Starting his year off strong, Dave Balow of Senior Living Investment Brokerage sold an Assisted Living Program (ALP) community in western New York for $3.0 million, or $125,000 per unit, at a 10.2% cap rate. Introduced in the state around 30 years ago, the ALP program essentially provides a higher level of care (close to skilled nursing) in an assisted living setting for Medicaid residents. It’s proven to be a win for the state, which can reimburse nearly skilled nursing level care at a lower rate, and for the providers, which can take in Medicaid residents at a significantly higher rate. Even with the higher care and staffing costs, those all-Medicaid facilities can often boast 30% operating margins.
This community in Hinsdale is one of those success stories. Developed in 1991 by a private owner who was instrumental in setting up the ALP program in New York (and is now retiring from the business), it featured 32 beds in 24 units. Occupancy was consistently at 100%, helped in part by it being the only ALP community in the county. It also operated at a 27% margin on over $1.14 million of revenues. That success prompted plans for a 68-bed expansion project, which will be started by the new owner, an ALP operator with a strong footprint and reputation in the area. With this community’s existing operations, they’ll be hitting the ground running. Well done to Mr. Balow, who we should be hearing more from in the coming months.
Senior Living Investment Brokerage continued the good work in Reno, Nevada, where the team of Jason Punzel, Matthew Alley, Brad Goodsell and Vince Viverito sold a large 174-bed skilled nursing facility on behalf of a Texas-based not-for-profit seller. The facility was the only property operated outside of Texas for the seller, which showed in the occupancy averaging between 60% and 65%. Even still, the 19-year old facility was well-maintained and brought in more than $1.5 million of trailing EBITDAR. The buyer emerged as a regional owner/operator based in Southern California but with one other facility in Nevada. They paid $13.6 million, or $78,160 per bed, with an 11.0% cap rate. The sale included vacant land on-site that could be developed into additional units. That’s if occupancy is improved, we assume.
Matthew Alley followed that up with a closing of his own in Pittsburg, Texas. Representing a local partnership looking to redeploy its assets, he sold a 104-bed skilled nursing facility that recently graduated from the Special Focus Facility list (after spending nearly two years on it). Built in 1969, the facility operated on just 92 beds, all of which are dually certified. However, it struggled with occupancy, averaging less than 60% based on operating beds. Leaving the SFF list should help, but new ownership could also help boost census and the operating margin (which was 11% on $3.2 million of revenues). An independent owner/operator based in the Dallas/Fort Worth area paid $2.4 million, or $23,100 per bed, with a 14.6% cap rate, for that chance.
