There is always a good amount of risk when purchasing a seniors housing community at Certificate of Occupancy. While you avoid the risks associated with development and construction costs, you are saddled with the burden of fill-up. But Capitol Seniors Housing (CSH) is up for the challenge, having recently purchased, along with its joint venture partner Harvard Management Company, a 92-unit/109-bed assisted living/memory care community in Tampa, Florida.
The newly opened community was developed by a joint venture between Walt Chancey and Rookis Development Company and presold to CSH prior to breaking ground for an agreed price of $20 million, or $217,400 per unit. CSH has brought in The Arbor Company (a manager it has worked with in the past) to operate the community, which features 52 assisted living units, 26 memory care units and 14 transitional memory care units (called “Bridges”) for those residents in need of a few more services. About a third of the licensed beds have already been preleased, and residents have just started moving in.
Assuming a two-year stabilization period (a conservative length of time), we estimated the community to generate approximately $4.9 million in 2017 revenues and $1.6 million in EBITDA. If it fill faster than projected, these numbers will move up as rate increases will be easier to come by.
Given the existing product in the area, this new development should stand out as one of the better properties in its market, which should lessen CSH’s fill-up risk.
