Lease vs. Owned RE - ALFs

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December 13, 2024

by a searcher from Harvard University - Harvard Business School in Miami, FL, USA

Looking to understand valuation multiple differences in leased vs. RE owned ALFs as well as appetite from investors for a 100% leased ALF platforms.

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Reply by a professional
from University of Illinois at Urbana in Naperville, IL, USA
Thanks for the tag, ^redacted‌! I am interested in being a part of this. In addition to being an attorney, I am a certified Residential Assisted Living Specialist and have numerous clients in the assisted living industry. My wife is also an award-winning assisted living life enrichment specialist. We are also working toward starting or acquiring an assisted living home ourselves. I am based in Illinois, but I have clients and search nationwide.
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Reply by a searcher
from Harvard University in Miami, FL, USA
Don’t know much about ALFs but it seems if the real estate is owned, you should separately value 1. the business and 2. the land to calculate the total valuation. To value the real estate I would speak to brokers in the industry / geography to get a more precise view on the valuation. When you’re calculating the value of the business excluding real estate, make sure to burden the EBITDA of the business by the theoretical rent you would be paying if it was leased.
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