Aron Will of CBRE continued his recent run of activity with two more transactions. Up first was a bank financing arranged on behalf of a joint venture between Bourne Financial Group and HRA Senior Living to refinance their newly-built 96-unit assisted living/memory care community in Wilmington, Delaware. The high-quality community boasts an upscale salon and spa, as well as a bocce court, yoga and fitness studios. It’s also located near two large shopping centers. CBRE secured a $25.5 million, five-year non-recourse loan with 36 months of interest only shortly after the property received its certificate of occupancy. Estimated lease-up figures in the affluent area must have been impressive.
Then, across the country Mr. Will arranged Fannie Mae financing for a 207-unit senior living community in Riverside, California. A joint venture between Capitol Senior Housing and Welbrook Senior Living obtained the $24.9 million, 10-year loan with a floating rate and 48 months of interest only, which was actually the third financing Mr. Will has worked on for the property in just five years. The JV originally purchased the community from C-3 Capital in 2013 for $16.25 million, or nearly $80,000 per unit. At the time, it was an independent living community with two buildings built in 1980 and 1984. Operations were dragging, with a 25% margin and 68% occupancy rate. So, CSH invested in a significant (over $5 million) capital improvement program, converted one of the buildings to assisted living and memory care, and reduced the units to 207. Average IL rents at the time were $1,600 per month, which we imagine were revised upward significantly. Operations have dramatically improved since then, and occupancy is currently over 93%. Assuming a loan-to-value of 65%, that means the community’s value has increased by over 135% in five years. Not bad.
