A regional operator partnered with a REIT to purchase two assisted living/memory care communities in Tennessee. The two identical 87-unit communities were built in 2000 and have maintained a strong reputation in their respective markets of Knoxville and Chattanooga.
Occupancy was in the low-80s, and the buyers saw an opportunity to enter two targeted markets and improve performance at the sites. The operating margin could also improve from the current 20% on more than $7.35 million of revenues. Plus, there is adjacent land next to each community, which enables the new owner to expand services in the future. According to the panelists on our recent webinar “Assisted Living: Where are Values Now,” owners and operators will likely be enticed to add independent living units to their assisted living communities in order to lengthen resident stays and capture a larger set of younger seniors. So, perhaps an independent living expansion?
The seller was an independent owner/operator based in the Mid-Atlantic who retained the services of Patrick Burke and Dave Balow of Senior Living Investment Brokerage to handle the transaction. In the end, the properties sold for $27.86 million, or $160,100 per unit.
