The time had finally come for the Village of Dolton (a suburb south of Chicago) to sell its 126-bed supportive living facility, as the town handed over the keys to an experienced private owner. Built in 1970, the five-story facility had undergone an extensive renovation in 2008 to accommodate the SLF license.
However, years of hiring third-party managers had not improved operations at the facility. Occupancy stood at just 33%, with a 51% Medicaid and 49% private pay census, and the facility lost around $700,000 per year in EBITDAR on approximately $1.4 million of revenues. The facility also went years without capital improvements, which certainly did not help occupancy nor its competitiveness in the area.
The buyer, who is partnering with an Illinois-based real estate owner on the acquisition, took over operations while waiting for change of ownership and slashed the facility’s loss to near-breakeven in just a few months. Moving forward, the new owner also plans to invest significant capital in the physical plant and as a result increase private pay rents and improve margins. They left plenty of room for improvement, purchasing the facility for $2.6 million, or about $20,600 per unit. And the Village of Dolton is relieved of a loss on their books. That sounds like a win-win. Patrick Burke and Ryan Saul of Senior Living Investment Brokerage facilitated the transaction.
