M&A has been especially active in the first two weeks of the fourth quarter. It seems a dam, of sorts, of delayed deals had broken. There are certainly many more deals still in limbo or terminated altogether because of the pandemic, but it is an encouraging sign to see this level of deal-making considering the circumstances.
One highlight of the activity was the sale of three seniors housing communities in the Northern Sacramento Valley in California, handled by Jason Punzel, Brad Goodsell and Vince Viverito of Senior Living Investment Brokerage. The deal includes two properties in Chico and one in Oroville, with a total of 85 memory care units and 131 beds.
Built from 1999 to 2006, they all previously operated under the Roseleaf brand by a local owner/operator. These were the seller’s only senior care communities, and while they are exiting/retiring from the business, the buyer is making its first investment in senior care. That buyer is a regional real estate investment group, which will bring in a manager with experience operating in California and the greater West Coast.
They plan to continue operating in a similar manner to the previous owner, which makes sense given the high census ranging from 92% to 100%. The operating margin could probably be improved, currently sitting at 24% on nearly $5.2 million of revenues. The marketing process started about a year ago, and in the end, the purchase price came to $14.6 million, or $171,800 per unit and just 3% off of the pre-COVID amount. The deal featured an 8.5% cap rate.
