November 16, 2020, Ben Swett, The SeniorCare Investor - When it rains, it pours, we suppose. Last week, Eagle Arc Partners acquired a portfolio of 20 skilled nursing facilities in the Southeast, the largest SNF deal that we had seen for some time. Just a day later, Evans Senior Investments announced that it handled the sale of 21 skilled nursing facilities across three separate transactions in three Midwest states. The combined purchase price for the portfolio was $86 million, or around $54,000 per functional bed.
Eleven of the facilities are located in Indiana and combined for 751 licensed skilled nursing beds (692 functional beds) and 109 senior living units. At the time of marketing, average occupancy was around 78%, with total revenues combining for $47 million. However, the pandemic caused census to bottom out around 66% (currently sits at 69%), and we imagine revenues were affected too. The new regional owner/operator hopes to increase Medicaid rates, and revenues as a result could increase by $1.0 million without any change in occupancy. CIBC funded the acquisition with a $51.2 million loan, the details of which you can find here.
That same buyer also acquired seven facilities in Iowa in mostly tertiary markets. This portfolio includes 512 licensed skilled nursing beds (466 functional) and 75 senior living units. Similar to the Indiana facilities, average census dropped since the time of marketing, from 75% to 69%, and revenues also likely fell from $29.7 million. Most of the facilities were underperforming in terms of operating margin, and four were losing money before debt service. The buyer previously had no presence in the state and secured a different tenant to turn around operations. Evans Senior Investments worked to find another regional operator that had recently taken over a large SNF portfolio in Iowa to take over the lease.
Finally, the smallest portfolio in the deal featured three skilled nursing facilities and 293 total licensed beds (262 functional) in Illinois. The whole portfolio was underperforming, with two locations losing money before debt service. Average census was low at 72% (dropping to 64% as of November 6), with combined revenues totaling $13 million. The same buyer of the Indiana and Iowa portfolios originally purchased the Illinois facilities, but the current operations and lack of cash flow caused them to immediately seek a sale. Evans again ran that process, finding an Illinois-based regional owner within 30 days. Three different tenants will operate each property. In total, that is two separate buyers, five different operators across three different states.