Ryan Saul and Jason Punzel of Senior Living Investment Brokerage sold a portfolio of four skilled nursing facilities and three assisted living communities in Wisconsin that were placed into receivership in September 2018 when their for-profit owner/operator, Atrium Health and Senior Living, was unable to fulfill its financial obligations. SLIB was hired by a Wisconsin-based receiver to solicit offers, and the court approved the sale to a regional based owner/operator headquartered in Illinois with other communities in Wisconsin and the Midwest. The new owner plans to focus on building census by incentivizing local leadership and investing capital into the communities to attract quality payors.
Built from the 1960s to the 1990s, the properties consisted of 349 total beds and units in the towns of Chetak, Black River Falls, Bloomer and Oconto Falls. Not surprisingly, they were losing money, over $325,000 annually in negative EBITDAR, on more than $14.2 million of revenues. Census across the portfolio averaged at 59%. In the end, the portfolio sold for $3.5 million, or $10,000 per bed.
Jeff Binder and Patrick Byrne then represented a not-for-profit, faith-based organization sponsored by The United Church of Christ in the sale of its only seniors housing asset. Located in the town of Belleville, Illinois (St. Louis MSA), the CCRC features a 53-unit independent living wing that was built in 1980, and a health care wing added in 2015 with 14 memory care, 21 sheltered care and 65 skilled nursing beds. Given the market demographics and historical performance of the community, the expansion project was quite ambitious, and at the time of SLIB’s initial engagement, the sponsor’s relationship with its operator grew contentious because of the subpar performance and the high construction costs. Eventually the bank got involved, and the decision to sell was made.
The SLIB team first worked with the seller to stabilize operations and clean up some billing issues, bringing in The Tutera Group to take over. The turnaround was working, as overall occupancy stood at around 89%, and the community was operating at an 11.6% margin on nearly $11.82 million of revenues. Those figures were trending up, too. The scarcity of newly constructed nursing facilities in southern Illinois should also be a boon to operations going forward. Ultimately, Tutera emerged as the buyer, paying $15.25 million, or $99,700 per unit, at a 9.0% cap rate.
