The story of Sunwest Management keeps creeping up in the news, although not in a bad way this time, as a former Sunwest assisted living/memory care community in Spartanburg, South Carolina, just sold to a joint venture between LTC Properties and Affinity Living Group. Originally built by the former Manorhouse Retirement Communities in 1999, the 87-unit community was sold to Sunwest in 2005 for approximately $6 million, or about $69,000 per unit.
The lender, however, foreclosed on the property when the community was just 50% occupied and sold it to private investor Chris Brogdon in 2010 for $4.95 million, or about $57,000 per unit. Average monthly rents fell to $2,400, from $2,625 per month in 2009, and occupancy remained low, but Mr. Brogdon eventually resold the community to Meridian Senior Living in late 2013 for $8.25 million, or about $95,000 per unit, with a 6.25% cap rate. That equated to a 67% return in three years for Mr. Brogdon. Not bad.
Meridian Senior Living has since split into two separate entities, Meridian Senior Living and Affinity Living Group, the latter of which retained ownership of 60% of the divided properties, all located in the Southeast, including the Spartanburg community. LTC Properties purchased the community for $10 million, or just under $115,000 per unit, and triple-net leased it back to Affinity, which will continue to operate.