Jim Knapp of Marcus & Millichap has been busy in the state of Michigan lately, closing two transactions in the last few weeks, totaling over $12 million. Starting in the town of Flushing (located just upriver from Flint), Mr. Knapp sold a 52-unit assisted living community that included two buildings with 40 assisted living/memory care beds and a separate 20-bed advanced memory care community located about a mile away. This was the last owned seniors housing property by the seller, a local partnership that still currently operates a small memory care community within a hospital. Built in 2001, the two AL/MC buildings were well occupied at 90%, but experienced higher than normal expenses, operating at a 13.5% margin on about $1.8 million of revenues. The separate MC building, which was originally built in 1945 but was renovated for assisted living in 1999 and was gradually converted to more critical memory care over the past eight years, was just 80% occupied. Its operating margin was no better, at 14% on approximately $656,000 of revenues. The buyer, a local not-for-profit operator with a regional presence, should be able to improve the occupancy and performance of the communities. Helping them is the fact that the properties were well maintained and featured healthy rents between $4,300 and $4,800 a month. The two properties sold for a combined $5.8 million, or 11,538 per unit, with an approximate 5.8% cap rate.
Mr. Knapp also handled the sale of a brand new (as in, opened this month) 40-unit assisted living/memory care community in Washington Township for $6.5 million, or $162,500 per unit. Developed by a local builder in partnership with a local operator, the all-private pay community was 60-70% preleased prior to opening, and residents have already started moving in. Plus, the regional owner/operator buyer purchased additional land adjacent to the two-acre site to construct 40 more AL/MC units. The project should break ground this spring.
