A publicly traded REIT and its operating partner Saber Healthcare acquired a portfolio of five skilled nursing facilities and one assisted living community in North Carolina for an undisclosed price. The REIT emerged from a competitive bidding process that saw 16 total offers and was ultimately selected due to its likelihood of closing and of not renegotiating on price. Indeed the price, although not disclosed, did not change from the initial bid submitted at the end of August. That is impressive, and kudos to Brandon and Ben Bohland of Senwell Senior Investment Advisors for facilitating the transaction.
Featuring 691 licensed beds, including 100 beds (in 77 units) at the private pay assisted living community, the properties are mostly located in the Charlotte MSA, with one in the Winston-Salem MSA. They were all operated by an independent owner/operator who was looking to retire. She owned the real estate at three locations, while a trust owned two and a partnership owned the sixth property. The outgoing operator had a hand in developing four of the facilities (two herself and two for the trust) and acquired her third property. The portfolio had an effective age around 20 years old, consisting of a property built in 1989 and one as recently as 2016.
Operations were steady across the portfolio, with the SNF beds, which were mostly Medicaid, benefiting from the state’s Medicaid supplemental payments. Without that (and other) aid, the portfolio still operated just above breakeven. Occupancy also improved throughout the transaction process from 68% during marketing to 72% at the time of closing. That likely helped stave off any pricing renegotiations in the end.
REITs have been quiet on the acquisition front for the last year, but with their financial strength, they could grow more opportunistic this winter. They could become the buyer of choice for sellers too, with their strong balance sheets and ability to close deals. We shall see.
