Seniors Housing
From Exit to Acquisition, Reviving an Assisted Living Memory Care Facility
One owner’s exit is another owner’s opportunity
When a portfolio sale creates opportunity for both the seller and buyer
The Background: Reimagining What’s Next
While everyone has been yearning for a return to “normal,” our very definition of normal has changed and looks quite different today than it did yesterday. The pandemic forced a new normal and resulted in a collective reassessing of life’s priorities. From relocation and resignations to rebranding and retirement, everyone has personal criteria for determining what their new normal will represent.
This narrative is no different in seniors housing and senior living. Everyone from owners and operators to frontline staff was stretched thin during the pandemic. For owners and operators on the cusp of a planned retirement, it is understandable that some are ready to implement their succession plans and pursue their next chapter.
When an owner or an operator decides to turn over the reins to someone else, it creates an opportunity for both parties, as was the case with an assisted living facility in California.
Value-Add Acquisition: A value-add involves a facility that may have poor occupancy and little cash flow at acquisition, but strong upside potential with a shorter timeline once the issues are addressed by the buyer (i.e., value-added to the facility or business model).
At Wilshire Finance Partners (Wilshire) we are in the business of financing opportunities, whether that’s to acquire a facility or to fulfill a succession strategy. We focus on providing bridge loans and capital strategies to finance strategic and value-add acquisitions in the $1 million to $10 million range, specifically when an acquisition may not meet traditional lending requirements.
The Challenge: Ready for Retirement
A second-generation owner-operator with more than 20 years as administrator at this facility, was interested in expediting his succession plan as quickly as possible. It was clear that the pandemic had taken its toll and he was ready for retirement. In this case, the exit strategy required finding a new owner-operator to take the reins.
While the facility wasn’t distressed, it fell into a status quo state for far too long. The facility had been simply surviving, rather than thriving. From the top down, everything about the community was stale. Without regular improvements and capital reinvested into the building, there was no room to adjust resident rates, so occupancy fell flat. Because of that, this storied facility became an afterthought in the marketplace, often overlooked for newer facilities and amenities nearby.
This scenario created an opportunity for Wilshire’s client, who saw the potential and recognized that the facility would benefit from the infusion of a fresh perspective and a face lift. It was an opportunity to inject new life into a facility yearning for attention, while sprucing up the appearance and deploying fresh marketing and community relations activities.
