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Financial Performance & Pro Forma Analysis
Since being acquired by current ownership in 2017, the Community has demonstrated strong financial performance and demand in their Assisted Living units. For trailing twelve months ended January 31, 2022, the Revenues have increased on a month-to-month average by 2.00% per month, while Expenses have increased .72% by the same metric. T-12 Revenues were at $2,043,000, T-3 annualized Revenues are $2,197,000, representing a recent growth in rental income. The valuation analysis is based upon pro forma earnings which are projected based on the following assumptions:
Occupancy: Overall occupancy levels for the community are projected to improve slightly upon recent historical levels, 91% as of January 31, 2022, to a stabilized occupancy rate of 94% by Year 2. Rental Revenue: Average per-unit revenue is projected based on actual, unit-specific rents as reflected in the January 2022 rent rolls. Long-term average rent per unit is further projected to increase by 3.5% per annum. Expenses: Operating Expenses for the Community are projected in Year 1 based on T-6 levels and increased by 2.7%. Real Estate Taxes: Commercial properties are reassessed county wide for tax purposes every year in
Escambia County. The property tax assessment and correlated expense in each municipality is expected to increase slightly following a sale of the property.
Based on a review of Berkadia’s proprietary market data and discussions with major seniors housing operators in Florida, Berkadia believes that any such overly burdensome tax assessment can be contested and successfully reduced to approximately 50% of the purchase price. Therefore, the property tax expense for the Community is projected based on an assessment equal to 50% of the sale price and average millage rates of 13.8469 for Grandview
Retirement Center. Management Fees: Management fees are projected at 5.0% of net revenues in accordance with current market standards. In addition to the above, the long-term cash flow and yield calculations are based in part on the following assumptions:
Annual Rent Growth
Other Income Growth Rate
Annual Expense Growth 3.50%
3.50%
2.70%
