Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.
Issue link: https://seniorshousingbusiness.epubxp.com/i/799407
www.seniorshousingbusiness.com 45 February/March 2017 n Seniors Housing Business Administrative Agent & Lead Arranger Administrative Agent & Lead Arranger $479 Million Bridge Loan $110 Million Balance Sheet $410 Million HUD Banking products and services are offered by KeyBank National Association. All credit, loan and leasing products subject to credit approval. Key.com is a federally registered service mark of KeyCorp. ©2017 KeyCorp. KeyBank is Member FDIC. 170207-190740 Use the red key to learn more: Visit key.com/healthrec Matt Ruark—Healthcare Mortgage Banking 913-317-4237 | matthew_t_ruark@keybank.com Kevin Murray—Healthcare Finance 770-510-2168 | kevin_p_murray@keybank.com Fannie Mae $62 Million Bridge Loan $55 Million 8 Senior Living Communities "KeyBank's expertise allowed us to successfully complete the transaction for 305 West End Avenue efficiently and quickly. They understood the issues, and their valuable guidance allowed all concerned parties to have full confidence in completing this transaction." – Jan Burman, President, The Engel Burman Group "We like that KeyBank has a unique and broad financing platform. They've been a great partner and allowed us to execute a variety of transaction types." – John Mark Ramsey, President & CEO, Sentio Healthcare Properties "KeyBank played a crucial role in getting a complex acquisition loan over the finish line. It's comforting to see a lender coordinate its balance sheet, syndication, credit and permanent loan teams with the confidence it takes to deliver a complex financing on time. This deal reinforces what we believed and heard about partnering with KeyBank." – Brian Beckwith, Chief Executive Officer, Formation Capital Building ideas together residents. "That 20 percent teaches the management team more about their customers than they ever thought to ask," says Haselman. Additionally, the "toxic" employ- ees that drag down the rest of the staff and take up the executive director's time often leave naturally amid the increased pressure to per- form well, adds Haselman. To help illustrate the problems caused by turnover, Senior Living NOI encourages operators to fig- ure out the actual cost of losing an employee. "No one measures the expense of turnover," says Haselman. "They'll say 'it's killing us,' but there's no line on the P&L; state- ment for it." Beat problems to the punch NOI can often be unlocked on the development end before a community even opens. For own- ers, this can result from securing the best interest rates available on acquisition, construction or mort- gage loans. For an operator, favor- able lease terms are the key. "Once you've entered into a lease, it's really hard to change those numbers and escalators. You have to live with that for 10 to 15 years," says Wollschlager. "Those sorts of things have a direct impact on your bottom line." The current low-interest-rate environment also means operators of independent living and continu- ing care retirement communities need to make strong pushes for new move-ins, according to Katie Davis, chief strategy officer for Sherpa, a customer relationship management software firm. Those two sectors are particularly depen- dent on prospects being able to sell their homes, which low interest rates and a strong seller's market supports. "From an NOI standpoint, low interest rates drive independent living occupancy," says Davis. "We've enjoyed low interest rates. As long as that continues, CCRCs and independent living are going to flourish." For opera- tors with mul- tiple levels of care, improving independent liv- ing census will have long-term impact on NOI, Davis adds. Resi- dents move in at the front end of the continuum of care and move through as needed, rather than only coming to seniors housing out of necessity. Low interest rates also lead to a double-edged sword. Newcomers are entering the seniors housing space, looking to either try their hand at a new, growing industry, or build and sell quickly while cost of capital is still low, according to Davis. These developers are either too inexperienced to operate effec- tively, or are just looking to make a quick buck on the construction. "From that perspective, cheap money is not always a great thing," says Davis. On the other side of that, though, Wollschlager sees lots of opportunity for more experienced owners and operators to swoop in, take over struggling facilities and unlock NOI. "The new opportunities are going to be mergers and acquisi- tions," says Wollschlager. "People will be able to procure properties for pennies on the dollar. Orga- nizations that know what they're doing can get them on the cheap and have a big impact on the bot- tom line." Katie Davis Sherpa