An age verification file that stops in 2021 is a real risk on a 168-unit 55-plus acquisition
On a 2016-built active adult community, 168 units averaging 940 square feet, in-place average rent around $2,190, occupancy in the mid-90s, and pricing to a low-6 cap on trailing, the file room is usually where the real underwriting happens rather than the rent roll. Three things stand out on a deal shaped like this. First, a community holding itself out as 55-plus and relying on the housing for older persons exemption from familial status rules needs to continually document that at least 80 percent of occupied units have a resident 55 or over, plus published intent to operate as older housing. If the last full verification survey in the file is several years old and a meaningful number of newer leases carry no age documentation at all, that exemption is at real risk, and how it is enforced varies enough that counsel needs to weigh in, even while pricing has to happen before that answer comes back. Second, an optional service package, weekly housekeeping, a scheduled shuttle, several dinners a week, a wellness coordinator, edges toward independent living, and the line between that and a licensed use is a state-specific question with real payroll attached, often several hundred thousand dollars a year. Third, a management agreement with an incentive fee structure that does not clearly tie to the historical financials is its own diligence item. The live decision is whether to require a fresh full verification survey as a closing condition, which can take months and threaten a rate lock, or take a holdback and complete the survey in the first quarter of ownership. Sizing that holdback correctly is the harder part of that choice.
