Occupancy rate is one of the first numbers buyers ask about when evaluating an assisted living facility, but it is far from the only one that matters. The following fictional case study compares two similar Florida facilities, one with high occupancy in an aging building and one with slightly lower occupancy in a newer, well-maintained facility, to show how physical infrastructure changed buyer interest and valuation.
The facilities below are fictional, but the pattern reflects the kind of analysis buyers apply, including what private equity firms look for in an assisted living acquisition.
Harborview Senior Residence had a loyal resident base and consistently high occupancy. However, the building’s age meant buyers would need to invest heavily in HVAC, roofing, and life-safety systems soon after closing.
Pelican Bay Assisted Living had a few more open beds than Harborview, but its newer construction meant a buyer would not need to plan for major capital expenditures for many years.
| Factor | Facility A | Facility B |
|---|---|---|
| Occupancy | 96% | 89% |
| Estimated Near-Term Capex | $850,000 | $50,000 |
| Buyers Who Made Offers | 2 | 5 |
| Valuation Approach | Revenue multiple minus capex reserve | Straightforward revenue multiple |
| Final Sale Price | $5,050,000 | $6,270,000 |
One private equity buyer evaluating Harborview explained the math directly: “We love the census, but we have to underwrite a new roof, new HVAC, and life-safety upgrades in year one. That comes straight out of the price.” Pelican Bay, despite lower occupancy, required no such adjustment.
Occupancy reflects current performance, but building condition reflects future risk and cost. Institutional buyers and private equity groups in particular build detailed capital expenditure projections into their offers, and a facility requiring significant near-term investment will often be valued lower than one with slightly softer occupancy but modern infrastructure, a factor closely tied to how business valuations are calculated.
If your facility’s occupancy is strong but its infrastructure is aging, consider addressing major capital items, roofing, HVAC, and life-safety systems, well before listing. Even partial upgrades can reduce the capex discount buyers apply and support a stronger valuation.
Despite lower occupancy, the newer facility sold for over $1.2 million more than the higher-occupancy facility with significant deferred maintenance. If you would like guidance on how your facility’s physical condition might be affecting its value, contact Truforte Business Group today.
Owners preparing to sell should also review our guide to exit strategy planning well before going to market.
For more real-world (fictional) examples of how deal factors affect outcomes, see: Case Study: Selling a Doctor-Centered vs. Associate-Driven Medical Practice, Case Study: A Medicare Audit During Due Diligence, Case Study: Credentialing Problems Before Closing.