The Skeptic's Corner: Florida's $91.5M Fantasy Deal
Got this email from a friend. Some deals are so delusional they deserve their own spotlight.
Dear Shmooze,
Someone just forwarded me a deal and I had to share this with your readers. 3-facility Florida portfolio asking $91.5M for 555 beds.
The Listing Claims
Let's break down what they're actually asking:
555 beds total = $164,864 per bed
85% occupancy earning $5.8M EBITDAR
"Potential" to hit $9.8M EBITDAR (that's a 69% increase!)
"Could reach" $12M EBITDAR with improved occupancy
"Economies of scale" opportunities await savvy buyers
The Math That Doesn't Math
Current Reality: You're paying $91.5M for $5.8M in current EBITDAR.
That's a 15.7x multiple.
To put that in perspective, most SNF deals trade at 5-7x EBITDAR. This is asking for more than DOUBLE the going rate.
The Fantasy Projections:
Even if their fairy tale $12M projection comes true, you're still paying 7.6x
That assumes EVERYTHING goes perfectly
Zero setbacks
Perfect execution
Magic census increases
Unicorns and rainbows
The Red Flags
1. Behavioral Health Focus
One of the facilities is behavioral health focused. If you've operated in this space, you know this almost always comes with:
More liability
Higher staff turnover
More difficult residents
More regulatory scrutiny
More family complaints
More lawsuits
2. The "Potential" Game
This isn't a nursing home business - this is a PowerPoint presentation about what MIGHT happen if everything goes perfectly.
You're being asked to pay for:
Revenue you don't have
Occupancy you haven't achieved
Efficiencies you haven't realized
Magic that hasn't happened
3. The Ownership History
Here's the real kicker: These 3 homes from Simcha Hyman come on the market every 18 months.
Apparently Simcha bought these at $115 per bed and wants to make at least $160 per bed. So he keeps trying his luck every year or so.
Translation: The owner has been trying to flip these for years at a price nobody wants to pay.
My Prediction
Some PE group with money burning a hole will:
Buy this deal
Leverage it at 80%
Rebrand it "Premium Care Solutions" or some nonsense
Realize the projections were fantasy
Try to flip it in 3 years to the next guy who believes in "potential upside opportunities"
The Lesson
There's always a bigger fool with deeper pockets. The question is: Do you want to be that fool?
A Message to Simcha
Simcha - you'll get the price you want eventually! Stay strong, brother. Maybe try listing it again in another 18 months. Third time's the charm. Or is this the fourth time? We've lost count.
For Buyers Considering This
Ask yourself these questions:
Why is the current owner selling if there's so much "potential upside"?
Why hasn't the owner captured any of this potential themselves?
What do you know that they don't about maximizing this portfolio?
Can you actually execute on the turnaround plan?
What if you're wrong about the projections?
The Reality Check
Actual facility value: Probably $115-130 per bed based on current performance
Asking price: $165 per bed
Gap: Fantasy
Keep sending in those head-scratchers, folks! If you've seen an overpriced deal that makes you laugh, send it our way.
- Sam the Skeptic
Bottom line: Price your facility for what it IS, not what it COULD BE if someone else does all the work and takes all the risk.
