Senior Living Investment Brokerage was out of the gates fast at the start of the second quarter, closing a slew of transactions in the first two days of April. The first announcement involved a 90-bed skilled nursing facility in Meriden, Connecticut, being sold by a not-for-profit organization. Miller Memorial Community was built in 1975 and also features 19 active adult cottage-style apartments.
The campus operated at a heavy loss during the marketing process, losing more than $1.5 million a year of EBITDAR on $7.63 million of revenues. Plus, occupancy for the SNF fell from 66% during marketing to around 50% by closing. The cottages were around 50% occupied too, and were in need of capex. Residents paid between $600 and $800 per month for them.
However, the facility attracted significant interest from buyers due to the fact it was non-union, had an above-average Medicaid rate and the high occupancy rates in the surrounding market. SLIB procured double digit bids from qualified buyers focused on Connecticut, and the seller selected a Northeast-based private real estate investment firm with a strong footprint in Massachusetts. This was their first acquisition in the Nutmeg State, paying $4.5 million, or $50,000 per SNF bed. That seems like a pretty good sum given the state of the operations. Ryan Saul and Dave Balow handled the transaction.
Next, Matthew Alley of SLIB sold two skilled nursing/assisted living properties in Texas for $13 million, or $54,850 per bed. Previously owned by a not-for-profit Catholic hospital system, Burleson & Bryan St. Joseph Manor are located about 25 miles apart in Caldwell and Bryan, respectively, and combine for 237 beds. They were built in the late 1990s and boasted quality physical plants. Both were also enrolled in QIPP, which provides for additional revenues.
Operationally, there is some room for improvement. Burleson, which only has SNF beds, was 43% occupied, and Bryan, which has some AL units, was 66% occupied. Combined, the properties were losing more than $4 million a year on approximately $11.7 million of revenues at the time of marketing, and they had been struggling for the previous several years. Its not-for-profit owner was selling their only senior care assets. But the buyer owns several SNFs in Texas and is leasing the operations of these buildings to a group based in the Dallas-Fort Worth area. The new operator plans to work on expense management and take advantage of two solid markets to turn things around.
Finally, Brad Clousing and Daniel Geraghty closed the sale of The Palms of Ponte Vedra, an 86-unit assisted living/memory care community in Ponte Vedra, Florida, about 20 miles south of Jacksonville. Built in 2015, the community was previously owned by a Florida-based regional owner/operator. But after receiving multiple offers, the seller decided to go with Starling, a Jacksonville-based regional owner/operator looking to expand their presence in the Sunshine State.
Starling has renamed the community Starling at Ponte Vedra, which joins several other sister communities in the state, such as Starling at San Jose, Starling at Nocatee Independent Living and Starling at Nocatee Assisted Living & Memory Care. CBRE secured a three-year, $16.2 million loan through Live Oak Bank to help fund the deal and capex. Aron Will, Phil Rachels and Michael Cregan arranged the financing.
