In the waning days of 2022, the Newmark Seniors Housing Team sold a large assisted living portfolio in Pennsylvania and Michigan. Dubbed “Project Freedom,” the portfolio consists of eight communities and 744 private pay units, featuring a mix of assisted living and memory care. These communities are located in smaller submarkets and have an average age of approximately 20 years, which leaves room for some capital improvement projects for the new owner.
Persimmon Ventures, LLC began acquiring the communities in 2016 after having built and sold a 10-facility skilled nursing portfolio over the previous eight years. Persimmon and its joint venture partner on the portfolio, Big Bay Ventures, brought in Cardinal Senior Management to operate the communities, which had varying degrees of performance issues at the time of acquisition. The team also completed physical plant upgrades and additions to serve both memory care and more affordable entry-level services.
Persimmon and its partners navigated through the pandemic and positioned the portfolio for sale in early 2022, engaging with the Newmark team at the time. Newmark marketed the portfolio to a limited group of buyers with the intention of potentially selling the portfolio to two buyers, given that all but one of the properties were located in Pennsylvania. However, the best choice ended up being a northeast-based investor and operator that decided to purchase the entire portfolio at essentially the asking price, paying $136 million, or $182,800 per unit.
To the seller, this represented the prepandemic value of the portfolio. The LOI was signed in December 2021, and despite the upheaval of the capital markets in the last year, there was no re-trade on price or terms, which is impressive. During that time, occupancy remained in the upper 80s and low 90s. Having a solid, if not improving, operation helps. The buyer financed the purchase through the assumption of existing HUD mortgages, 1031 exchange proceeds and some senior debt. Stephen Bellone, President and Managing Member of Persimmon Ventures, added, “Despite working towards close through a challenging economic environment, the buyer not only closed as promised on all terms, they recognized the continued strength and performance of the existing operator [Cardinal Senior Management], through a protracted close process, and committed to close with [Cardinal] in place, thus we couldn’t be any more pleased all around.”
The buyer was a large Northeast-based owner with over 50 locations, mostly concentrated around the Philadelphia, New York and Boston markets. It has experience operating both skilled nursing and seniors housing buildings, but the buyer decided to retain Cardinal Senior Management as operator of all but one of the eight communities in a go-forward agreement.
