Patrick Burke of Senior Living Investment Brokerage sold a portfolio of three assisted living communities located throughout Middle Tennessee. A group of local investors originally built these properties in the early 2000s to address a need for senior care in smaller, rural markets. As such, there is limited competition at a couple of the locations, and occupancy averaged around 95% for the portfolio, with a 100% private pay census. Plus, the property in the more competitive market was fully occupied. So, the operator (one of the investors) was doing something right.
The portfolio consists of a 50-unit community in Lebanon (about 30 miles east of Nashville) and two 38-unit communities in Fayetteville and Winchester (90 miles south and southeast of Nashville). What a new owner could improve upon is the operating margin, which stood at around 18% on over $4.86 million of revenues. The investors had decided it was time to exit the industry, hiring Mr. Burke to run the process.
Taking over ownership was a real estate/asset management firm based in the Northeast. They are partnering with a Southeast-based operator with an existing footprint in Tennessee and expect to use economies of scale to improve operations. The purchase price ended up being $12 million, or $95,200 per unit, at a 7.4% cap rate.
