Dan Mahoney and Tony Cassie of Marcus & Millichap handled the sale of two assisted living/memory care communities in Oregon, both with operational upside. First, Focus Healthcare Partners saw potential in a 58-unit community in downtown Portland, which they snapped up for $10.8 million, or $186,200 per unit. Built in 2007, the community was the last acquisition of Sunwest Management and has been owned by a TIC of 17 different investors ever since who were all very hands off, hiring a management company in the area to operate (the buyer, in fact, uses the same manager for its buildings in Oregon and Washington). There were a small number of Medicaid residents in the building. By making capital improvements, the buyer plans to improve the financial performance at the community by converting more of the one-bedroom AL units to semi-private memory care units. The transaction came with a 5.9% cap rate based on trailing 12-month NOI. A majority of the sellers will do 1031 exchanges into mobile home park assets.
Second, Mr. Mahoney and Mr. Cassie arranged the sale of a 95-unit AL/MC community in Ashland (near the California border) for $10.75 million, or $113,200 per unit, with a 6.75% cap rate on trailing 12-month NOI. This community was older (built in 1997), and in 2014, NOI dropped significantly when the state required the move of several memory care residents to skilled nursing because of their high acuity. That caused a drop in occupancy at the community, which typically takes in around $750,000 in annual NOI. But as the buyer, another private investor, increases occupancy and cycles out Medicaid residents with private pay clients, pro forma NOI is estimated to reach $815,000. Included in the sale price was a $350,000 prepayment on the seller’s HUD loan.
