Blueprint Healthcare Real Estate Advisors recently closed on the sale of a 132-unit retirement community outside of Nashville, Tennessee. Its claim to fame is that Johnny Cash built it in 1984 for his mother-in-law, Maybelle Carter, although we do not know how long she lived there. That age, however, had an impact on pricing, as apparently it is very limited as to what one can do with the current layout.
It didn’t help that several years ago the operator of the community filed for bankruptcy protection. But this was before the pandemic. Surprisingly, occupancy was 80% before the pandemic struck, and then remained around 80% during the pandemic, but then skipped down to 70% for the three months before the sale.
The community has 66 independent living units, 58 assisted living units and just right memory care units. The IL and AL components in 2019 had both average about 79% occupancy, but by 2022 it was the AL side of the business that dropped the most, to just 68%, while the IL units slipped to 76%. Revenue per occupied room was about $3,500 in 2019, that has slipped to $3,000 today. This will be the key number for the financial turnaround.
The entire building has about 123,000 square feet, and in the past few years the seller completed close to $400,000 in small capital improvements, mostly in the common areas. The buyer plans to invest up to $2 million, which is most likely what is needed to bring census at least back up to pre-pandemic levels, if not higher.
When the seller (a national REIT) bought it, EBITDA was close to $2 million, but at 70% occupancy and all the additional pandemic expenses and higher labor costs, we suspect it may be operating close to breakeven.
Brooks Blackmon and Kyle Hallion of Blueprint represented the seller in the transaction, garnering multiple offers before ultimately selecting Miami-based real estate investment firm Lloyd Jones.
