Challenge: The sale consisted of two components: The Shire at Culverton, an assisted living facility, and North Village Apartments, an independent living facility. The properties were 40 years old and there was a significant amount of deferred maintenance.
A very important attribute to this sale was the current license in place by the New York State Department of Health (DOH) Assisted Living Program for The Shire at Culverton. The facility was to operate 200 assisted living beds, with 48 of them being approved for Medicaid support under the DOH’s Assisted Living Program. Very few assisted living facilities in New York have access to this funding source.
The North Village Apartments complex consists of 28 one-bedroom and 14 two-bedroom units. In response to the previous downturn of the real estate market, the owner chose to eliminate the age restrictions at this apartment complex and allow tenants with minor children. Although the elimination of age restriction increased occupancy levels, profitability was minimal.
Strategy: Realizing that these facilities would not fit into the typical seniors housing business model of a national or institutional investor, a decision was made to present this opportunity to regional, local and non-profit organizations. A new operator would have to reposition the property by reorganizing it into an independent living/seniors apartment complex, which was its intended use.
Result: In our target market, a buyer was found who envisioned renovating the residences as well as putting in place an aggressive marketing campaign to attract the right type of residents to The Shire at Culverton and North Village Apartments. Finding a REIT whose vision aligned with the buyer’s enabled the opportunity to culminate in a successful closing. The transaction closed at a 7.6% cap rate, which is uncommon for a facility of this age and condition.