As you are aware by now, not only has the seniors housing and care M&A market seen a significant drop in volume, but most of the limited sales activity we have seen is from deals negotiated before the pandemic really started. Now, a few deal offerings have just been disclosed, almost simultaneously.
First, the Tampa office of Cushman & Wakefield just went to market with a 187-unit community outside Springfield, Massachusetts that has 129 independent living cottages, 40 IL apartment units and 18 assisted living units, all on 46 acres. The cottage homes average 1,200 square feet. The C&W team was hired through a bankruptcy court mandated process. The occupancy is just 60%, so this is definitely a turnaround situation. It was developed by someone with no seniors housing experience who ran into multiple problems. An experienced operator will bring the needed expertise, and a clean slate. In addition, the San Diego office of C&W is out in the market with another senior living community. You will have to give them a call to get the details.
Second, Sherman & Roylance Group is out in the market with a 96-unit (150+ beds) assisted living community located within an affluent resort community in Riverside County, California. The community is 90% private pay and has had more than $350,000 in capital improvements in the past 30 months. Despite not being fully stabilized, there is solid EBITDA. A buyer can pay cash or assume the existing HUD loan.
Founded two years ago, Sherman & Roylance just announced it opened a mid-Atlantic office headed by Jack Osteen and a Southeast office headed by MJ Ridenour. They are looking to open two additional regional offices in the coming months. We suppose they are seeing enough future business to warrant the new hires and to go national. We wish them luck in their endeavors.
We will be monitoring the “new offering” market to see if there has been a pent-up demand from sellers waiting for things to calm down (not yet), and we really want to see what the pent-up demand is from buyers. We have heard all the stories about dry powder waiting to be used, so we will see how explosive it is. But keep in mind it all depends on what types of properties come to market, and we have to assume that some sellers are willing to wait on the sidelines for better conditions.
