March 30, 2020, Ben Swett, SeniorCare Investor - The team at Blueprint Healthcare Real Estate Advisors announced a couple of deals that closed earlier this year. The M&A market was a little different back then, close to a peak in terms of pricing and definitely at a peak for activity. Seems like just yesterday.
First, Ben Firestone, Michael Segal and Trent Gherardini sold a portfolio of three assisted living/memory care communities on Florida’s Gulf Coast. Featuring a majority-private pay census and historically operating near stabilization, the properties were recently impacted by the high level of new development in southwest Florida.
Given what we have heard of the level of groundbreakings around Naples, Sarasota and Tampa, that is not too surprising. And since overdevelopment affects not only census, but also staff retention, the costs can really climb.
Ultimately, a private equity firm and its Florida-based operating partner stepped in to buy the communities. Their utilization of private capital and a specialized finance company helped to close the deal amid performance challenges and market volatility.
No purchase price was disclosed, but we imagine the buyer left some room to add value. We hope they got a jumpstart on any turnaround initiatives before everything came to a screeching halt, and that their residents are remaining safe and healthy.
Then, Messrs. Firestone and Segal were joined by Brooks Blackmon to sell a 91-unit assisted living/memory care community in Greenville, South Carolina. Built in 2001 with 74 assisted living and 17 memory care units, the community has a 100% private pay census, but recently experienced a decline in operations.
A competitive market at the start of the recent construction boom (beginning around 2014/15) led to leadership turnover at the community, causing a decline in performance in 2016 and 2017.
Operations had begun to rebound in 2018 but fell again during the due diligence and marketing periods, with occupancy falling to its lowest point since 2017. Understandably, the community’s revenue per occupied unit was lower than the market average.
The memory care census, however, had remained stable. A private investor bought the community for an undisclosed price and will bring in a new leadership team.
Hopefully, they will work out and stay for a long time.