Allen McMurtry and David Kliewer of Cushman & Wakefield’s Tampa office sold The Barrington of Carmel, a 267-unit CCRC just outside of Indianapolis, Indiana, for $61 million, or $228,500 per unit/bed. The Type A entrance-fee community has 137 independent living units, 56 assisted living units, 26 memory care units and a 48-bed nursing facility. There is also the potential to expand by another 20 to 25 IL units, but that will be on the buyer, Baptist Homes of Indiana. The buildings comprise 372,000 square feet on 19.5 acres.
Built in 2013 with approximately $112 million in tax-exempt bonds and $7 million in taxable bonds, less than six years later its not-for-profit sponsor, Mayflower Communities (an affiliate of Senior Quality Lifestyles Corp.), filed for bankruptcy protection after failing to make some bond payments, even though overall occupancy was 92% in 2018. The IL occupancy has declined since then, but the AL, MC and SN portions remained relatively strong.
The way we look at it is that the initial residents’ entrance fees, according to the Official Statement, were forecast to be just $15.5 million, or $113,000 per IL unit, for the initial development. That is tough when your total debt comes to $445,700 per unit/bed for the entire campus, or $868,600 per IL unit. Without knowing other details, this seems like it was destined for a default, since we would have expected much higher entrance fees.
We also want to mention that the Tampa and the San Diego, California offices of Cushman & Wakefield teamed up to represent the seller of a massive 589-unit CCRC in Riverside, California. That included Allen McMurtry, David Kliewer, David Rothschild and Mary Christian. We covered the transaction in detail in the September issue of The SeniorCare Investor.
Originally geared towards retired military officers and their spouses, the community sold to California-based Westmont Living. After several bond and bank letter of credit defaults, the community was put into receivership in February 2018. Occupancy declined as a result to just 40%. The purchase price was approximately $58 million, or $98,500 per unit/bed. Financing was provided by Bank of Texas for $43.28 million and Locust Point Capital for $4.0 million.
