Get while the going’s good

In the last year, we have heard of many single-asset owner/operators suddenly getting the bug to retire. And who wouldn’t? While pricing may have peaked at the end of last year and beginning of 2015, per bed values are still high and cap rates may continue to sink even further. So when the owners of a family-owned business reached retirement age, they decided to sell their 106-bed skilled nursing facility in Oswego, Illinois for $13.37 million, or $126,200 per bed. Originally built in 1972, with a 16-bed addition in 1985 and an interior renovation in 2009, the skilled nursing facility was 93% occupied on 100 functional beds. Also included at the facility were a rehab company, in-house therapists (the therapy program was added in 2008) and a staffing company. Plus, there are two adjacent homes that were included in the sale. Helping to explain the high price per bed was the 98% quality mix, although the operating margin could be improved, as it currently stands at just 5.8% on $18.9 million of revenues. The transaction came in at a very low 8.2% cap rate (the average for skilled nursing is 11.8% for the trailing 12 months ending September 30), but that is reflected in its prime location outside of Chicago, high quality mix and good census. Also, the buyer, Symphony Post Acute Care Network, which has another community in the market, plans to do an expansion with all private suites, in order to maintain the quality mix while expanding the Medicaid program. Ryan Saul of Senior Living Investment Brokerage handled the transaction.