Their ears must have been burning, because after we discussed the rise in M&A activity in the active adult/55+ market, Matthew Alley and Bradley Clousing of Senior Living Investment Brokerage announced the sale of an 81-unit community in Granbury, Texas. Developed in stages from 2018 to 2020 by a local mom & pop, it was already fully occupied with a wait list by the end of 2020. Talk about strong demand! It helps that the community is located near Lake Granbury and the lakefront activities there, along with many restaurants and shopping downtown.
We’ve talked about the strong operating margins that active adult can offer, and indeed, this community brought in $950,000 of EBITDAR on $1.6 million of revenues in 2020, for a 59% margin. With lower labor, service and insurance costs, there is less immediate danger of that margin dropping much nationwide.
A Utah-based national group with other properties in Texas acquired the community for $18 million, or $222,200 per unit, at a 5.3% cap rate. And the seller was able to exit the industry as a result and focus on other industries. With this success story, maybe they’ll be back soon.
