Nearly four years after it acquired a 66-unit assisted living community in Portage, Wisconsin (Madison MSA), SHA Capital Partners’ efforts were rewarded when it refinanced and earned a 30.0% IRR and 2.25x equity multiple for its primary equity partner.
When SHA and its partner, Matthews Senior Living, made the 2015 acquisition, the community was operating well enough. Built in 1999 and renovated in 2006, it was 80% occupied (with a 20% Medicaid census) and operated at a 32% margin on about $1.55 million of revenues. Paying $5.3 million, or $80,300 per unit, SHA and Matthews then spent $350,000 to upgrade the common area and hired a new marketing director who brought occupancy up to 100%.
Since then, operating income also increased (by 43%) and SHA was able to begin seeking a refinance about 18 months ahead of schedule, a win-win for its investors, original lender, operating partner and refinancing lender, not to mention SHA itself.
