Berkadia Closes $40M in Skilled Nursing Deals; Ensign Expands Again in Texas

Alex Spanko

Skilled nursing heavyweight The Ensign Group (Nasdaq: ENSG) last week took over operations of the Hays Nursing and Rehabilitation Center, a 116-bed property in San Marcos, Texas.

The deal expands the San Juan Capistrano, Calif.-based Ensign’s total portfolio to 228 properties across 13 states.

“We are excited to strengthen our presence in the state of Texas with the addition of this dynamic skilled nursing operation that will add to our several existing operations in Texas Hill Country,” Ensign CEO Barry Port said in a statement.

Formerly operated by a faith-based non-profit, the facility had occupancy of 49% at the time the acquisition closed on December 1.

Keystone Care, Ensign’s operating subsidiary in the Lone Star State, will formally oversee the facility, which is subject to a triple-net lease.

“We look forward to working together with the local health care communities and an outstanding team of caregivers as we strive to exceed the clinical and social needs of each resident we are honored to serve,” Keystone president Kevin Niccum said in the statement.

Berkadia’s $40M Fall

The Seniors Housing and Healthcare Group at Berkadia Commercial Mortgage LLC last week announced the completion of nearly $40 million in skilled nursing financing deals, across multiple portfolios, since September.

First up, the Charleston, S.C.-based real estate company landed $14.72 million in Department of Housing and Urban Development-backed loans secured by three SNFs in Alabama, Illinois, and New Jersey with a total of 273 beds; the cash helped the sponsor, an Pennsylvania-based owner-operator, to retire a bridge loan from Berkadia originated less than a year ago.

In a separate transaction, Berkadia provided $15.38 million in HUD loans for a pair of SNFs in Oregon and Washington state, allowing the borrower to pay off construction and mezzanine loans associated with the properties.

The firm elsewhere closed $22.5 million in HUD financing for two Medicare-only transitional rehab facilities with 95% occupancy, as well as a $6.7 million HUD loan for a 79-bed nursing facility in Montana for a Washington-based borrower.

Berkadia managing director Jay Healy led all of those transactions.

“While COVID-19 has certainly presented some unique challenges for us as a HUD health care lender, we remain steadfast in our commitment to this sector and those that serve the most vulnerable of our population,” Healy said in a statement. “As such, we’ll continue working in tandem with HUD to make sure all qualified projects are able to maximize the benefits of the HUD 232 program and take full advantage of historically low interest rates. And in this operating environment, access to low cost permanent financing is as critical as ever.”

Berkadia managing director Ed Williams also landed a $2.82 million HUD loan that will help an Indiana-based sponsor add 23 private rooms to an existing 114-bed property — bringing a total of 58 single-occupancy rooms to the facility.

ESI Turns Two in Indiana, Pennsylvania

Evans Senior Investments announced a pair of transactions, starting with the $9.3 million sale of the Cherry Tree Nursing Center in Uniontown, Pa. to an owner-operator based in Ohio.

The 120-bed facility was 72% occupied at the time it hit the market, with net operating income of just $50,000; the previous owner-operator, a single-site provider, was looking to exit the space entirely.

“Cherry Tree Nursing Center presented a great opportunity for a new ownership group with operational expertise and synergies in the state of Pennsylvania to place an emphasis on increasing skilled census and to improve upon the expense structure as this community is folded into their portfolio,” ESI president and founder Jason Stroiman said in the deal announcement.

ESI also arranged the sale of the 110-bed Pine Haven Health & Rehab Center in Evansville, Ind. for $7.8 million.

The property was a Southeast-based owner-operator’s only Midwest facility, according to the Chicago-based brokerage.

The facility experienced 66 COVID-19 cases during the sale process, with occupancy dropping from 73% to 67%, though it eventually sold for the originally agreed-upon price.

ESI has facilitated $255 million in transactions since the start of the pandemic, and projects about $60 million more set to close by the end of 2020.

“The resilience of the skilled nursing M&A market despite the COVID-19 pandemic continues to demonstrate how essential skilled nursing facilities are to our health care system,” Stroiman said in a separate statement.


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