An assisted living community with an improving census and reputation sold to a regional operator before fully realizing its potential. As rough starts go, this community in East Stroudsburg, Pennsylvania may take the cake. Built in 1984 as a skilled nursing facility, it never opened as such because the developer defaulted on the bond financing the project. A Lutheran senior housing group then bought it and operated it as an assisted living community until January 2013, when a group of doctors bought the community with just 12 residents occupying it. After remodeling the third floor to add 29 memory care units and an adult day care program, the doctors brought the census up to 66 residents and improved the community’s reputation in the local market. However, expenses still ran high, the adult day care program was a relative financial drag, and the 71% occupancy on 93 licensed beds could definitely be improved.

These pressing problems prompted the sale to an experienced operator with the resources to make the necessary changes, including redesigning and refurbishing the building’s interior (especially on the first two floors and the common areas), moving away from the adult day care program, and increasing census. Woodbine Senior Living, which operates five senior living communities in Maryland, Pennsylvania, New Jersey and New Hampshire, plans to fill the community in about six months, which shouldn’t be a problem given the company’s average move-in rate of six to seven new residents a month per facility. Woodbine was co-founded by industry vets Steve Gaylor and Gloria Brock. At closing, the community was losing money, but we estimate cash flow should rise to approximately $1.1 million on annual revenues of $3.6 million. The company paid $7.75 million, or $112,300 per unit, for the property, but once stabilized and costs normalized, the value could reach $15 million. Evans Senior Investments represented the seller in the transaction.