CBRE recently executed its second financing for the same five-community seniors housing portfolio in Oregon, arranging the assumption of a $55.6 million fixed-rate Freddie Mac loan with an interest rate close to 3.5%. In 2016, CBRE had arranged acquisition financing on behalf of the portfolio’s current seller, but with the debt nearing maturity, the decision to divest was made.
Through Freddie Mac’s Optigo lending platform, Aron Will, Adam Mincberg and Michael Cregan of CBRE managed the assumption for the buyer, Arcus Healthcare Partners. Arcus plans on making significant capital improvements across the portfolio. The in-place operator, Frontier Senior Living, has managed these communities since 2012 and will continue to do so under Arcus’s ownership.
The communities are concentrated in mostly suburban, tertiary markets in Oregon, with one located near Portland. They were built in the late-1980s and early 1990s, having received modest updates over the last 10 years. In total, they offer 468 units comprising independent living, assisted living and memory care. The portfolio was very profitable, generating approximately $4.8 million in EBITDAR in 2022, which translates to more than $10,000 of EBITDAR per unit.
Considering the properties’ age, acuity mix and performance, plus a more aggressive bidding environment given the assumable, low-rate debt, we would estimate a cap rate between 7.0% and 7.5%, for an approximate value of the portfolio between $64 million and $68 million, or between $137,000 per unit and $145,000 per unit. Dan Mahoney, Michael Segal and Ben Firestone of Blueprint Healthcare Real Estate Advisors handled the sale.
