Assisted Senior Living: OCCUPIED vs. VACANT
Hello BP Nation,
Has anyone bought a vacant assisted living facility with licensing in place?
Story: Seller is retiring and wants to sell all her assets and I'm working with a private investor to underwrite 5 lucrative off-market assisted living residential facilities for an acquisition in the next 3-6 weeks. These are all residential in A/B areas and would love a second opinion on valuing vacant care homes.
All occupied homes have 5-6 residents.
#1) OCCUPIED:
- 3 are occupied and operating with consistent 12 mo P&L's with NOI year-over-year. These look and can be bought in a portfolio.
#2) VACANT:
- 2 are vacant with "licensing in place".
- Broker said, we can "fill it up on day of closing without going through any additional licensing".
Questions:
A) Are we correct to assume, since there's no income = no value? Just like any other commercial property valuation there it is a liability until it achieves break even occupancy?
B) Or should we reconsider since we can "fill it up at closing"? Broker said he verified that licensing is in place, and they were full "2 weeks ago".
- If so, what else should we be looking to do to cover our tracks?
- would I have to go through inspections again?
- Should I factor in a 1-6 month delay for marketing and lease up....of which I wouldn't have to deal with in a fully occupied facility?
Note: We have been through the headaches of trying to bring a 1960-1975 commercial building up to state standards, and that was no walk in the park working with inspections (fire proofing, sprinkler systems, windows, widening halls, updating bathrooms, etc) Also, seller will give us an 80% note which shows commitment on the part of the seller.
Overall: I am currently leaning towards only the turnkey assisted living residential homes over the vacant ones, however if the licensing is indeed in place and all I have to do is marketing, these could also be a great deal. Any opinions, comments, pointers are welcome.
Thanks in advance!
Swat