There has been a lot of talk about pricing, both during the pandemic and as we are coming out of it. Is it a buyer’s market, or a seller’s market? Should you be conservative, or aggressive and take advantage of the current positive momentum? How about being just right?
In a transaction that just closed on June 1, Jason Punzel, Vince Viverito and Brad Goodsell of Senior Living Investment Brokerage represented the regional owner/operator of a 95-unit assisted living and memory care community located in Oregon. Built in 1997 with a renovation in 2015, it is licensed for 107 beds and has an occupancy rate of 92%. Yes, through the pandemic they mostly kept COVID out and the residents in. We need to hear more about how these providers did it. The owner was exiting the state, and the buyer is a regional investor who will bring in a third-party manager.
The purchase price was $15.1 million, or $159,000 per unit. Annualized revenues and EBITDA for the six months through March 2021 were $4.55 million and $1.27 million, respectively, which resulted in an 8.4% cap rate. That 28% operating margin is very good as well during the pandemic. But it appears they had few pandemic issues, other than maybe spending more on infection control. For those interested, the price per square foot came in at $228. This is what we would call a solidly priced deal for a stabilized community.
