June 20, 2018, Ben Swett, Senior Care Investors - Many of Blueprint Healthcare Real Estate Advisors’ closings this year have featured a publicly traded REIT divesting skilled nursing facilities (a theme in the past year), which was yet again the impetus for its latest deal.
Christopher Hyldahl, Ben Firestone, Gideon Orion and Michael Segal worked on behalf of Sabra Health Care REIT to sell a portfolio of 12 skilled nursing facilities in New Hampshire (7) and Florida (5).
The deal did not come as a surprise, as it was part of a previously announced 35-property disposition plan of Sabra’s to reduce its exposure to Genesis Healthcare. The first tranche of 20 properties in Indiana, Kentucky and Ohio sold earlier this year (also handled by Blueprint) for $103.3 million, or about $55,400 per bed. Now, Sabra has thrown off 12 more, at a price of $134 million, or just over $100,000 per bed.
Why such a price disparity? Not only were the latter facilities located in higher-income and higher-barrier to entry markets in the Northeast and Florida, but they also brought in over $5,000 in EBITDAR per bed more than the Midwest facilities (about $12,000 per bed versus nearly $7,000 per bed, both based on trailing EBITDA). That’s the value of cash flow.
The buyer, a well-capitalized private equity investor, entered into a new triple-net lease with Genesis at market terms. The purchase price and lease terms represent a 9.0% initial yield on rent and a 1.35% lease coverage ratio, based on trailing EBITDAR.