High-priced transaction in Minnesota

A non-traded REIT recently bought a 105-unit senior living community in Maplewood, Minnesota for $30 million, or $285,700 per unit, with a 6.3% cap rate. Located in the Twin Cities area, the community features 22 independent living units, 51 assisted living units and 32 memory care units. It is relatively new (built in 2011 by developers experienced in seniors housing) and operates at a 37% margin on $5.15 million of revenues, based on the estimated 2015 budget. Not only that, the community has improved dramatically since the beginning of 2014, raising occupancy from around 69% to 92% by earlier this year, and EBITDA from just under $200,000 in 2014 to $1.9 million in the estimated 2015 budget. There are also 12 AL/MC units that offer below-market rents, so the buyer could potential re-lease these units at market rents, further improving performance. The REIT buyer will hire a national operator to manage the community. Jeremy Stroiman, Jason Stroiman and Kris Lowes of Evans Senior Investments handled the transaction.