Residential Care Facility Sale by Patrick Byrne
Patrick Byrne of Senior Living Investment Brokerage, Inc. recently facilitated a Residential Care Facility sale in Missouri. Cedars of Liberty is a converted school originally constructed in 1962, licensed for RCF-II. This licensure is effectively low-acuity assisted living, often carried by older buildings which do not meet current ALF standards. Many RCFs also service more of a mental health population, and that’s true of Cedars of Liberty. Years ago we toured this campus when it was a struggling, geriatric focused building with some mental health and we encouraged them to fully embrace that mental health model. Despite being in a major metropolitan market the facility was quite rural and with amenities like a basketball court & many common areas, the facility was uniquely equipped to care for a younger population. Given the low margin in this business, many smaller mental health facilities in the state were closing, leading to a steady increase in Cedars’ population.
While the facility is very large, 129,658 square feet with a capacity of 206 beds, the functional capacity of the license is only 130 beds. As such, the census at the time of marketing was above 90%. The buyer plans to expand the capacity and enhance the physical plant; whereas the seller lacked the capital to justify further investment. In the prior fiscal period the facility barely made $200k in EBITDA so the improvement was recent and combined with the aging physical plant and unique focus, attributed to a higher capitalization rate.
The Seller was a local family who had inherited the operations from their parents. The Buyer is a growing skilled operator and one of the largest mental health operators in the Midwest. The census at the time of sale was 57% and the Residential Care Facility sale was at a 13.94% capitalization rate and a 1.26X GIM.
Patrick Byrne of Senior Living Investment Brokerage, Inc. handled this Residential Care Facility sale. For additional information on this transaction or on how Pat can assist you with a purchase or sale, please contact Patrick Byrne at firstname.lastname@example.org or 314/961-0070