The transactions keep on coming from Evans Senior Investments, which followed up on its value-add deal in Pennsylvania with a skilled nursing sale in Indiana. This facility was built in three phases in 1964, 1978 and 1998, and now features 204 licensed beds, although 180 are currently functional. The owner/operator has other skilled nursing facilities but primarily on the West Coast. This was its only Indiana facility, the closest facility in its portfolio being 122 miles away. So, it was slated for sale.
At the time of marketing, the facility was 60% occupied and profitable, generating $2.2 million of NOI at a 22.1% margin. Helping that strong margin (despite the low census) was the $1.9 million in upper payment limit income (UPL) that the facility received (a 75% split with its hospital partner). There is additional upside in lowering expenses such as high raw foot costs and the opportunity to bring in house therapy and pharmacy departments that were previously outsourced.
Evans Senior Investments represented the seller and ran the marketing process, procuring five letters of intent in two weeks. Castle Healthcare paid $17.45 million, or $97,000 per functional bed, at a 12.6% cap rate.
