A stand-alone memory care community in Dallas, Texas has some clear room for improvement, despite being built less than 10 years ago. Located just 10 miles from downtown, the community is made up of four “neighborhoods,” each with a dining area, living room, family/TV rooms and courtyards. Despite its relatively new build (in 2008), it was just 56% occupied and operated on an 8.7% margin on $1.47 million of revenues. Perhaps that is due to the increased construction in the Dallas-Fort Worth area, meaning a 2008 build is not state-of-the-art anymore. The buyer, a private equity group located in Southern California, has plans to invest in capital improvements at the community to make it more competitive in the marketplace. They will bring in Redding, California-based Northstar Senior Living to replace the outgoing regional owner/operator, which is based in Norman, Oklahoma with a facility each in Texas and the Sooner State.
With the help of Matthew Alley and Jason Punzel of Senior Living Investment Brokerage, the property sold for $4.5 million, or $86,539 per unit, which is low for such a new property. To put it in perspective, seniors housing communities built between six and 10 years ago sold on average for nearly $100,000 per unit higher, at $180,500 per unit in 2016, according to the 22nd Edition of The Senior Care Acquisition Report. That is compared with those communities built in the past five years selling for $303,200 per unit. Also, considering communities with a memory care component (which includes stand-alone MC) sold for $225,400 per unit in 2016, the Dallas sale stands out even more. But it goes to show that cash flow is king when valuing a property. But this buyer thinks opportunity knocks.
