As we keep saying, the recovery from the pandemic is going to be a long slog for many, but most investors, lenders and operators understand that and have been able to deal with it. Take National Health Investors, which would have liked to turn in a better fourth quarter, but nonetheless continued making acquisitions in February.
First, NHI bought two memory care communities from Silverado Senior Living, a new customer, for $37.5 million, or $312,500 per unit. They both opened in 2022 and both are 60 units. One is located in Summerlin, Nevada, and the other in Frederick, Maryland. Silverado will lease them back from NHI for 20 years with a first-year lease rate of 7.5% plus 2% annual Escalators. Blueprint Healthcare Real Estate Advisors handled the transaction.
The second acquisition was for a 60-unit assisted living and memory care community in Chesapeake, Virginia that opened in May 2022. The purchase price was $17.3 million, or $288,333 per unit. The seller, Bickford Senior Living, is a major tenant of NHI’s, and will lease it back at a cash yield of 8.0%. The community is off to a great start, and for the six months ended December 31, 2022, EBITDARM coverage was 1.62x, increasing to 2.32x for the month of December. Not too shabby.
But the census recovery at NHI continues to hit some bumps in the road. Bickford Senior Living’s 39 communities had their worst month in more than a year, with census in January 2023 averaging 81.7%, down 120 basis points sequentially and down 190 basis points year over year. Census had been as high as 85.0% last July, and this is certainly not the direction anyone expected, or wanted.
Senior Living Communities, with its nine properties at NHI, has been slowly moving in the right direction. January’s occupancy was 84.0%, up 10 basis points from December and up 230 basis points year over year. They are getting close to “stabilized” occupancy, which we suppose is whatever you want it to be.
So far, the winter months have been relatively kind to the seniors housing sector, which should bode well for a spring bounce back.
