Selling a SNF in Washington State (let alone near Seattle) these days seems like a fruitless task, yet Evans Senior Investments sold two of them (yes, two) in early April. First, in Seattle itself, an East Coast capital group formed a joint venture with a Los Angeles-based operator to acquire a 165-bed facility for $10.5 million, or $64,000 per bed. To add to the deal’s complexity, the facility was placed into receivership in June 2019 after the local not-for-profit owner defaulted on their existing HUD loan.
At the time of the sale, the facility, which was built in 1974, was 77% occupied and was losing over $500,000 in annual NOI. An abundance of contracted staff at the facility contributed to that negative cash flow, which the new operator plans to replace with full-time employees. On the bright side, the facility recently received a substantial Medicaid rate increase that was supposed to begin later this year but was retroactively granted as of February 1 as part of the COVID-19 crisis. That’s a $24 per day increase now, and another $30 a day in July, which makes a huge difference to the facility’s bottom line. Evans represented the court-appointed receiver in the deal, executing a letter of intent just 20 days after taking the facility to market.
The same buyer wasn’t done. They also acquired a 120-bed SNF in Tacoma for $8 million, or $66,000 per bed. Built in 1986, the facility was locally owned and operated but was just 69% occupied, with negative cash flow. It was also on the receiving end of a retroactive Medicaid rate increase, which should help operations. For this deal, Evans secured a letter of intent from the buyer just two days (yes, two) after taking it to market.
Switching to seniors housing, Evans also closed the sale of a Colorado memory care community on March 31. The stand-alone community located in Lakewood was built in 2016 but recently experienced some census troubles. It was 75% occupied at the time of marketing, with a 100% private pay census, and cash flow could certainly be improved.
That may be a tough task in the next few months. Representing an independent investor group, which was selling its only asset, Evans found a buyer in a not-for-profit owner/operator with a seniors housing portfolio in Colorado. They paid $8.5 million, or $185,000 per unit.
