Just how does a high-quality assisted/independent living community located in rural Northeast Ohio maintain a combined occupancy over 90%? Well, aside from having an excellent reputation for care and services, the community was owned by a local golf pro and golf course owner with ties to the seniors housing industry, who would let residents and guests of residents play at his neighboring course free of charge. That added feature certainly must have helped keep census strong over the years, and maybe prompted a few more visits from family members.
The community was built in 2001 with 56 units of assisted living, and added 12 independent living cottages between 2004 and 2008. At the time of the transaction, occupancy at the AL units was 93%, while the cottages were filled. The owner currently has 12 other IL cottages under construction (with four already preleased), which he will sell to the same buyer upon lease-up at an agreed upon price outside of this transaction. And given the historical 100% occupancy for the cottages, the lease-up period should be minimal.
A national operator emerged as the winning bidder, with a purchase price of $13.25 million, or $194,850 per unit, and a market cap rate of 7.2%. As this was the only property of the seller, a national operator with its economies of scale should be able to improve margins at the community. Evans Senior Investments handled the transaction.
