Illinois is often cited as a state in which skilled nursing owners and operators do not want to do business in. Its uncertain reimbursement market and fiscal situation make for a risky investment, particularly outside of the more densely populated, higher income Chicagoland. That was the impetus for an owner/operator to sell its two Illinois skilled nursing facilities in the greater St. Louis area, with the help of Josh Salzman, Michael Segal and Ben Firestone of Blueprint Healthcare Real Estate Advisors. The exit wasn’t surprising for the previous owner, which had not intended to operate the facilities for the long term. The two facilities are both located in Edwardsville and combined for approximately $12 million in total revenues, although they operated at approximately breakeven. They sold to a St. Louis-based opportunistic investor looking to grow its presence in the area for $5.5 million, or about $24,000 per bed.
The transaction comes on the heels of another Blueprint closing (one of seven announced so far this month), this time in the Toledo, Ohio suburb of Whitehouse. There, Connor Doherty, Michael Segal and Ben Firestone teamed up to sell a 90-bed skilled nursing facility on behalf of its publicly traded REIT owner. The previous operator decided to exit the competitive submarket in order to focus on other markets in the state, as it had recently been struggling to maintain census. One remedy to fill beds was to offer behavioral health services, but those lower reimbursement rates limited the facility’s overall cash flow potential. So, Blueprint found a buyer in a newly formed partnership between a real estate investor and a fast-growing in-state operator known for its turnaround expertise. That experience will surely come in handy as they look to boost the facility’s value.
