The smaller, private REIT was poised for success because of an opportunity to be competitive in the regional market by repositioning the facility at the right price point, with a building refresh. Even before the plans to implement a facelift were fully realized, census began climbing as the broader community welcomed the ownership change.
The rebranding and refreshing included new paint, carpeting, furniture, fixtures, and more were upgraded, along with a new HVAC system, kitchen appliances, IT infrastructure, and security equipment.
“The larger REIT was very successful with their overall portfolio over the years, but this assisted living property became an outlier,” Wilshire’s CEO Don Pelgrim said. “For our client, the smaller, private REIT, the facility represented an opportunity. Acquiring it at the right price provided the foundation necessary to refresh and reposition the facility as an addition to their portfolio with a prosperous future.”
Wilshire’s sage guidance and entrepreneurial approach enabled this private REIT to implement a plan to reposition and refresh an assisted living facility struggling with stabilization. From a financing perspective, the $8.2 million bridge loan was structured with holdbacks and reserves for payment, capital improvements and operations.
First lien bridge $8.2 million
Unit Count 100 units, 109 beds
Pre-Acquisition Occupancy: 43%
Post-acquisition the new management team focused on raising occupancy and began to generate several move-ins per month. Once the value-add is fully realized and stabilization is obtained, the facility will be on target to generate a 56% gain over the client’s basis. This scenario highlights how the sale of a property benefits both parties for different, but equally important, reasons. In this case, both REITs walked away happy, and Wilshire saw the opportunity to provide debt capital to an experienced private REIT with the knowledge and knowhow to improve the facility.