It wasn’t the most straightforward of transactions, but Jim Knapp of Marcus & Millichap successfully sold an assisted living/memory care community in southeast Michigan for $6.5 million, or about $162,500 per bed, with an approximate cap rate between 9% and 10%. Built in 1991 and 1996, the community was owned by a family trust until the current sale.
About 25% of its census (occupancy was in the high 90s) was derived from residents with traumatic brain injuries who were funded through catastrophic claims. Part of Michigan’s mandatory no-fault insurance, that particular income stream had to be underwritten differently and would also appeal to a unique set of buyers. They turned out to be a partnership between a local investment group and a local operating company.
Located on about five acres, the campus also had room to expand, which will be an option for the new owners going forward. HUD financing helped fund the deal.
