Newmark Knight Frank closed on a large senior living community in Farmington, Connecticut a few weeks before the COVID-19 pandemic let loose in the Northeast. The community was built in 2015 and has 89 assisted living and 45 memory care units for a total of 134 units. Occupancy was at 97% when it went to market, which is fantastic in any market.
Assisted living rates average about $4,100 per month plus care levels, while memory care rates range from $5,600 for a shared room to $7,700 for a private studio. Based on that, we have estimated revenues to be just above $8.0 million assuming occupancy has remained high. Farmington is one of the nicest towns in the middle of the state with a very wealthy population.
We have to assume that in that location operating margins would be at least 25%, if not 30%, especially with such a high occupancy rate. Although the price was not disclosed, using a cap rate of 6.0% on the upper end of the margin range would derive a price close to $40 million, or perhaps $300,000 per unit. That seems about right for the age and location. But this is our speculation. Given the location and the new age, the cap rate could have been lower, and we will try to find out.
The seller was Bridge Investment Group and the buyer was AEW Capital Management. Given the high occupancy, we assume AEW might want to keep Atria Senior Living as the operator, but you never know. We have not heard how census has fared since the outbreak, but hopefully they are sanitizing everything and keeping outsiders to a minimum. Ryan Maconachy, Chad Lavender, Dave Fasano and Ross Sanders of Newmark handled the transaction, which closed at the beginning of March.
