The Stahler Group of Marcus & Millichap just closed the sale of a 69-unit assisted living/memory care community in Monterey County, California. Well located with strong demand and limited competition, the 22-year-old community was owned by a not-for-profit healthcare provider and originally leased by Emeritus, then ultimately by Brookdale Senior Living. Brookdale chose to not renew their lease for the community, which brought in sufficient cash flow but also offered significant operational upside with occupancy at 65%.
After multiple full-price, competitive offers, a buyer with a strong regional presence stepped in to buy the community, using acquisition debt from a regional bank. The purchase price ended up being $8.3 million, or $120,300 per unit, with no market cap rate.
The Stahler Group wasn’t finished just yet, also leasing a 50-bed skilled nursing facility in Los Angeles County. As the only five-star facility in the area, the facility received interest from two prospects that went above asking in both lease rate and key money. The operator selected had a strong regional presence, significant planned capex in excess of $1.0 million (to be matched by the landlord), and surety of closing. A private family office owns the facility and had previously leased it to another regional SNF operator, but at a much lower lease rate. The landlord now has a 40% higher lease rate plus $10,000 per bed key money. Not a bad deal for them.
