Amid Welltower’s latest earnings release, the REIT announced the acquisition of six seniors housing communities in California, and it was revealed that Mike Garbers and Cody Tremper of JLL Capital Markets represented the seller, Oakmont Senior Living, in the deal. The combined purchase price for the portfolio was $312 million, or $520,000 per unit, but the transaction effectively could be separated into two portfolios: three assisted living/memory care communities and three entrance-fee CCRCs.
Oakmont developed all of the properties with Gallaher Companies, including opening the three AL/MC communities in 2021. Located in Fullerton, Simi Valley and Roseville, the communities total 263 units. Opening these communities during a pandemic may have been problematic, but being very selective with its sites and focusing on the California market, Oakmont was able to bring occupancy to 95% at the time of closing. Being high-quality communities in desirable areas, and not to mention stabilized, we assume that the per-unit price may have well exceeded $600,000 per unit, with a cap rate just below 6% at stabilization if margins are in the typical high-30s range for AL/MC communities in California.
Meanwhile, the CCRCs are located in Brea, Palm Desert and Santa Rosa, opening in 2013, 2010 and 2013, respectively. They total 337 units, with 67 memory care units and the rest licensed for assisted living, a majority of which were effectively independent living. That structure allows the residents to not have to move rooms as they require more services, unless they need memory care services. Occupancy was also in the 90s, and we assume the properties also operated at healthy margins in the mid- to high-30s. The portfolio will be managed by Oakmont under a RIDEA 3.0 management contract.
