With a state-imposed operator transition deadline approaching, a regional owner successfully sold its 83-unit assisted living/memory care community in Chico, California, to another regional owner/operator with the help of Chad Mundy and Nick Stahler of The Knapp-Stahler Group at Marcus & Millichap. Built in 2001, Windchime of Chico features 120 licensed beds of assisted living and memory care with lakefront views, multiple common areas and a central courtyard. It was operated by a third-party manager.
However, it was not performing well, with occupancy below 60% and a substantial operating loss, in addition to the imminent operator transition. There was also HUD debt secured by the property. So, Mundy and Stahler brought in another owner/operator to take over operations via a lease-to-purchase structure. Despite the significant operating loss, the Knapp-Stahler Group was able to negotiate a slightly below market lease during the transition that allowed for its client to basically cover its debt payments. Not a bad deal for them. The Group also expeditiously secured HUD approval for the operator transfer and helped the seller avoid decertification.
