A large (67,000 square feet) and old (built-in 1964) Residential Care Apartment Complex (“RCAC”) in Milwaukee, Wisconsin sold after falling on hard times. Known as St. Clare Terrace, it is made up of 59 units in a large building that sits on 2.4 acres. At the time of sale, occupancy was just 64%.
The property was placed into receivership after the former not-for-profit owner/operator defaulted on their outstanding bonds. The receiver appointed BAKA Enterprises to manage the community until it was sold. Annualized revenues were just under $1.1 million, which would put average monthly rates close to $2,400. Before debt payments, there was a negative cash flow of about $175,000.
Next Steps
The buyer is a group based in Wisconsin with seven other communities across the state. This background should help the buyer, especially with a low-cost basis. After the due diligence period, the buyer received a $500,000 credit for improvements to the physical plant, including repairs that the previous owner knowingly deferred.
The community will be rebranded under the name Willow View and the buyer will be investing significant capital to renovate and upgrade the building. The purchase price was $2.25 million, or $38,100 per unit, so there appears to be a lot of flexibility on how much is invested after the closing, and maybe even some funds to enhance the curb appeal.
Ryan Saul, Bradley Clousing and Joe Young of Senior Living Investment Brokerage handled the transaction.
