Nick Stahler and Hap Knowles of The Knapp-Stahler Group at Marcus & Millichap sold a memory care community in an attractive submarket of Scottsdale, Arizona at the end of June. The deal is the first of the newly formed partnership between Mr. Stahler’s and Jim Knapp’s respective broker teams to create a truly national brokerage service. Mr. Stahler brings a focus on the West Coast, while Michigan-based Mr. Knapp will concentrate on East Coast deals, but we imagine the two teams will help each other out whenever needed too.
Back to the Scottsdale deal, a 1031 exchange buyer paid $5.1 million, or $127,500 per unit for the property, which was struggling at the time of the sale. Built in 2000 and 2008 with two identical 20-private unit buildings, the community was operating around breakeven with occupancy at 70%. Its rates were also below market average, in an affluent part of the Phoenix MSA. Nearby competitors are able to charge more than $1,500 per month more than the target property for basically the same services. Bells and whistles and newer construction can get you those rates.
So, the new owner, which brought in a local operator to manage the community, will invest in capex and increase the bed count at the community. They should be able to quickly improve the operations, since the local developer/seller had self-managed the asset since inception and this was his only seniors housing asset.
