An Illinois-based skilled nursing facility was purchased for a total of $39.5 million at an Illinois record price-per-bed of $135,274, in a deal announced this week. The property was sold by Lancaster Health Group in a deal brokered by Senior Living Investment Brokerage.
The 292-bed community, Norridge HealthCare and Rehabilitation Centre, is based in Norridge, Illinois and had 89% occupancy at the time of sale. Built in 1976, the property has an ‘as is’ cap rate of 8.1% with a stabilized cap rate of 11.7%, and 40% private pay and Medicare residents.
While there are several deals in process in Illinois at prices over $100,000 per bed, says Michael Cooper of Hinsdale, Ill.-based Cooper Valuation Group, the sale represents a record-high price for a skilled nursing facility in the state.
“It is not surprising, and actually, quite understandable as they achieved a high quality mix in the past few years,” Cooper says. “Their census included about 30-40 private pay residents and 50 to 60 Medicare residents per day. Buyers/investors are attracted to high quality mix operations in solid Chicago metro markets.”
The buyer, Feiner Investment Corporation, has leased the property to Premier Healthcare Management with the expectation that the property will be a flagship for the company.
“As evident by the 40-day close from letter of intent and record price per bed in Illinois, the long-term care acquisition market remains torrid,” said SLIB’s Ryan Saul, who brokered the deal. “Properties that have a high quality mix and are located in strong markets receive national attention. Now is a great time to sell.”
Situated on 1.36 acres, the 99,979 square foot property includes 40% private pay and Medicare residents with the opportunity for financial improvement, in part driving the sale price.
Lancaster Health Group is a regional operator with two other nursing facilities in the Chicago area, electing to divest the Norridge community and focus on those properties that are remaining including attention to private pay and Medicare residents.
The new owner has plans to continue to improve the private pay and Medicare occupancy while also improving efficiencies.
“The Seller capitalized on the strong market and the Buyer expanded their portfolio by acquiring a strong performing asset with marked upside,” Saul said.
Written by Elizabeth Ecker