November 20, 2019
Jason Punzel

What is the optimum size for a Seniors Housing Community sale?

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What is the optimum size for a Seniors Housing Community sale? – By Jason Punzel

Many owners ask us, “What is the optimum size for a Seniors Housing Community sale?”.   We have found there is no optimum size for a senior housing community.   Different sizes will attract different types of buyers.  A REIT or large private equity company will not have an interest in a single, 16 unit assisted living community.  Likewise, a local nurse typically will not have the financial ability to buy a 100 unit assisted living community.

As a company, we have found that most larger Buyers have a minimum threshold of 40 units for an assisted community and 80 units for an independent living community.   However, the preference is typically 80+ units for assisted and 100+ for independent.   As there are more financially qualified buyers seeking larger communities, cap rates tend to be lower and the price per unit higher, than with smaller communities.

Exceptions:

However, there are exceptions to every rule.   If there are multiple smaller facilities (15-25 units) on the same parcel, or nearby, often times larger buyers are still interested.   We have also had a lot of success selling smaller communities (25-40+ units) that are in favorable locations in larger cities, newer, and specialize in higher end private pay residents who prefer a smaller setting.  Recently, we closed on a newer 40-unit memory care community in a California Coastal community that sold for over $450,000/unit.   It was 100% private pay with high occupancy and excellent quality finishes.   Since there are so many variables that factor into a purchase decision by any Buyer, it is important to work with an expert in valuing and selling a senior living community to ensure the optimal pricing and terms.

Conclusion:

For more information on what your senior living community could be worth, please contact Jason Punzel at punzel@slibinc.com or 630-858-2501 x 233.