It looks like Ray Giannini (of Marcus & Millichap) isn’t taking a vacation this summer, as he just closed the sales of a skilled nursing facility in Minnesota and a senior living community in Iowa. The Caledonia, Minnesota facility has a long history serving the health care needs of the area. Originally opened in the early 1900s as a hospital, the building expanded in 1962 and 1976, and now features 50 skilled beds, as well as a 16-unit assisted living community (added in 1987). Plus, the SNF was extensively renovated in 2012 at a cost of $1.4 million. Services there include physical, occupational and speech therapy programs, along with respite and hospice care. However, while the AL portion was fully occupied, the SNF experienced a census drop (from around 84% to 72%). That caused the expense ratio to jump to around 90%. The Minnesota-based owner/operator seller eventually sold the campus to a private investor for $4.3 million, or $68,200 per bed, with a roughly 10% cap rate. Dwight Capital provided a $4.5 million bridge loan to fund the deal.
Mr. Giannini was then joined by John Klement to represent a Minnesota-based owner/operator in their sale of an 86-unit senior living community in Spirit Lake, Iowa. Given the community’s rural location in northern Iowa, it was going to be an uphill battle for operations. Built in 2006 and renovated/expanded in 2014, it features independent living, assisted living and memory care units. However, low rates and an occupancy rate just above 80% wore on the operations. The community was operating at around a 10% margin but was losing money after debt service. So, to avoid foreclosure, the owner opted to sell the community to a Minnesota-based private equity firm for $8.3 million, or $96,500 per unit. Time to hit the beach, Ray!
