American Senior Housing Association

The American Senior Housing Association (ASHA) held its annual conference this year in Palm Desert, CA. Between January 30 and February 1. Nearly 800 people attended this conference, making it one of the most successful and crowded ASHA events in recent history.

The JCH Group connected with over 30 existing clients in just two days. Those attending the conference included lenders, operators, vendors and others interested in the space. Players from different regions reported positive movement with no shortage of new opportunities. There were only minor concerns for how senior housing investments might change in the long term. Overall, those involved in the senior housing industry are enthusiastic for the future

An Unexpected Change for Senior Housing Investments

As the senior housing industry continues to boom, and more people are attracted to the playing field, changes are inevitable. Experienced operators are already seeing changes in the type of buildings being constructed in the senior housing space. Now, there has also been a change in where investors place their money and who these investors are.

For the past two to three years, REIT’s have dominated the senior housing transaction market, providing the highest senior housing transaction volume. Currently, private equity firms appear to be leading the way. While this may not sit well for more experienced players, the influx of private equity from newcomers and industry veterans has carved out a new leader in acquisitions.

Read More About: Real Estate Investment Trust

Operators in the assisted living or independent living sectors of the senior housing industry also seem to be on the move. Those who attended ASHA have reported that they have preparations in place to grow their portfolios. This either means they create new product through development or search for additional senior housing investments through acquiring existing assets.

Overbuilding Plants is a Small Cause for Worry

There is no doubt there has been a remarkable number of buildings under construction in the senior housing industry. Some operators worry that these buildings are of poor design and cannot be run efficiently. There are some markets where development is overheated and consequently may take quite some time for all of the new units to be absorbed. The downside to this will be the negative perception of lenders and investors going forward if there are large numbers of new builds that are half full.

However, new product is always good for the senior housing industry. In fact, with the demand for independent and assisted living facilities growing, year over year, it is only a matter of time before residents fill these new buildings, although at a potentially slower fill rate than originally projected.

Read: How To Become An Owner In Senior Housing

We will have to wait and see what external factors come into play, interest rates, regulations, reimbursement rates etc. Overall, every attendee at the conference was very bullish on the senior housing market. No one foresees any major shifts or changes in the near future.

The Preferred Senior Housing Brokerage is the JCH Group

As its popularity rises, the senior housing industry continues to undergo changes. The experts at the JCH Group want you to make the most of the opportunities that appear.

As a loyal attendee of the ASHA conferences, our network delivers top resources, connections and information. We are a team of exceptional brokers and investments specialists, providing keen insight and advice to every client and customer. Our combined experience allows you to make your senior housing investment flourish within the senior housing industry.

To learn more about the ASHA Conference and how to make your move in the senior housing industry, contact one of our investments specialists at the JCH Group today!

Senior Housing Sales Negotiations

Negotiations are an integral part of the transaction process in the senior housing industry. It can be repetitive, complicated and challenging; having an experienced JCH investment specialist on your side makes it easier. More often than not, acquiring your senior housing investment depends on the negotiations themselves.

There are the three main phases of a typical transaction within the senior housing industry.

Phase 1: Negotiating the Letter of Intent

When a buyer makes an offer, the written document is called the letter of intent, or the LOI. It outlines details such as the due diligence period, purchase price, closing time frame and contingencies. Later in the process, the LOI develops into the purchase agreement.

There are two main approaches in -writing the LOI in the senior housing industry. Some investments specialists prefer a detailed LOI. They would rather get the majority of the negotiating out of the way and discuss sensitive details up front. This method, though aggressive, typically saves some legal fees for both the seller and buyer.

The simpler LOI, usually between one or two pages, saves the bulk of the legal negotiating for the purchase agreement and typically allows for quicker acceptance of the LOI.

Phase 2: Negotiating the Purchase and Sales Agreement

The next phase of negotiations includes the purchase and sales agreement, also referred to as the PSA, and the operations transfer agreement, OTA. Attorneys are involved in these negotiations; they will be responsible for drafting and negotiating the contracts.

The PSA and OTA negotiations determine the specific business terms and the legal framework of the senior housing investment deal. Typically, this is the most laborious negotiation process in acquiring assets in the senior housing industry. Because contracts are being drafted, the process can last for several weeks, although experienced brokers and attorneys can shorten this timeline.

Read: Investment Red Flags

Phase 3: Potential Negotiating After the PSA Has Been Signed

Once the due diligence period is complete, the buyer may argue for a potential re-trade or re-negotiation of price. This can be because the buyer discovered new information or simply had a change of heart. Sometimes, the buyer demands a lower price for the senior housing investment than what was agreed upon earlier.  Unfortunately, it tends to be an ugly negotiation. It can make or break the deal.

Another reason why buyers may attempt re-negotiations is to extend time frames. This is a rather common request. Depending on the circumstance, sellers will usually request an increase in the good faith deposit; the deposit may become non-refundable and be released to the seller, which is common for extensions on closing periods. This helps keep buyers invested in the closing of the deal.

The JCH Group is Your Key to Senior Housing Investments

In the senior housing industry, negotiations are what get you the housing investment you want. The investments specialists at the JCH Group know exactly what is marketable at any given time. We have experienced negotiators who have closed incredibly complicated transactions in the timeliest manner. They can do the same for you.

For your senior housing investment, speak to one of our investments specialists to effectively negotiate the deal you desire.

The senior housing industry is robust with new opportunities as we enter the first quarter of 2017. Several large operators have listed significant portions of their healthcare facilities for sale, attracting smaller and regional operators to buy skilled nursing facilities and assisted living facilities.

Read: 2017 Senior Housing Forecast

Many of these large providers operate hundreds of different facilities across the country. With so many healthcare facilities under their care, efficiency and competency in management can become an issue. For other operators, business models and plans change resulting in their need to strategically dispose of assets. As a result, portfolio management must keep up with the ever changing senior housing business.

Large Collections of Assets in the Midwest

Historically, as operators experience success, they expand their portfolios and buy healthcare properties. While this may be the dream and plan of most operators, there comes a point when a large portfolio becomes muddled. At this point, many of these operators start to downsize and list their care homes for sale.

In recent months, there have been a large number of skilled nursing and assisted living for sale available in the Midwest.

• Kindred Healthcare has announced plans to dispose of all skilled nursing facilities.
• A West Coast/Midwest SNF operator has listed all 66 facilities in their portfolio.
• Brookdale Senior Living, which oversees more than 1000 locations, has announced the disposition of 200 assets across the country.

Lastly, another national SNF operator is rumored to have listed 70 skilled nursing facilities for sale, though this has yet to be confirmed.

For these large companies, disposal of assets is a necessary move in order to protect efficiencies and compete in the senior housing industry. Most operators with over 100 facilities under their management often do not compete at a high level because quality of care slips.

Smart Opportunities for Operators

Searching for Growth

On the other hand, this is an immense opportunity for small to mid-level operators. Such a large selection of assets is unprecedented, giving prepared operators the chance to make intelligent senior housing investments.

There is a wide selection of skilled nursing and assisted living facilities for sale. This particular influx of available assets also provides the opportunity for operators to gain desirable territory in the Midwest should that be their goal.

This is a special opportunity for those involved in the senior housing business. Current senior housing valuations have shown strong numbers, making the move to buy healthcare properties a worthwhile senior housing investment. Investment specialists at JCH can help properly design deals to maximize equity and returns.

The JCH Consulting Group is available for operators ready to make a move. Our experienced agents are ready to assist those who want to expand their portfolios, experience fast growth or amass assets. We are also here for those looking to trim the proverbial fat off the portfolio and sell assets.

To design your senior living property investment plan, choose the investment specialists at JCH. We are a premier healthcare brokerage specializing in senior housing investments. As the authority in the senior housing industry, we help you navigate the senior housing business.

Contact one of our specialists for pricing information on these assisted living and skilled nursing properties for sale. Hire the JCH Consulting Group for your next senior living investment.

The senior housing industry has experienced tremendous growth within the past few years. Strong investment returns have attracted serious new players. With construction debt available in the marketplace, plenty of new construction is also under way. Now, as 2016 comes to a close, deals are wrapping up, providing a clearer picture of what 2017 will look like.

Here are a few changes to expect.

Interest Rates Will Rise

Those planning to buy healthcare properties should know that interest rates are expected to rise. Though it is uncertain just how quickly interest rates will increase, and by how much, owners and operators should anticipate a chain of changes as a result.

(Read: How To Become An Owner In Senior Housing)

Debt will inevitably become more expensive. Higher interest rates mean that the same amount of debt will cost more. Investors preparing to buy nursing homes may also struggle to make deals pencil at current capitalization rates. Higher interest rates will most likely affect the coverage ratios implemented by lenders. Increased interest rates will also affect existing variable rate loans and their monthly debt service.

Overall, operators may see some softening in pricing when they decide to sell. Though no dramatic shift is expected, there will be growing pressure for those in the senior housing industry to slightly lower expectations when it comes to valuations.

Expenses Will Increase

Several factors will contribute to higher expenses.  Due to minimum wage increases across the country, labor costs overall will become more expensive. We anticipate that insurance will also increase, as it has for the past two years. As a result, this affects the bottom line for operators and profit margins may shrink.

The main concern for new and prospective operators is, if, and how they can pass the increase in expenses on to residents/patients. With the private pay model, it may be doable, depending on the market you are in. Current operators have been testing and implementing new strategies where residents absorb a portion of the costs without compromising quality service.

However, the rise in labor costs will likely have a greater impact on facilities operating under the reimbursement model. This includes Medicaid and Medicare models that do not have the ability to pass increased expense cost to the patient. Rate increases for these models are expected to be lower than the increase in expenses.

New Construction Will Open

Last year, players in the senior housing industry were enthusiastic about the amount of new construction taking place. Expect those facilities to come online in 2017 and 2018.

New skilled nursing facilities and assisted living facilities will be good for the senior housing industry as a whole. These high quality assets are sure to support the demand expected from the booming senior housing business.

Those in the senior housing business expect a better idea of what these changes will look like as 2017 progresses. 2016 has closed with multiple large transactions in the pipeline. Healthy first and second quarters are expected in terms of transaction volume.

This also provides solid market parameters for valuations. With plenty of buyers for senior housing for sale, there will be enough data and metrics to measure the affect these changes have on the 2017 market.

Consult the Investments Specialists at the JCH Group

The investments specialists at the JCH Group are available to help make 2017 a complete success. From free business valuations to refinancing, we are available with key resources to strengthen your portfolio of assets.

To find your senior living investment in the senior housing business, contact one of our investments specialists today! Nick Stahler 714-463-1663 or Jim Hazzard 714-463-1677

Sell Your Senior Housing

Senior housing investments specialists are often asked how to identify the prime time to sell healthcare properties in order to maximize profit. Fortunately, there is no time like the present to sell. The senior housing industry transaction market is very strong, and the playing field is even for both sellers and buyers alike. Whether you list your nursing home for sale or plan to buy healthcare properties, current market conditions work in your favor. (Read: How To Calculate A Senior Housing Investment)

Expedient Transactions with Low Cap Rates

All sectors of the senior housing industry are experiencing historically low cap rates. Assisted living has a cap rate between 7%-9%, while the skilled nursing cap rate falls between 11%- 13%.

When you couple low debt interest rates with high pricing, sellers find the momentum to move forward with listing their assisted living properties for sale. Those looking to sell their senior housing investments should begin to plan their exit with their senior housing brokerage of choice, JCH of course!

Cheap Debt and Low Risk

Banks have been offering low interest rates on debt, making it easy to acquire loans. Incoming buyers therefore have greater access to cheap debt and can pay higher prices for the assets you sell, whether that is skilled nursing for sale or other assisted living investments.

Low interest rates on debt also mean that lenders perceive low risk in the marketplace. This allows players to borrow and buy without the type of worries that come in a high stress marketplace. As a result, transactions are easily facilitated on both sides.

Low Inventory and High Demand

The need for senior housing properties is growing each year. Investment specialists often advise sellers to wait until inventory for healthcare properties are somewhat depleted, which allows price hikes on the sale. From the buyer’s standpoint, a marker to look for is a steady flow of inventory, whether those healthcare properties for sale are cash flowing assets or distressed.

It has never been easier for a seller to find the right type of buyer in the senior housing industry. Sellers are discovering there is a strong demand for assisted living, but the need for skilled nursing facilities for sale is even greater. Recent transaction history has shown that senior housing facilities for sale have either accepted offers or are under LOI within the first 30 days of listing.

The Senior Housing Brokerage All Investors Trust

The current senior housing industry allows the seller to sell the way he or she wants. If you want to quickly dispose of your senior housing investment, you can have a buyer within the next month. If you would rather wait and achieve the highest price possible, then take the time for a larger marketing campaign to attract willing buyers. Whatever the situation, the JCH Group has both the resources and experience to facilitate your transaction goals.

If you are new to the senior housing industry and have no idea what a business is worth, ask for our free business valuation. No matter your status in the industry trust JCH as your investments specialists in the senior housing business.

Maximizing the profit of senior housing investments can be a complex process. It requires a great deal of research, planning, collaboration and knowledge to ensure that your senior housing investment yields the results and profits you desire. While the senior housing industry continues to boom, many investors, new and old, may not be maximizing their proceeds and opportunities. The 1031 tax deferred exchange is one of the vehicles that can help owners save on taxes when selling their senior living property investments.

Qualify for Tax Exemption

The 1031 tax exchange allows a property owner to sell their real estate asset and acquire a new like-kind asset while deferring the capital gains tax. (Read How To Calculate Senior Housing Investment, click here)

For example, if you list your assisted living facility for sale at a sales price of $10 million, find a buyer and close the deal, you can buy healthcare properties at the same valuation without paying any capital gains tax. It is essentially a tax-free transfer of value.

When making this new senior housing investment, you are free to bring in outside equity. However, the total real estate value must be transferred under the 1031 exchange guidelines. This means that all $10 million or more must be transferred into a new income-producing asset or you will pay capital gains on any amount not exchanged. There is also no debt forgiveness, meaning, if you have $6 million in debt on the $10 million deal, you must have $6 million in debt on the new acquisition.

Rules of the 1031 Exchange

There are actually two sales that occur during the 1031 exchange. The down leg refers to the initial housing investment property being sold in the exchange. The up leg is the second asset bought of equal or greater value.

Fortunately, the 1031 exchange applies to almost all real estate in the senior housing industry. This includes skilled nursing facilities for sale, Assisted Living, Stand-alone Memory Care, Independent Living, CCRCs’ and any other senior housing properties that have a real estate component.

Under the 1031 exchange, property owners typically take between 100 and 120 days to find a buyer for their senior housing facilities for sale. Once the transaction closes, owners have a total of 180 days to acquire a new like-kind asset. This gives investors almost a year to complete the entire process and honor the 1031 exchange timeline.

Because of these times constraints, buyers in a 1031 exchange gain preferential treatment from sellers because they have a strong incentive to close and have the funds to do so. However, falling outside these parameters will nullify tax exemption. The sale then becomes subject to normal capital gains taxation. For this reason, it is recommended that those particularly unfamiliar with the 1031 exchange consult a senior housing brokerage, like JCH Consulting Group.

Minimize your tax exposure with the Top Senior Housing Brokerage

The 1031 exchange is a phenomenal tool that helps operators and property owners make the most out of their senior living investments. Those who are deeply involved in the senior housing industry that have not yet implemented the 1031 exchange can experience a huge surge in savings from exempted taxes alone.

The investments specialists at the JCH Group are prepared to help you use the 1031 exchange to your benefit. Our extended experience and intelligence makes us the choice senior housing brokerage that handles each aspect of the transaction with expertise. If you are listing your assisted living facility for sale and would like a free business valuation, contact one of our experts for assistance.

This month the JCH Consulting Group’s investment specialists attended the California Association of Healthcare Facilities conference. The CAHF’s 66^th Annual Convention and Expo were held, as always, in Palm Springs, California. From November 13 to 16, senior housing investments specialists, operators, vendors, lenders, attorneys, and those with serious interests in senior housing and skilled nursing sales met to share and exchange vital information.

The four-day conference featured information sessions led by senior housing experts, meet-ups and an exhibition hall where vendors and operators showcased their services. Out of over 200 expo booths, the JCH Group was the only senior housing brokerage, providing a unique vantage point within the attendance. The conference also offered several continuing education sessions for facility level employees.

The 2017 Calendar Year Looks
Strong and Steady

The majority of active members in the senior housing and skilled nursing industry felt confident that 2017 would yield positive results. Inevitably, everyone expects an increase in costs, particularly for labor and insurance. However, no one felt there to be any significant factor that would negatively impact the senior housing business. Specifically Medi-Cal and Medicare, reimbursement and revenue are expected to experience little change.

In fact, under the Trump administration, operators anticipate fewer audits. As a result, operators and owners will have more time to focus on field operations and will spend less time wrestling with compliance issues.

The JCH Group Finds Success in Collaboration

As the premier senior housing brokerage attending CAHF, the JCH Consulting Group partnered with Lancaster Pollard in hosting a cocktail party. Lancaster Pollard is a top tier loan brokerage that provides loans for operators in the senior housing industry.

Over fifty clients attended the event, mingling with each other and the top investments specialists at JCH. Many players wanting to buy assisted living and skilled nursing facilities or list their assisted living and skilled nursing facilities for sale were able to find pathways to move their deals forward.

While the JCH investments specialists provided key information for operators ready to move, Lancaster Pollard representatives made transactions possible by laying out the financial logistics. It was a beneficial alliance for both companies and an enormous convenience for those seriously interested in senior housing investments. The JCH Consulting Group plans to collaborate more frequently with Lancaster Pollard to make senior living property investments a seamless operation.

The Senior Housing Business Experts at the JCH Consulting Group

Overall, the senior housing business remains bullish and robust. Valuations are stable and the demand for residential care homes for sale remains strong and consistent. Those involved in the senior housing industry are still eager to seize opportunities and make connections.

The investments specialists at JCH are proud to have taken part in the 2016 CAHF Conference. We anticipate a productive year in 2017. Our team has already begun building new opportunities for our clients in the year to come.

The JCH Group is the experienced senior housing brokerage that delivers results. We provide valuations for your facility(s) free of charge and are happy to answer any questions you have about senior living property investments. Contact one of our investments specialists to assist you in your plan to buy healthcare properties.

Investment Red Flags

The senior housing industry grows larger and larger each day. With more operators looking for an assisted living facility for sale, the marketplace grows a bit muddled. Less experienced sellers and buyers may get mixed up in bad business decisions.

If you are looking to buy assisted living facilities, cautiously investigate every facility you visit and every person you meet. Just by avoiding a few red flags, you can easily weed out faulty senior housing investments.

Search the Physical Plant

In most states, sellers are required to disclose any major issues with the physical plant prior to acquisition. However, JCH investments specialist will encourage you to conduct inspections yourself and hire experts to conduct inspections on your behalf. Some examples of what to look for are: major cracks or movement in the foundation, walls and roof. For now, it is best to overlook the cosmetic fixes such as peeling floors, paint or falling stucco. Deferred maintenance can be dealt with at another time. Read: What You Should Know About Assisted Living Developers

Keep Licensing in Order

Before acquiring an assisted living facility, familiarize yourself with the new rules and regulations required to obtain licenses. Because regulations change, what slid under the radar one year will be flagged the next. For example, the assisted living facility for sale may be a very old structure. The current owner has the licenses needed to operate lawfully. However, when you acquire the facility, a new license is needed and potentially may be under new or different rules and regulations.

Do the Math for Financial Returns

Rule of thumb: whatever sounds too good to be true usually is. Though revenue is relatively easy to verify, expense reports have wiggle room. For that reason, it is imperative that potential buyers scrutinize expense reports. Pay added attention to expense reports that seem too low. If you are unable to replicate the expense matrix, chances are, it was understated and you paid too much for the asset. This results in a smaller profit margin going forward. Read: How To Manage A Profitable Skilled Nursing Facility

Use Common Sense When Meeting Sellers

Simply planning to buy assisted living facilities is no small task. Take the time you need to collect all the information necessary to make a confident decision.

When a seller is pushy or demands a non-refundable deposit too early in the process, take a step back. They may be trying to hide a flaw or hand off misfortune. A proper and honest seller allows you time for due diligence and provides all the practical information you request.

The JCH Group for Your Housing Investment

The JCH Consulting Group is a senior housing brokerage curating high quality deals on a daily basis. Our investment specialists do our best to filter out all red flags prior to bringing the facility to market. As a result, everything you see with us passes our standard of excellence.

Trust your next senior housing investment to the experts at JCH. Our team is available to ensure that your transaction is as profitable as possible. To speak with one of our investment specialist, contact the JCH Group at your convenience, Nick Stahler 714-463-1663 and Jim Hazzard 714-463-1677.

At this moment, opportunities are flooding the senior housing industry. With the demand for skilled nursing facilities and assisted living facilities rising each day, experienced operators and administrators in the senior housing business are looking for a vertical move.

Operators accustomed to managing assisted living facilities for sale are now opening up companies to become owners of their own. This is an unprecedented move that has resulted in many high quality senior housing investments.

Whether you are new to the housing business or a regional operator overseeing several plants, becoming an owner is an enormous step. However, with careful planning and help from the correct nursing home and assisted living brokerage, you can soon be an owner with a strong portfolio of senior living property investments.

Research and Plan Carefully

When making the move from operator to owner, a great deal depends on your track record and resume. Your resume needs to prove that your work as an operator was both productive and profitable. This type of proof is necessary to persuade investors, lenders, and other key relationships, bringing the entire deal together.

Impending owners also need a pipeline of acquisitions ready.  Know the type of facilities you are interested in, the kind of skilled nursing and assisted living facilities currently for sale, and what type of capital is needed to buy the assisted living or skilled nursing facilities you want.

Build Strong Relationships and Find Capital

Start up capital is needed for company overhead expenses. There will be a time period where your new company incurs expenses with little profit. So, you need funds to account for the office space, employees, equipment and other miscellaneous items as well as the capital needed for acquisitions.

Operators who want a robust portfolio of 10 or more assisted living or skilled nursing property investments will need a proportionate amount of resources. This is where your professional relationships come into play. The money to acquire the senior housing investment itself will most likely come from the investors. Plan your pitch and support it with your resume.

Operators seeking to own just one asset face a simpler process. There are several debt options for these owners. This includes small business association loans that will work with you to fund your senior living investment.

It is unlikely that an experienced operator will have no connections whatsoever. Rest assured, if your contacts fall through, senior living brokerages have resources for you.

Investments specialists at senior living brokerages can make the transition from operator to owner seamless. In fact, if only you come with a clean track record, they can assemble the rest of the transaction for you. This includes finding the right investors, the right assisted living facility for sale, and the right managerial contracts.

Rely on the JCH Group Investments Specialists for the Rest

At the JCH Group, our team of experts has assembled incredible senior housing investments. As a result, every owner has profited from their senior housing facilities.

We provide honest advice about the senior housing business so that you can count on your wealth. For free business valuations or answers to questions about senior housing facilities, contact one of our experts.