Senior Living Investment Brokerage’s Dave Balow has been crisscrossing the state of New York lately, selling an upstate ALP (Assisted Living Program) facility last week and represented the seller of two ALP facilities just this week on Long Island. CIBC Bank USA also provided $6.75 million in acquisition financing to support the purchase. CIBC’s Fritz Kieckhefer arranged the debt.
Located in Holbrook and Center Moriches, the two properties combine for 85 beds in 46 units. The private seller had owned them for over 40 years and was able to produce consistently strong cash flow over the years. In fact, it operated at a roughly 40% margin on more than $2.56 million of revenues.
However, a Northeast-based diversified investment group with a presence in the seniors housing market saw potential to improve that cash flow, particularly since occupancy was at 79% and Suffolk County boasts high ALP reimbursement rates. Thankfully, COVID-19 did not enter either building, so occupancy stayed flat, and as a result there was no change in the final purchase price, which came to a combined $9 million, or $195,650 per unit, at an 11.3% cap rate. On a cap rate basis, that should leave plenty of room for the new owner to add value.
The buyer leased the properties to Nova Senior Living, a skilled ALP operator with several facilities throughout the state. We mentioned last week how long it takes to get any deal done in New York, with the long CHOW process, but Mr. Balow closed the transaction within 20 months.
