The SeniorCare Investor: IL/AL Combined Acquisition Market -

September 2012
 

A nice little campus in Washington was recently purchased by National Health Investors (NYSE: NHI) for approximately $22.8 million, or $170,300 per unit/bed.  Closing costs and additional adjustments took the total cost higher.  Built in 1994 on 13 acres and well-maintained, the campus includes 48 assisted living units, 43 independent living cottages, and a 47-bed short-term-stay skilled nursing center.  NHI will be leasing the campus to Oregon-based Santé Partners with an initial 15-year term at a 7.8% initial lease rate plus escalators.  As part of the transaction, NHI will also be providing up to $3.5 million in financing to allow the buyer to expand the health canter so that all rooms will be private, and to upgrade the rehab capabilities. Santé Partners’ expertise is short-term subacute care, so they should do well with the expansion.  Current occupancy averages about 94%, and in-place revenues and EBITDAR are $14.0 million and $2.6 million, respectively, resulting in an 11.4% cap rate on the price before the cost add-ons.  This will be a nice addition for both the landlord and tenant. This was the only senior care asset of the seller, and he did a great job running it for 18 years.

Washington seems to be popular, as Focus Healthcare Partners and its joint venture partner Artemis Real Estate Partners purchased a 193-unit community in Burlington which has 119 IL units, 52 AL units and 11 freestanding duplex cottages.  Originally built in 2001, there were several expansions including a 64-unit addition that opened in 2010.  The owner’s loan went into default shortly after this last portion opened.  The purchase price was $18.64 million, or $95,600 per unit, and the buyers plan to “refresh” the building and have hired Vancouver, Washington-based Artegan to manage it.

A mini-CCRC in reverse (as we like to call them) in Kansas City, Missouri, was sold at the end of August. Originally built in 1992, the community has 112 skilled nursing beds, 46 assisted living beds (in 24 units) and 48 independent living units.  Occupancy has declined in the last two years, especially the IL units which went from 95% in 2009 to 65% in 2011.  Overall, occupancy is close to 77%.  Revenues and EBITDA in 2011 were approximately $9.3 million and $1.1 million, respectively, so there is a solid cash flow to build on.  The buyer, located  in the Midwest, paid $13.5 million, or $65,500 per unit/bed. Patrick Byrne of Senior Living Investment Brokerage handled the transaction............Want to read more? Click here for a free trial to The SeniorCare Investor and download the current issue today