Don Husi, Dan Revie and Tedd Van Gorden of Ziegler represented a not-for-profit owner of three skilled nursing facilities in Delaware in a sale that closed earlier this month. The sales price was $67.0 million, or just over $141,600 per bed/unit. That represents one of the highest prices in the state. The seller was Emerald Shelter Group, a Nashville, Tennessee-based owner of seniors housing, healthcare properties and affordable housing assets in the Midwest and Southeast.
Two of the nursing facilities are located in northern Delaware, in Newark and Wilmington, while the third property is located further south in Lewes. The portfolio includes 430 skilled beds and 43 independent living apartments at one of the facilities. The 430 beds represent about 8% of the state’s total number of beds, giving the buyer quite a concentration. Occupancy averaged 90% across the portfolio, and two facilities had a four-star rating and one a five-star rating. One property was built in 1984, one in 1988 and the third in 1965 with a 2018 renovation. They totaled about 218,320 square feet.
Revenues were about $46 million for the group, with operating expenses, inclusive of a management fee, just under $40 million, representing an operating margin of about 13.5%. The cap rate was about 9.5%, which is below average, most likely because of the concentration of the assets and the scarcity of Delaware SNFs coming on the market. The portfolio was purchased by a joint venture between a healthcare real estate-focused private equity group and a national seniors housing skilled nursing operator. The sale will enable Emerald Shelter Group to redeploy and concentrate their operations in their core geographic footprint.
