A major portfolio of Medicaid waiver assisted living communities sold in the Midwest, with Connor Doherty, Ryan Kelly and Alex Florea of Blueprint Healthcare Real Estate Advisors handling the transaction. The portfolio, which has seven locations in Indiana and four in Ohio all built around 2000, consists of 1,400 total units. Altogether, the communities earned approximately $56 million and $12 million in revenues and EBITDAR, respectively, for a strong 21% margin.
Not too many Medicaid waiver portfolios of this size hit the market, let alone stabilized portfolios, but ownership desired to execute a succession plan and engaged Blueprint to create a competitive bidding process. Apart from the strong existing financials, there is the potential for upside from material state reimbursement rate increases, including a potential significant increase set to take effect in Ohio in November of this year.
When Blueprint took the portfolio to market in August 2022, the portfolio was still in lease-up after transitioning to Medicaid waiver and featured occupancy around 75%. However, by closing, occupancy rose to 95%. That seller was an entrepreneurial owner/operator who had bought the properties over the last five years and added 200 brand-new units to the portfolio in that time.
Six buyers ranging from private equity to high-net-worth individuals submitted offers, and a partnership between two experienced providers/investors with a focus on solving for the middle market opportunity emerged as the ultimate acquirer. Despite a challenging capital markets environment, two banks helped finance the deal, with a third party providing mezzanine debt.
