Senior Housing and Assisted Living

Five Star Quality Care, Inc. (NYSE Amex: FVE) last week announced its financial results for the quarter ended March 31, 2010 that showed revenues for the first quarter of 2010 increased 5.6% to $310.3 million from $293.8 million for the same period last year.  FVE’s net income from continuing operations for the first quarter of 2010 was $4.3 million compared to $25.1 million for the same period last year. Net income for Q1 2010 was down compared to 2009 due to extraordinary items that included a $25.1 million gain on extinguishment of debt and other gains during Q1 2009.

Operating Highlights Include:

• Senior living occupancy for the first quarter of 2010 was 86.2% compared to 86.7% for the same period last year.
• Senior living average daily rate for the first quarter of 2010 increased by 2.8% to $149.09 from $145.07 in the same period last year and increased by 3.1% from $144.64 in the fourth quarter of 2009.
• The percentage of senior living revenue derived from private and other resources for the first quarter of 2010 increased to 70.0% from 69.4% for the same period last year.

FVE Q1 2010 8-K

Skilled Healthcare Group, Inc. (NYSE: SKH) announced its Q1 2010 earnings this week and the acquisition of substantially all the assets of five Medicare-certified hospice companies and three Medicare-certified home health companies.  SKH showed total consolidated revenue for the quarter ended March 31, 2010 was $189.3 million, compared to total consolidated revenue of $188.1 million in the first quarter of 2009 and $188.4 million in the fourth quarter of 2009 and net income for Q1 2010 totaled $8.9 million, compared to $10.0 million for the first quarter of 2009.

“Our first quarter results demonstrate improving operating metrics in several key areas. First, our occupancy rate increased to 83.8 percent, or 70 basis points, over the fourth quarter of 2009 as the affiliates increased average daily census by 140 patients. Second, our skilled mix improved by 90 basis points to 23.0 percent as compared to the fourth quarter of 2009. Additionally, the percentage of Medicare days in the upper nine RUG categories reached an all-time high of 46.4 percent. With a continuous focus on high quality of care, these improving operating metrics illustrate the success of initiatives implemented in 2009 to mitigate risk from the challenging economic and competitive environment,” said Boyd Hendrickson, Chairman and Chief Executive Officer.

As part of the acquisition of the five hospice and three home health companies, SKH will enter into a fee-based management agreement for another home health company and be granted an option to acquire substantially all of the assets of such other company. The hospice and home health companies collectively have operations in Idaho, Montana, Nevada and Arizona.  Total consideration of the transactions is approximately $62 million consisting of approximately $43 million in cash with the remainder in the form of certain deferred payments payable over a three to five year period. The cash portion of the purchase price will be funded primarily from Skilled Healthcare’s senior credit facilities.

Boyd Hendrickson, Chairman and CEO, noted, “We are very excited about this transaction which comes with strong cash flow, a successful operating platform, a solid management team and higher than Company average EBITDA margins. Additionally, it expands our business lines into home health care and further expands our hospice platform. This lateral diversification expands our footprint to three additional states; thereby, diversifying our revenue stream both geographically and by sector.”

Marcus & Millichap Real Estate Investment Services recently announced the sale of Tudor Heights, a 64-unit assisted living facility in the Baltimore suburb of Pikesville, Maryland. The 39,000 square foot facility had an occupancy of 60% at the time of closing.  The buyer was Walton Street Capital, L.L.C., a private equity real estate investment firm based in Chicago. Walton Street formed a joint venture with a Senior Lifestyle Corporation, also from Chicago, who will manage the facility for the group. The seller was an entity affiliated with Sunwest Management, Inc., a company that has been operating under an SEC receivership in bankruptcy since January when the former CEO was accused of conducting a massive fraud. The lender DNB National Bank from South Dakota eventually foreclosed on the property after it was released from the receivership allowing the title to the property to transfer back to the lender.  The purchase price was not disclosed.

Omega Healthcare Investors, Inc. (NYSE:OHI) announced that it has exercised its option to acquire 63 additional long-term care facilities from affiliates of CapitalSource Inc. (“CapitalSource”) for approximately $295 million, consisting of approximately: (i) $34 million in cash to sellers, and (ii) repayment of $261 million of debt at closing.   The 63 facilities represent 6,607 available beds located in 19 states and are part of 30 in-place triple net leases among 18 operators. The 30 leases generate approximately $34 million of annualized revenue.

Omega acquired the option to purchase the 63 facilities in connection with Omega’s previously announced securities purchase agreement with CapitalSource, pursuant to which Omega acquired entities owning 40 facilities on December 22, 2009, and has agreed to acquire 40 other facilities subject to obtaining consent of the U.S. Department of Housing and Urban Development.

Senior Living Investment Brokerage announced that it is seeing strong interest in senior living sales during the first quarter of 2010.  The company sold three facilities, one in Illinois and two in Florida, totaling over $14.3 million dollars.  SLIB sold a 44 unit Assisted Living Facility located in Ormond Beach, Florida, for $2.2 million, or approximately $50,000 per unit.  Constructed in 1996, the four-story building is comprised of 32,440 square feet and sits on 1.2 acres and was at an occupancy level of approximately 60% at the time of the sale.  In another Florida transaction, SLIB sold a 78 unit Assisted Living Facility located in Hollywood, Florida which is home to approximately 144,000 residents and adjacent to Ft. Lauderdale.  The four-story, 62,000 square feet and sits on 2.9 acres was construction in 1999 was sold for $7.85 million, or approximately $100,641 per unit. Bradley Clousing of Senior Living Investment Brokerage, Inc. worked on both transactions.

Additionally, SLIB facilitated the sale of a 99-bed Skilled Nursing Facility located in rural Illinois, just west of Peoria for $4.3 million, or approximately $43,434 per bed.  Constructed in 1971, the one story building is comprised of 29,817 square feet and sits on 2.3 acres.  At the time of the sale, occupancy was approximately 66% and one of attractive attributes of the asset was that it was financed by assumable HUD debt.  Jeff Binder and Patrick Byrne of Senior Living Investment Brokerage, Inc. handled the transaction.

CLW Health Care Services Group recently celebrated its involvement in the sale of Capstone Village, an Entrance Fee Continuing Care Retirement Community located on the campus of The University of Alabama in Tuscaloosa, Alabama.  The facility, built in 2004, is located on 24 acres adjacent to the University of Alabama.  The sale for $9.5 million includes 159 total units including 22 Independent Living Garden Homes, 108 Independent Living Apartments, and a 29-unit Health Center (13 Assisted Living and 16 Memory Care units).

Senior Living Investment Brokerage (SLIB) announces the sale of two assisted living facilities in Florida and Alabama.  The Florida transaction was for $12.4 MM with 184 units that was constructed in 1999 and had an 89% occupancy level at the time of the sale.  The seller, a national skilled nursing operator, decided that the sale was a strategic disposition as it was its only stand alone assisted living facility in Florida. 

The second transaction announced by SLIB was the sale of a $4.5 million facility that has 50 assisted living units and 20 skilled nursing units in a separate wing. The skilled nursing wing is licensed for 20 beds (all private rooms) and is only certified for Medicare.  Constructed in 1994, the facility also had the assisted living portion of the facility has remained consistent at approximately 65% occupancy, which is significantly below market. The unit mix is 32 studios, 8 suites and 10 one-bedroom units in the assisted living portion.

Bradley Clousing and Ryan Saul of SLIB handled both transactions.

The Healthcare Real Estate Team of Sperry Van Ness recently announced the recent closing of the sale of a skilled nursing facility (“SNF”) licensed for 166 beds located in Nacogdoches, Texas for $7,850,000.  The Seller, Cascade-Willowbrook Health Services, Ltd., is affiliated with a regional operator which manages four other facilities in Texas. The Buyer, Texas-LTC, Ltd., is an affiliate of LTC Properties, a publicly-traded real estate investment trust (“REIT”) based in Westlake Village, California. The acquisition of Willowbrook Nursing Center brings the company’s portfolio to a total of 203 healthcare properties in 29 states, leased or mortgaged to 44 different operators.

The sale was handled by Grant Edwards, National Director of Sperry Van Ness’s Healthcare Real Estate Team. Transactional support was provided by Jake Corrigan, Advisor with Sperry Van Ness Healthcare Real Estate Team and Steve Fithian, Managing Director of Sperry Van Ness / Visions Commercial in Fort Worth, Texas.

Commenting on the sale, Grant Edwards said, “As always, the Sperry Van Ness Healthcare Team utilized it considerable resources to fish for Buyers with a wide net, while at the same time preserving confidentiality throughout the process. And yet, this transaction showcased more specifically our ability to help structure complex transactions for the benefit of all parties. That’s another important advantage of our team’s adherence to a set of core covenants, which ensures a client-first approach to senior care brokerage.”

Senior Living Investment Brokerage, Inc. announced the closing of a $11.2 million, or $37,949 per bed, sale of a Skilled Nursing Facility located in Washington, D.C. The five story facility is located in eastern Washington, D.C. in one of the oldest communities in the area, the Deanwood Neighborhood. Consisting of 296 beds, the structure was originally developed in 1982. The facility consists of approximately 136,142 square feet and sits on 1.44 acres. At the time of the sale, occupancy at the facility was approximately 75%. The buyer, a large regional operator, will be assuming the existing HUD insured financing; the buyer plans to use their experience with larger nursing homes to increase operating efficiencies, improve the Medicare census, and continue to enhance the performance at the facility.  Bradley Clousing and Jeff Binder of Senior Living Investment Brokerage, Inc. handled the transaction.

CB Richard Ellis Senior Housing Services announced that Hearth Management purchased Kensington Green of Southbury Senior Living Community for $17,199,000. The senior living community, which is located in Southbury, Connecticut,  includes 120 total units with 96 assisted living and 24 Alzheimer care units.  Established in Binghamton, New York in 1988, Hearth Management currently operates 10 senior living communities in New York, Connecticut and Indiana.

David Rothschild, Matthew Whitlock and Mary Christian of CB Richard Ellis’ national Senior Housing Services Group represented the seller, an affiliate of Salem, Oregon-based Sunwest Management. Hearth Management represented itself.