It’s getting tougher and tougher for operators of rural skilled nursing facilities, particularly those single-asset owners. It’s a more complex and expensive business to operate these days, and with lengths of stays dwindling and acuities rising, it’s not getting any simpler. There were a lot of these deals this year, and we can’t blame any of these owners for exiting the industry altogether.
One such transaction saw a not-for-profit board made up of local community members sell their only senior care campus in Marshall, Illinois (just over the border from Terre Haute, Indiana). Ryan Saul of Senior Living Investment Brokerage led the deal.
Originally built in 1963 with additions and renovations between 1969 and 1996, the campus consists of a 75-bed (49-unit) skilled nursing facility and 16 independent living units. The not-for-profit seller had hired a third-party manager a few years ago to operate it, but it was losing over $900,000 in EBITDAR annually on under $2.6 million of revenues, so they decided to sell. Occupancy was just 60% across the skilled nursing beds, and while the IL units were fully occupied, they operated around breakeven and served as a feeder for the SNF.
The buyer was a private owner/operator with other facilities in Illinois that plans to use their scale to improve occupancy and profitability. Demand for these types of rural facilities is low, so they paid $1.2 million, or $13,200 per bed/unit, leaving plenty of room to add value.
