residential care facility

When considering to exit the senior living industry, there are two main alternatives to consider, selling the facility fee simple, or leasing it to an operator. There are advantages and disadvantages of each option.

The biggest advantage of selling an assisted living facility (or independent living facility) is an owner receives all of their cash up front and has no future financial liabilities or risk. The owner no longer has the risk of the market going down in the future, new government regulations, overbuilding, etc. The biggest disadvantage of selling is paying the capital gains tax, which can be substantial for those owners who have owned their facilities for a number of years.

Leasing, on the other hand, has the advantage of not having to pay a large sum of capital gains tax and the advantage of receiving monthly rent. For those owners who do not need a large amount of cash upfront, leasing can provide a great residual income for years. However, the disadvantages of leasing are many. To begin with, an owner must find a quality tenant that has the operational and financial ability to run the facility for the length of the lease. If the operator defaults on the lease, the owner could be in the position to have to take over the operations of the facility, which could be in poor condition. Additionally, at the end of the lease, the owner still has to make a decision on what to do with the facility. If the market is worse, and/or if there are new competitors in the area, the facility could be worth substantially less than at the beginning of the lease.

When the market to sell a senior living facility is good, like it is today, it typically makes more sense to sell and eliminate the risk of an operator defaulting and/or the facility being worth a lot less at the end of the lease. However, when the market to sell is not as good (like it was in 2009-2010) it might make more sense to lease the facility to a quality operator.

For more information on different exit strategies, contact Jason Punzel at [email protected] or (630) 858-2501 x 233.

The post Should I sell or lease my Senior Living Facility? appeared first on Senior Living Investment Brokerage.

I’m often asked when is the best time of year to list a seniors housing or nursing home asset? We are all used to residential real estate agents telling us to list in the Spring while the weather is starting to change (at least for us Northerners).

Does it matter for seniors housing communities?

Yes and no. While there is not the seasonality in the seniors housing market as there is in the residential market, there are good and less optimal times for getting buyers’ (even institutional buyers’) attention.

I would argue that we are entering into one of those sweet spots as we get into the middle of September. Typically, Senior Living Investment Brokerage, Inc. has its highest volume of listings in September and early October.

Why is that?

During the Labor Day / beginning of October time frame, Buyers have made it through the Summer and are looking to deploy capital before the end of the year. They are hoping to make one last push to meet their aggressive beginning of the year expansion goals.

With a typical 3-4 month closing period, now is as good of a time as any to consider listing your property with Senior Living Investment Brokerage, Inc. We can help you procure the right Buyer, who can close the transaction prior to year-end. Many Buyers are looking to “get money out the door” by December 31st and this may give you an advantage in coercing those groups into making a more aggressive bid than they would in the middle of the year.

If you have any questions on the topic of this post or would like a confidential valuation of part or all of your seniors housing portfolio, please contact Matthew Alley at 630-858-2501 ext. 225 or [email protected].

The post When is the best time to list a seniors housing or nursing home community? appeared first on Senior Living Investment Brokerage.

Ryan M Saul