The acquisition market is alive and well, at least it is in California, where demand for properties remains quite strong. The 158-unit, 96,700 square foot community has about 15 memory care units with all the remaining units licensed for both assisted living and independent living.

Located just south of San Francisco, the community was built in 1986 and has not received the capex that it should have over the years. Occupancy suffered, at about 55%, despite having below market monthly rates. It was self-managed by a group of multifamily investors, so one could consider it to be somewhat of an orphan property.

Because of the low occupancy, it was operating close to break even on estimated revenues of about $5.7 million. The market where it is located has experienced recent occupancy levels from the high 80s to low 90s, so there is definitely room for improvement, especially when the new owner puts in the needed capex and better management.

Arizona-based Cadence Senior Living, in partnership with an equity provider, paid approximately $32 million, or $202,500 per unit. While that may seem high for an older, low-occupancy community, that San Francisco MSA does come with pricey real estate. And, there was at least one other byer willing to pay about the same price, so demand at that level was strong. With some modernization, higher rates and market occupancy levels, this community should be worth at least $250,000 per unit in a few years, although we suspect the buyers are looking at a much higher number. Rob Reis of Marcus and Millichap represented the seller in the transaction.