Last week we wrote that Newmark (formerly Newmark Knight Frank) was going to have a big fourth quarter. And they have, with five sales transactions worth well in excess of $400 million, plus a few financings, and we still have a few weeks to go before the end of the year.
The largest sale, which we previously reported on, was the six communities in Massachusetts that sold for about $200 million in a recap of the portfolio previously owned by Welltower. Most recently (early December), however, was one of the larger skilled nursing portfolio sales of the year. With nine facilities and 1,014 beds in Virginia, this portfolio was sold for just over $150,000 per bed.
The average age of the portfolio was about 18 years, which in SNF years is quite young. According to our Senior Care Acquisition Report, the average price per bed in Virginia over the past five years (2015-2019) was $110,200, with a range of $57,459 to $269,784. Only New York and Maryland had a higher average price. So, this sale was way above the average but not a record. Hard to do with a portfolio. Even harder during a pandemic that struck nursing homes particularly hard.
However, the sale was subject to a current lease with about 12 years remaining and an annual lease rate of approximately $12 million. That comes to about 7.8% cap rate, but remember that this is not comparable to the typical 13% cap rate when you are buying the real estate and operations of a SNF. This was just a real estate sale. A New York based private equity firm owned the real estate and the buyer was not disclosed. The seniors housing and care team at Newmark represented the seller. The tenant, Commonwealth Care of Roanoke, will remain as manager and lessee.
