JD Stettin, Managing Partner of Carnegie Capital, helped finance the acquisition of a non-performing senior care campus in Dallas, Texas. The debt will also help cover around $9 million in planned renovations at the 119-bed campus. Built in 2001 with a recent 2018 renovation, Crystal Creek at Preston Hollow features a range of care levels including skilled nursing, assisted living and memory care. At the time of marketing, occupancy in both the seniors housing and skilled nursing was rapidly declining. Due to the skilled nursing component not being licensed to accept Medicaid, the campus consistently struggled to lease up the beds with Medicare & private pay residents, which resulted in negative operating margins.
Evans Senior Investments ran a confidential marketing process, targeting a small group of seniors housing buyers. The process yielded several offers, with Marcus Investments ultimately being selected as the buyer. Vitality Senior Living was retained by Marcus Investments to operate the community going forward.
The buyer plans to spend over $9.0 million renovating the community to replace 60 SNF beds with 30 additional assisted living and memory care units. Renovations are set to begin following the close.
Carnegie Capital secured an $8.0 million bank loan, with a five-year term and two years of interest only. That covers more than 110% of the purchase price and 70% of the purchase price plus the planned capex. The interest rate was floating over Prime, and the borrower can prepay without penalty after Year 3. The bank also accepted a corporate guarantee in lieu of personal guarantees.
