The team at Evans Senior Investments represented an independent owner/operator in the sale of its value-add senior care campus in Rochester, Pennsylvania. Numbering 122 skilled nursing beds and 22 operational personal care units (out of a total of 62), the property sold for $9.2 million, or $63,900 per functional bed/unit.
Originally built in 1965, the campus received a $2.5 million renovation from 2015 to 2019, leaving it with a modern physical plant and all rooms being either private or semiprivate. However, it was not profitable at the time of marketing, with occupancy averaging 69% and the community generating an NOI loss of over $1.0 million on $10.45 million of revenues. High expenses, agency staffing costs in excess of $800,000 per annum and declining census as a result of the pandemic all contributed to the struggling operations. Capital improvements were still needed to bring the 40 offline personal care units into operation.
So, there is a major opportunity for the incoming owner, a new East Coast-based owner/operator of skilled nursing facilities that wanted to expand their presence in the commonwealth of Pennsylvania. They beat out five other competitive offers, which was surprising given the facility was losing more than $1 million in NOI prior to paying its debt service. Then again, they are getting into a campus with recent renovations at a good basis.
