with the current value of the property.

5) It Saves the Owner Time. In addition to promoting the property, Senior Living will minimize the owner’s time involvement by screening and presenting offers, fulfilling information requests, assisting in arranging financing, coordinating inspections and reviewing escrow documents.

Selling a Long-Term Care facility requires professional representation and Senior Living will achieve the highest price for your property. Our commitment to selling only Long-Term Care & Senior Housing and track record of success demonstrate this.

Feel free to contact me with questions at Michael Brundage.

By Michael L. Brundage,
Senior Vice President

Recent Sales

Jeff Binder and Patrick Byrne sold a 47 unit Independent Living Facility in Southern Illinois on 7/2/09. It was built in three stages beginning in 2002 with the final addition being opened at the closing of the transaction. The facility sold for an 8.5% capitalization rate.

In a first for Senior Living Investment Brokerage, Brad Clousing has sold a fully accredited home health agency in Tampa Bay, FL. The agency received their accreditation in 2008 and had an average case load of 24 residents in 2009. Hopefully this will be the first of many for Brad and Senior Living Investment Brokerage. If you have any questions, please contact Brad at clousing@seniorlivingbrokerag.com

Grant Kief
Senior Living Investment Brokerage, Inc.

Seller Financing - Helping the Deal

Seller financing might just be the magic bullet to help some deals get to the finish line.

Gone are the days of Sellers cashing in their lotto ticket when debt and equity was abundant. Buyers and liquidity were driving prices through the roof. Senior Living Investment Brokerage continues to sell Seniors Housing and Long-Term Care despite the challenges in the credit markets. In order for Sellers to maximize their value and increase the probability of getting transactions closed, Sellers should consider carrying paper and/or providing a second mortgage. When structured properly, Seller financing is an attractive option for both Buyer and Seller.

Buyers are able to structure a financing package that reduces the amount of equity by bridging the gap with a Seller note. Sellers will achieve a higher interest rate on their money compared to alternatives in the market. Personal guarantees and the right terms on the second mortgage provide added security for Sellers. By the time the note balloons in three to five years, the debt markets should have more options. Sellers will be taken out in an environment with more lucrative interest rate options. So, consider all of your options when attempting to achieve your investment objectives.

Contact me via Email at Ryan Saul for a confidential analysis.

Ryan Saul
Managing Director
Senior Living Investment Brokerage, Inc.

Senior Living Announces Sale of Assisted Living Facility

Ryan Saul sold Harbor House Assisted Living in Wheeling, IL. The property consists of three identical one-story cottages with each building containing 12 units with 16 licensed beds. Census at the time of sale was 85%. Senior Living investment Brokerage has sold 22 facilities in 2009.

Grant Kief
President
Senior Living Investment Brokerage, Inc.

Senior Living Announces Sale of Skilled Nursing Facility

Senior Living Investment Brokerage, Inc. facilitated the sale of a Skilled Nursing Facility consisting of 120 beds in Blue Springs, MO. This is the company’s third sale of a long‐term care facility in Missouri for 2009.

The one‐story structure was built in 1979 and encompasses approximately 39,000 square feet and sits on 2.915 acres. The facility is located on the eastern fringe of the Kansas City MSA and is within two miles of the primary medical center for the region. At the time of the sale, occupancy at the facility was approximately 70%. The buyer is a regional long‐term care provider and owns two other facilities in the state of Missouri.

The facility sold for $4.3 million, or approximately $33,800 per bed. Jeff Binder and Patrick Byrne of Senior Living Investment Brokerage, Inc. handled the transaction.

Grant A. Kief
Senior Living Investment Brokerage, Inc.

Have We Been Here Before?

There are a lot of questions flying around the industry right now, from reimbursement to bankruptcy, numerous topics are in play. However, one interesting question posed to our group recently had its genesis from the recent report on the potential insolvency of Medicare and how this has to be a negative, both in the short- and long-term, for the long-term care industry. In regard to Obama's influence on the long-term care industry, we believe it is too early to get a clear picture. The state of the economy clearly took precedent during his first 100 days, not to say that the two are not interrelated. Perhaps a better glimpse of the President's plans for the long-term care industry will be provided by new HHS Secretary Sebelius. Sebelius' recent depiction of the state of Medicare certainly does not leave anyone dependent on Medicare reimbursement feeling comfortable with the long-term prospects of the system – as it stands today. However, in her own words, the recent Medicare Trust Fund report was a "wake up call" and will likely lead to reform. Of particular note to providers of long-term care is the review of the Hospital Insurance Trust Fund (which covers hospital stays and related care); current projections reveal that the assets could be exhausted by 2018 if nothing is done. What is interesting is that a similar report was published in 1998 which called for the program to remain solvent through 2008 - what is also important to note that a previous1997 report depicted a fund that that would be insolvent in 2001. The reason the outlook changed for the better: government action came in the form of the Balanced Budget Act of 1997, which did include modifications to SNF reimbursement as it went from a cost-based to prospective payment system. The point is that the government intervened much like they will again over the coming years. Yes, the movement to a prospective payment system had a detrimental impact on reimbursement levels. However, through subsequent acts (Balanced Budget Refinement Act - 2000 / Deficit Reduction Act of 2006) reimbursement has increased significantly and in a more balanced fashion.
As a start, the administration has pinpointed the following measures: significant increase in fighting Medicare fraud, providing the uninsured access to health care in an effort to promote a healthier well being and to offset the need for Medicare down the road (or at least have utilization at lower acuity levels), and a streamlining of corporate and government delivery models to reduce skyrocketing administrative costs. In the short-term, it appears the only tangible impact on Medicare reimbursement could be the proposed "net" negative adjustment of 1.2% to overall Medicare reimbursement to skilled nursing facilities - this is a combination of a recalibration of case mix indexes to offset earlier overpayments to certain RUG categories coupled with a "market basket" increase. It is also important to note that it is generally more cost-efficient to have short-term rehabilitation done in a skilled nursing facility setting than in an acute care environment; so some argue that the government will be more punitive on hospitals than on skilled nursing facilities. Senior Living Investment Brokerage, Inc. will closely follow any new developments regarding reimbursement issues pertaining to long-term care facilities.

Jeff Binder
Managing Director
Senior Living Investment Brokerage, Inc.