No skilled nursing deal comes easily these days, and one facility in Connecticut went over a few hurdles to find a new owner. That buyer played a big role in getting the deal done too, other than writing the check. The deal was under LOI before the pandemic and closed at the end of September. Dave Balow of Senior Living Investment Brokerage handled the transaction.
Built in stages in 1955, 1975 and 1994, the 62-bed facility in Plainfield had been family-owned and operated since it opened. It had historically run at high occupancy (at 90% before the pandemic), with a strong quality mix. Also, the facility had managed to stay COVID-free throughout much of 2020, a feat for any SNF in the Northeast. However, in late November, there was an outbreak, and the facility had to contend with key staff refusing to show up to work.
That was when the buyer, Massachusetts-based Wachusett Healthcare, stepped in to provide resources (including staff) to help the seller get through the worst of the outbreak and prevent the facility from shutting down due to inadequate staffing levels. Wachusett provided this aid, under an interim management agreement where they were compensated 5% of revenues, all while trying to operate its other four SNFs in Connecticut and Massachusetts during a difficult winter.
Eventually, they were able to rebuild census back to 90% and turned EBITDAR positive by the time of closing. The payor mix was also approximately 75% Medicaid, 20% Medicare and 5% private pay/insurance. Using an SBA loan, Wachusett paid $2.575 million, or $41,500 per bed, for the facility, at a roughly 9% cap rate on trailing financials.
