In mid-August, Chartwell Seniors Housing REIT disclosed that it had sent confidential financial information to at least a few parties that we assume were interested in purchasing the REIT.  That sent the REIT’s share price up by almost 20% over the next couple of weeks to over C$15.00 per share.  But last Friday, September 14, Chartwell announced that it “is currently not in discussions with any third parties in connection with a potential sale.”  The shares plunged by almost 15% on that news, much to the consternation of the arbs who probably thought they could make a quick buck on the sale of the REIT.  The Special Committee of the board is still reviewing “strategic alternatives,” including the potential sale of the REIT, but with the debt markets still unsettled and the real estate markets not getting any better, a buyer may not materialize.  Chartwell’s share price is now under C$13.00, and the market cap is just under C$1.3 billion, which is not that large a deal in today’s world.  Perhaps management will make a run at taking it private…. 

In case you haven’t heard, there has been a little bit of a storm developing over the release of preliminary data from the upcoming ASHA/NIC Seniors Housing Construction Trends Report 2007.  Apparently, the preliminary data shows that for the top 75 metro areas in the country, total seniors housing and care units/beds under construction as of March 2007 was 28.2% higher than March 2006.  Specifically, the number of independent living units under construction grew from 11,335 units to Read more…

In the August issue of The SeniorCare Investor, we stated that we had heard rumors that Chartwell Seniors Housing REIT may be for sale.  Rumors no longer.  Today, Chartwell announced that its special committee of the board, assigned to deal with strategic alternatives in light of changes to the federal income taxation of publicly traded income trusts in Canada, has made information available to certain parties, under confidentiality agreements, who are interested in possibly purchasing the REIT or completing some other strategic transaction.  There is obviously no assurance that a transaction would occur, but we are sure there will be plenty of interested parties.  While now is not a great environment for “real estate,” we may see the number of health care REITs shrink in the next few years.        

When prices for assisted living facilities head over $300,000 to $400,000 per unit, investors get a little nervous.  And why not?  Where’s the upside when you get into nose-bleed territory, unless it is a great strategic fit with incredible cash flows?  We recently heard about a deal that certainly sets a record and at the same time leaves those $400,000 per unit sales in the dust.  We are talking about a sale of 15 assisted living facilities with 1,244 units that sold recently for approximately Read more…

After the market close yesterday, Sunrise Senior Living issued a press release with the now-standard language that its board of directors had decided to “explore strategic alternatives intended to enhance shareholder value,” which means they are looking into a sale of the company, or at least part of it.  They have hired Citigroup Global Markets to act as its financial advisor.  It has been rumored for several months that this was the path the company would go down, well before Millennium Partners, LP, a 2.5% owner of Sunrise, sent a letter to the board asking it to either sell the company or change management.  Letters such as these usually have little impact anyway.  But we heard earlier this year that the company had been in serious discussions with Read more…

Over the long term, health care REITs have been one of the best investment vehicles in the market.  A relatively high dividend yield combined with price gains have provided investors with solid returns for nearly 20 years.  For the 11 health care REITs that we follow, the total returns (inclusive of dividends) in 2006 ranged from a low of 26.8% to a high of 52.5%, beating most every market index.  One of the best recent years was in 2003, when the total returns ranged from 22.1% to 153.5%, with six of the 13 REITs posting returns in excess of 50%.

This year, however, is shaping up to be one of the worst this decade.  Just in the month of June alone, all 11 health care REITs suffered price declines, ranging from 1% to 15%, with six of them dropping by 10% or more in the month.  By the end of June, every health care REIT was Read more…

My colleague and contributing editor Kate Upson recently talked to Deborah Burkart of National Equity Fund, one of the largest, not-for-profit equity funds in the country, about why the Low Income Housing Tax Credit program is such a successful tool in creating affordable senior housing.
You can click here to listen to the interview (4.5 minutes) or read the transcript below.

Kate Upson: Welcome to Expert Opinion, a Conversation with Deborah Burkart.  Debbie is Vice President and National Director of Supportive Housing and Assisted Living for the National Equity Fund, one of the largest, non-profit equity funds in the country.

Her expertise is in helping providers utilize low income housing tax credit equity to create and preserve housing for the low-income elderly.  She will be a panelist in our July 25th audio conference on affordable senior housing and today gives us a preview.

Debbie, can you please summarize the Low Income Housing Tax Credit Program and how it works? Read more…

We figured something was up last Friday when, after steadily dropping in value since June 19, Manor Care’s stock traded up by more than $3.00 per share during the day on heavy volume of 2.4 million shares.  Final bids had been due the previous Friday, June 22, and it took just a week for the board to sort things out.  We had heard that the buyers were getting a little nervous, and the final price agreed to seems to reflect that anxiety, but was a little disappointing, especially to anyone who had purchased the stock since the beginning of May.  Carlyle is paying $67.00 per share, a level that is lower than where the stock has traded on 20 separate days in the past two months.  The good news is that after Manor Care made its “strategic alternatives” announcement in April, and the stock price jumped to $65.00 per share in less than two weeks, we were not alone in stating that this was about the top value for the company.  If the bidding had gone to the $70.00 to $75.00 per share range, then we certainly would have thought the market had hit the “irrational exuberance” threshold once again.  But even at $67.00, we believe Carlyle is paying top price for a high-quality company that may not have much room for improvement.  We will have a more detailed analysis in the upcoming July issue of The SeniorCare Investor.    

Not two days back from vacation out of the country, you can imagine my surprise when I picked up the phone and it was a special agent from the securities fraud division of the FBI on the other end of the line.  I didn’t even know that the FBI had a securities fraud division, as I assumed these matters were handled by the SEC.  Well, apparently the FBI also looks into securities fraud, and this agent had received a few copies of The SeniorCare Investor and wanted an additional four issues Read more…

My colleague and contributing editor Kate Upson recently talked to Brian Pollard of Lancaster Pollard & Co., a leading industry banker and lender, about how senior care providers can benefit from the current economic climate.
You can click here  to listen to the interview (6 minutes) or read the transcript below.

Kate Upson: Welcome to Expert Opinion, a Conversation with Brian Pollard, President and Senior Managing Director of Lancaster Pollard & Co.  Brian was an original co-founder of this Columbus, Ohio-based firm and is Chairman and CEO of Lancaster Pollard Mortgage Company.  He has almost 20 years of investment banking experience focused on the health care and senior living sectors and is a frequent speaker at state and national conferences.

Brian, how would you characterize the current general health of the senior living and senior care markets?

Brian Pollard: I would characterize the general health as very strong—2006 was the third year in a row of improved Read more…