Nick Stahler and Jim Hazzard of The JCH Group had their work cut out for them but got the job done, selling a 97-unit assisted living community in Fulton, California on behalf of a family trust. There are some issues the new owner will have to address, however.
Built in 1976, the community is in need of some renovations, over $3 million, in fact, estimated by the buyer. The payor mix could also significantly improve, as the community is almost entirely made up of SSI (Supplemental Security Income) residents, which doesn’t necessarily help the bottom line. Every room can be double occupied, with an 88% census based on the 194 beds at the time of the sale. Lastly, owned and operated by a local family since the early 1990s, the community experienced a significant dip in operations following the death of the family patriarch. Some big changes are ahead for the struggling property, as the new owners (a local Korean family with some experience in the assisted living business) plan to tailor their operations to the Korean community. They paid $9.6 million, or just under $100,000 per unit, for the community, and we imagine a bulk of the $3 million renovation budget will help achieve that vision.
Messrs. Stahler and Hazzard showed their range in also successfully negotiating a skilled nursing facility lease extension on behalf of a California-based private equity firm. The negotiation resulted in a lease rate nearly double the previous rate, due to a fair-market clause in the existing lease. Well done.
