Well, it looks as if the sky did not fall, the SEIU did not prevail, Chicken Little is back in the coop and The Carlyle Group closed on its purchase of Manor Care today.  How’s that for a stocking stuffer for shareholders and option holders.  One last comment, however.  Although the merger price was for $67.00 per share, today’s trading high was $67.03.  Go figure. 

After the independent committee of the board of Sunrise Senior Living submitted its report to the independent directors this week, we figured it would take a few weeks to digest the information, let alone act on it.  Wrong.  Effective today, Tom Newell, the president of Sunrise, Larry Hulse, the former CFO from 2000 to 2005 and most recently the CEO of the company’s captive insurance company, and Carl Adams, the Treasurer and former chief accounting officer from 2000 to 2004, were all given their walking papers.  Well, Merry Christmas and Happy New Year to you, too.  The company’s press release stated that the “entire senior finance team that was in place during the years covered by the pending restatement is now no longer with the Company.”  And we thought that Brad Rush (the CFO from August 2005 until his abrupt dismissal on May 2, 2007) was the fall guy for the restatement process.  It appears that the board is trying to put the entire accounting problem behind the company by saying Read more…

Recently I got to talk with Grant Kief of Senior Living Investment Brokerage about what 2008 will bring for both buyers and sellers in the seniors housing market.

You can click here to listen to the interview (5 minutes), or read the transcript below.

Steve Monroe
We’re sitting here today with Grant Kief, president of Senior Living Investment Brokerage, a seniors housing brokerage company, with three offices across the country.

Grant, you have been representing sellers of seniors housing assets for many years.  How would you characterize the last few years?

Grant Kief
The last few years, Steve, it’s been gangbusters.  We have grown from about five or six brokers three years ago; we currently have 13 or 14 brokers.  And we have probably tripled the number of transactions and the dollar volume, as well.  It’s been very good to us.  I think that we’ve grown along with the market.  It’s been, with the demographics in our favor, very good to us.

Steve Monroe
Good.  Did you notice any change in the atmosphere in the market during the first half of the year, before the summer credit crisis?

Grant Kief
No, we probably have more deals under letter of intent and contract now than we did in the first half of the year.  It continues to Read more…

After missing a self-imposed December 15 deadline for an independent committee of the board of Sunrise Senior Living to complete its review of the accounting restatement and alleged insider trading and option pricing issues, on December 18 the company announced that the committee’s investigation had been completed and that its work was being considered by the independent members of the board.  The actions the company will take, if any, will be announced “in due course.”  The shares of Sunrise hit a 52-week low of $26.78 just before the announcement was made, and have rallied a bit since then, but investors’ confidence has been shaken a bit, and patience has been in short supply.  This is a price level not seen since mid-2006 after the accounting restatement problem was first disclosed.  I can only guess that management and the board want to get it right the first time, so we assume they are being overly cautious.  How long it will take the independent directors to review the conclusions is anyone’s guess, but with the holidays coming up, we don’t expect anything until next year.  Investors really want Read more…

Last month at the NIC Conference I got a chance to talk with John Cobb of GE Healthcare Financial Services  about the seniors housing market in the months following the credit market crisis, and discuss what forces would help jump-start the industry again.

You can click here  to listen to the interview (7 minutes), or read the transcript below.

Steve Monroe
I’m sitting here at the 17th annual NIC Conference in Washington, D.C., with John Cobb, managing director of Long-Term Care at GE Healthcare Financial Services.

John, how does the atmosphere seem to you?  Is it a little different from last year?

John Cobb
I think it’s a little bit different.  I think people are very energized, [there are] a lot of smiles on their faces.  People are trying to search through the clouds.  Everyone knows about the credit market or the credit crunch, as people are calling it, and they’re trying to see what’s going to happen.  And I think people think that probably cap rates have risen.  I think they’re trying to figure out, (a) from what they’ve risen from and (b) how much is that?  Is that 50 basis points, is it 100 basis points?  I think that’s what people are kind of searching for.  So it’s interesting that they’re all searching for something.

Steve Monroe
All searching.  Well, how has GE Healthcare responded to the summer’s credit crisis?

John Cobb
I think, unfortunately, we’ve probably paused a little bit.  I think we’re trying to figure out where the market has come to.  You know, the first two quarters of the year, we had not done a lot of seniors housing volume.  We did a lot more skilled nursing volume, mainly because that’s where some of the yield was.  But right now, we’re definitely pausing.  I mean, our cost of funds Read more…

There he goes again.  Crack New York Times reporter Chuck Duhigg is once again spreading misinformation and bias about the skilled nursing facility industry (front page article in the business section of the Times today).  Referencing his “report” in the Times again, Chuck once again states that private equity firms have purchased “thousands” of nursing homes, when he knows that this is just not true.  But then again, the Times is often not known for going after the truth; rather, its political agenda often drives the “news” stories, and it is unfortunate that not enough people stand up to this pervasive bias. 

The hearings in yesterday’s House Ways and Means Health Subcommittee and Senate Special Committee on Aging were a blatant attempt to show one side of the story.  In Chuck’s story today, he referred to the one industry representative as “a Read more…

I caught up with analyst Frank Morgan  of Jefferies & Company recently and asked him about the market forces that sparked the volatility in seniors housing stocks this year, and what he thinks lies ahead for the industry.

You can click here to listen to the interview (9 minutes) or read the transcript below.
Steve Monroe
We’re here today with Frank Morgan, managing director and healthcare equity analyst with Jefferies & Company.

Good morning, Frank.  Most of the seniors housing stocks got whacked earlier this year. Were investors justified or did they just overreact to economic news?

Frank Morgan
Well, you’re certainly right about the “whack” part.  From the 2007 yearly highs until the end of the third quarter, the average stock was down about 26% with the worst one down about 32%.  The best performer was down only 16%.  Now, fortunately, the stocks have bounced off those lows recently, so you’re definitely correct in terms of the stocks got hit and were very volatile.

Was a correction justifiable?  Correction probably justified to some degree, but as usual, things usually get overdone.  Don’t forget, we’ve actually been in a multi-year bull market in these stocks and the two factors that have been driving the stocks were Read more…

The New York Times is at it again.  Crack reporter Chuck Duhigg, who appears to get all his information from the SEIU and trial lawyers, seems to have a little trouble with numbers when reporting on his own “reporting.”  In today’s story in the Times, he refers to his last story, which he calls a report, where private investment firms had “bought thousands of nursing homes.”  Well, in his September story he listed those private investment firms, including GE which is not a “private investment firm,” and their acquisitions, and lo and behold, the total was less than 1,300 facilities (including the GE deal, but excluding the Manor Care deal which hasn’t closed), not the “thousands” that Chuck “reported.”  He probably wanted to exaggerate the facts for his union friends.  And speaking of unions, the Times story today includes a picture of SEIU union organizers protesting at The Carlyle Group’s headquarters last month.   If you have a copy of the article, please note that all the signs held by the ”protesters” say ”Put Ohio’s Seniors Above Caryle Profits.”  They can’t even spell Carlyle right (the missing “L”).  And the reporter’s buddy, Read more…

I recently sat down with Jim Pieczynski and Steve Gilleland, top healthcare real estate executives with CapitalSource Inc. to ask them what’s ahead for the seniors housing industry, given the recent credit market meltdown and the increased scrutiny of private equity deals, and more.

You can click here  to listen to the interview (9 minutes) or read the transcript below.
Steve Monroe
We are here today with Jim Pieczynski, who is the co-president of healthcare and specialty finance business at CapitalSource , and Steve Gilleland  , who is a director of the same group.

Guys, we’ve had a great run for the last three to four years in the seniors housing industry, but the market has softened.  When do you think we’ll see a turnaround? Read more…

After months of work, consisting of interviews with 37 individuals, including past and current employees, and the review of more than 2.5 million electronic and hard copy documents, the Special Independent Committee of the board of Sunrise Senior Living has found no evidence of backdating of stock options, no evidence of an intention to reach an inappropriate accounting result with respect to two accounting errors, and no evidence that any director or officer traded in the company’s stock based on prior knowledge of non-public information.  These were some of the allegations in a complaint filed by the SEIU, a shareholder of Sunrise. 

The findings of the Committee’s initial report are not surprising, but there was one new revelation that was unexpected. Read more…