The portfolio consisted of 3 separate transactions for all 5 of the seller’s communities. The combined purchase price for all 3 transactions was $99,000,000 or $137,000 per functional bed/unit. The portfolio was of modern vintage with four of the five communities being built between 1996 - 2011 and the vast majority of beds were private resident rooms.
The first tranche of the portfolio consisted of one skilled nursing community located in Rayne, Louisiana. The community was licensed for 130 skilled nursing beds and had an additional 54 banked skilled nursing beds that could be used for an expansion in the future. At the time of marketing, the average census was 71% with revenue of $8,500,000 and net operating income of $1,100,000 or a 13% net operating income margin. The ESI team ran a selective and confidential marketing process ultimately securing a regional owner/operator looking to grow their skilled nursing presence in the state of Louisiana. The community sold for $14,000,000 or $108,000 per functional bed.
The second tranche of the portfolio consisted of a standalone skilled nursing community located in Baton Rouge, Louisiana. The community represented the oldest property in the seller’s portfolio being built in 1973 and consisted mostly of a Medicaid and Veterans Administration resident base. At the time of marketing, the average census for the community was 68% with revenue of $6,500,0000 and net operating income of $1,100,000. The ESI team ran a simultaneous marketing process with the entire portfolio and secured a regional owner/operator. The community sold for $12,000,000 or $91,000 per bed.
The final transaction of the portfolio represented 3 skilled nursing communities with a small assisted living component. Built between 1996 - 2011, the portfolio consisted of 428 skilled nursing beds, 32 assisted living units, and 56 banked skilled nursing beds for a future expansion opportunity. Additionally, one of the communities had just opened a ventilator unit and dialysis program which will add additional reimbursement revenue for the new operator. At the time of marketing, the portfolio had a census of 83% with revenue of $36,500,000 and net operating income of $6,800,000. The ESI team secured a regional owner/operator looking to enter the Lafayette, Louisiana market. This tranche sold for $73,000,000 or $159,000 per functional bed/unit. “This tranche of the portfolio matches the highest price per bed skilled nursing transaction ever sold in the state of Louisiana. The matching transaction was also sold by the ESI team earlier this fall,'' commented Henry Fuller, Senior Associate at ESI.
The ESI team ran a simultaneous marketing process for the entire portfolio and procured 20 letters of intent. ESI was successfully able to coordinate closing for all 3 transactions prior to year-end with 3 separate buyers for the seller’s entire 5 building portfolio. Jeremy Stroiman, CEO of ESI, commented “This transaction represented a strategic opportunity for each buyer to expand their footprint in Louisiana and demonstrates the ESI’s ability to maximize value while running a competitive and confidential marketing process.”
Evans Senior Investments continues to observe the difficulty of operating long-term care assets in today’s marketplace with rising labor costs and the increasing need for compliance oversight. The continued crisis related to the COVID-19 pandemic will likely intensify the struggles of independent owners as the crisis strains the day-to-day operations at facilities nationwide. In 2021, Evans Senior Investments closed $920 Million in transaction volume, with an additional $710M + in transaction volume set to close in the first half of 2022.