Stabilized seniors housing deals have been few and far between in the last year, but Dan Mahoney, Michael Segal and Ben Firestone of Blueprint Healthcare Real Estate Advisors hit the transaction trail to Oregon to sell five well performing assets on behalf of the seller. The portfolio, which consists of 468 units of independent living, assisted living and memory care, was concentrated in mostly tertiary markets in Oregon, with one located near Portland.
Built in the late-1980s and early-1990s, the portfolio received modest updates over the last 10 years. However, 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. For older buildings in tertiary markets, it doesn’t get much better than that. But one can imagine with some renovations, it could.
Also making the portfolio incredibly attractive to buyers was the assumable Freddie Mac debt, which had an interest rate close to 3.5%. It was maturing soon, hence the decision to divest. Arcus Healthcare Partners, a real estate investment firm started by Brian Beckwith and Sheryl Marcet, was selected as buyer among six offers. They are keeping the in-place operator and will invest in significant capital improvements across the portfolio.
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%, or an approximate value for the portfolio between $64 million and $68 million, or between $137,000 per unit and $145,000 per unit.
