When prices for assisted living facilities head over $300,000 to $400,000 per unit, investors get a little nervous.  And why not?  Where’s the upside when you get into nose-bleed territory, unless it is a great strategic fit with incredible cash flows?  We recently heard about a deal that certainly sets a record and at the same time leaves those $400,000 per unit sales in the dust.  We are talking about a sale of 15 assisted living facilities with 1,244 units that sold recently for approximately $1.1 billion, or $884,000 per unit.  That comes to more than $73 million per facility, which is what it would cost to build many CCRCs with more than 200 units. 

The difference in this case is that these assisted living facilities are located in the UK, not the U.S., and development costs tend to be higher across the pond, but we had no idea they were that much higher.  The purchaser was Morgan Stanley Real Estate, which bought a 90% interest, with the remaining 10% going to Sunrise Senior Living.  Sunrise never made an announcement about the transaction, and we believe these facilities were developed by Sunrise in partnership with Pramerica Real Estate Investors, with Sunrise maintaining the management of the properties for the seller (Pramerica) and now the buyer.  And our guess is that Sunrise already owned a 10% interest with Pramerica owning the 90%.  What adds a little spice to the story is that Morgan Stanley Real Estate is one of the companies rumored to be a front-runner for the purchase of Sunrise itself.  Perhaps this deal in the UK is just a tune-up for the real thing.  Or perhaps not.