The principal of Tranquilium, Ryan Housekeeper, has the experience to complete the following services:
Arranging Equity
The most important and initial factor to consider is identifying qualified buyers/investors. Prior to seeking out properties, Tranquilium will determine from these investors what criteria they have for a seniors housing asset purchase. The equity structure will be established based on these criteria. Equity will drive the deal.
Deals which meet the investor’s criteria will be sourced through real estate brokers and direct contact with property owners. Tranquilium has a nationwide database of senior housing brokers and owners. This database with be utilized and expanded in order to seek appropriate seniors housing properties.
Tranquilium will identify asset strengths and weaknesses through analysis of current year to date operating statements, past year operating statements, rent rolls, census history reports and additional property information. Tranquilium will utilize this information to establish an analysis reflecting EBITDAR (earnings, before, interest, taxes, depreciation, amortization and rent). In addition, Tranquilium will consider cash flow after amortization and rent, inputting the assumptions of the loan terms and the anticipated dividend to investors into the analysis.
Tranquilium will utilize a large database of seniors housing lenders to secure a loan commitment. Services will include providing the potential lenders with all due diligence requested and underwriting completed in order for the potential lenders to analyze the deal and provide a term sheet. The term sheet will be reviewed and negotiated by Tranquilium prior to executing a loan commitment.
Tranquilium will seek, qualify and engage a respected seniors housing management company to operate the community on behalf of the investors. Due diligence information for the management company to review and develop a budget will be provided. The management budget will be reviewed with the Tranquilium pro-forma. Finding a management company with a strong management history with comparable properties, will help determine if any improvements can be made to the property’s operating statement. The management compensation structure may vary. It could either be a sale-lease back, conventional management fee structure or a hybrid of the two structures. Tranquilium will negotiate this structure depending on the investors’ criteria.
After identifying an asset for sale which is close to the investor(s) criteria, Tranquilium will represent the investor(s) and negotiate with the seller’s broker or directly with the seller, in order to reach an agreement and execute a letter of intent. Once a letter of intent has been signed, Tranquilium will seek and engage a merger and acquisition law firm to draft a purchase and sale agreement. Tranquilium will negotiate the fee and the structure in which the M&A law firm will be compensated. Negotiations with the seller will continue through the PSA process.
Advising Attorneys
Tranquilium has contacts with several law firms and will provide support to the chosen M & A law firm, providing them with all requested property information and deal structure terms. Tranquilium will be in consistent contact with the law firm to vent any liability issues and risk factors of the transaction, relaying these concerns and considerations to the investors.
Due Diligence
After underwriting, a letter of intent maybe extended to the seller. Once a letter of intent has been delivered and executed, the second phase of the due diligence process will begin during the drafting of the purchase and sale agreement. This involves updating operating history as new operating statements become available and providing the analysis to the investors. Once the PSA is executed the official time line in order to determine feasibility of purchase shall commence. This period is stated in the agreement and may include a financing contingency. In this time period analysis is expected to be completed including: an environment phase 1, a property condition report, a market study, a survey, a title report, an appraisal report and any other reports deemed appropriate for this particular assignment. Also, during the feasibility period final loan commitment will be sought. Once the feasibility period has expired the earnest money will go hard. It is important to have the loan commitment, agreement on the financial analysis, and the complete analysis from each 3rd party report before earnest money becomes non-refundable. All these services will be coordinated by Tranquilium.
Closing Coordination
Once Tranquilium and the investors have determined that the deal is sound and no deal ending issues have been noted from third party reports, the feasibility period will expire and earnest money will become non-refundable. This signifies the beginning of Tranquilium’s closing coordination services. These services include continued coordination with the M & A attorney, lender’s counsel, and title company of all document requirements necessary at closing and verification that all investor funds and loan funds are available.