There was a roadblock, but Senior Care Realty’s Daren Dudgeon sold a 60-unit assisted living campus in Wisconsin. A husband and wife team had gradually built the campus over the years, starting with a 20-unit (20-bed) building in 1997, then another, and finally a third identical building added in 2005. Each building featured a common room, kitchen and dining room, while all the rooms came with at least a half-bathroom. The owners even had land for a fourth building and had been in partnership with another local mom-and-pop, but they recently decided to retire and sell the campus, which was around 94% occupied, with a 58% private pay census. Despite the less-than-optimal payor mix, operations were also strong, with a 35% margin on approximately $1.75 million of revenues.
Mr. Dudgeon had previously secured a buyer, but their equity partner (a fund based in Canada) dropped out of the deal, causing the buyer to bow out too. During the process, operations dropped slightly, but Mr. Dudgeon was able to find a new buyer and sold the building for $5.15 million, or about $85,830 per unit, with a cap rate above 9.0%.
The buyer was a family based in Chicago with experience in the hospitality industry. In fact, this was their first seniors housing deal, so Mr. Dudgeon paired them up with an operating partner, Mosaic Management Group, to take them through the licensing process and operate the campus. The family utilized a local bank based in Oak Brook, Illinois, with whom they have worked on other hospitality deals in the past, to finance the deal. Going forward, the all-brick buildings are in good shape but could use a cosmetic upgrade. And there is upside in the operations, too.
