Have you ever seen a skilled nursing facility sell for over $300,000 per bed? Well, according to our data (which dates back to 1989), such a deal has not happened, until today. Sabra Health Care REIT, which recently acquired nine seniors housing properties in Canada (lowering its SNF exposure to approximately 50%), purchased four Maryland skilled nursing facilities with 678 beds for $234 million, or a whopping $345,100 per bed. When you look at the purchase price for three of the facilities (with 472 beds) at $175.2 million, the price per bed is an even higher $371,000. The fourth facility, which has a $10.8 million HUD loan with a 5.60% interest rate and sold for $58.8 million, was valued at just $285,000 per bed, which is still significantly higher than the previous record. Occupancy across the four facilities was approximately 95%.
The seller was the Maryland-based owner/operator NMS Healthcare, which entered into a triple-net master lease agreement for three of the facilities and a triple-net lease agreement with the fourth, both agreements having an initial term of 15 years, two 10-year renewal options and annual rent escalators equal to the great of 2.50% or the CPI, but not to exceed 2.75%. The leases are expected to generate annual lease revenues of $24.5 million and an initial cash yield on rent of 8.75%. To fund the acquisition, Sabra will draw from available cash and proceeds from its revolving credit facility. The high price reflects the high acuity census, including ventilator and dialysis patients, as well as high Maryland Medicaid reimbursement rates for those patients who stay for a longer period.
