Over five years on from its acquisition of a 217-unit independent/assisted living community in Tucson, Arizona, MBK Senior Living is exiting the asset with the help of Matthew Whitlock of CBRE. Originally built in 1991, the property underwent a series of multimillion-dollar renovations that included the conversion of 78 units to assisted living and the renovation of the community’s clubhouse. It now features three two-story garden-style independent and assisted living buildings and three single-story buildings that house 19 casitas surrounding a greenhouse and putting green. When MBK bought the property from The Dermot Company in 2012 for $31.9 million, or $143,000 per unit, it was 90% occupied with an impressive 44% operating margin.
Occupancy is now 97%, and although the current operating margin is not known, we imagine it is close to that 2012 level. Chicago Pacific Founders emerged as the buyer, bringing in its management arm, Grace Management, to operate the community. CBRE’s service came full circle when Aron Will, Austin Sacco and Tim Root also arranged acquisition financing for CPF in the form of a $35 million Freddie Mac loan, with a floating rate, 10-year term and 60 months of interest only. The purchase price was not disclosed, but assuming a normal loan-to-cost, we can already estimate that it surpasses at least $40 million, and possibly well higher than that.
