National Health Investors (NYSE: NHI) added a well-run independent living community in Chehalis, Washington (40 miles south of Olympia) to its portfolio for a purchase price of $9.25 million, or $96,400 per unit, with an 8.7% cap rate. Built in phases from 1986 to the early 2000s, the community features a mix of apartment-style units and cottages, and is 95% occupied. It operates at a 35% margin on approximately $2.3 million of revenues, which can improve. Plus, sitting on 24 acres next to a medical center, there is also room to expand for NHI, which leased the community to a partnership between Marathon Development and Village Concepts Retirement Communities for a period of 15 years and an initial annual rate of 7.25%, with annual escalators from 2% to 3%. NHI plans to also spend about $350,000 for capital improvements and will fund the acquisition with borrowings on its revolving credit facility. Jason Punzel of Senior Living Investment Brokerage handled the transaction.
