Rural seniors housing communities, even when they are relatively newly built, often come with a risk. Located far from high-density and high-income areas, these communities can sometimes struggle to maintain consistently high occupancy or strong levels of cash flow, especially if there is a significant Medicaid census. However, the right operator can find success in almost any market.
That was the case when Patrick Byrne of Senior Living Investment Brokerage sold a 129-unit independent living/assisted living community in the town of Sedalia in central Missouri. Built in 2006, with expansions in 2008 and 2013, the community consists of a 52-unit IL building, with a connecting 47-unit AL building, and a 30-unit high-acuity AL building. It was over 95% occupied (with a 100% private pay census) and operated at a 26% margin on approximately $4.41 million of revenues.
The sale was prompted by the previous regional operator’s investors looking to cash out of the successful community. It sold for $15 million, or about $116,300 per unit, with a 7.7% cap rate. The incoming owner, a private investment group based in Texas, and operator, a growing Midwest-based provider, hope to increase on the per-unit value by improving the operating margin, which currently falls below the market average.
