A large Midwest-based company has transitioned from operator to owner-operator at 12 facilities in Pennsylvania and Delaware after purchasing the assets for $140.5 million in a deal announced on Wednesday by CIBC Bank USA.
The seller, a private equity firm, has reportedly been looking to divest from the space. Neither the buyer or seller in this transaction were disclosed by CIBC.
The Midwest-based buyer assumed Department of Housing and Urban Development debt and CIBC financed a $73 million acquisition loan for the transaction, the bank announced in a news release announcing the deal.
Operating performance has reportedly been trending favorably at the facility as the buyer plans to utilize its economies of scale and knowledge of the market to boost census and enhance cash flow.
The private equity firm’s exit comes with the national spotlight squarely on private equity involvement in the skilled nursing space thanks in part to recent reform proposals released by the White House.
“Too often, the private equity model has put profits before people — a particularly dangerous model when it comes to the health and safety of vulnerable seniors and people with disabilities,” the White House noted in its nursing home reform package rolled out earlier this year.
The U.S. Department of Health and Human Services and other federal agencies will examine the role of private equity, real estate investment trusts (REITs), and other investment ownership in the nursing home sector and inform the public when corporate entities are not serving their residents’ best interests, according to the proposal.
CIBC’s Michael Velazquez and Peter Kane handled the closing.
The transaction continues what has been a busy year so far for CIBC in the health care space.
CIBC provided a local operator with $32 million of senior-secured loan facilities for the purchase of a three-home skilled nursing portfolio in Mississippi and CIBC financed a $50 million loan for five SNFs in the same state totaling 511 beds.
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