CASE STUDY ONE

Grand Villa of Melbourne

964 South Harbor City Blvd., Melbourne, FL 32901

Grand Villa of Melbourne was being operated as a hotel when it was acquired in June 2010. The company continued to operate it as a hotel while it was getting the renovation process permitted. Once renovations started, the hotel operations were discontinued. Renovations were substantially completed and opened as an assisted living community at the end of April 2011.

By the end of 2011, there was a census of 70 residents representing a 61% occupancy at the community. The average resident rate was $2,810. Based on the last three months of 2011, the community was operating at an annualized net operating loss of $180K, with an actual operating loss for the eight months of 2011 of $591K. By May of 2012, one year after starting assisted living operations, the community had a census of 98 residents, representing 93% occupancy. The average resident rate had increased slightly to $2,881 in May 2012. The actual net operating income for 2012 was $802K with a trailing three month annualized net operating income of $1,030K. For the trailing twelve months ended May 31, 2022, the community operated at a 93% occupancy, with a census of 152 residents. The average resident rate is $4,040 with a net operating income of $2,110K.

The community was originally purchased for $4.5M. The cost of the initial renovations to convert the property to an assisted living community was $3.2M. Since that time, the company has invested an additional $7.6M into the property. Most of that investment was related to the special purpose memory care building that was built next to the main building at a cost of $5.0M. The memory care unit consists of 26 units and was opened for operations in December 2015.

The total cash investment in the property is $7.1M. The partners have received distributions of $12.9M over the course of the investment. Based on the current market price of $29.0M, there is a remaining liquidation value of $13.6M. This would result in a total cash return of $26.5M on a $7.1M investment.

CASE STUDY TWO

Grand Villa of Pinellas Park

8980 49th Street North, Pinellas Park, FL 33782

Grand Villa of Pinellas Park was an operating assisting living community when it was acquired in June 2013. The community was underperforming. At the time of acquisition, the community had 73 residents, representing a 71% occupancy and a maximum functional capacity of 103 residents. The average resident rate was $2,249 per month, with an annualized net operating loss of $62K.

In May of 2014, less than one year after acquisition, the occupancy had been increased to over 90% with a census of 110 residents. The average rate had been increased to $2,556, with an annualized net operating income of $600K. Today, the community has a 93% occupancy with a census of 122 residents and a maximum functional capacity of 131 residents. The average resident rate is $3,730 per month, with an annualized net operating income of $1,002K.

The property was originally purchased for $3.8M. Within the first 18 months, significant renovations were made to the community totaling $1.9M. To date, the total investment in capital assets is $7.8M as the property was continually updated. The total cash investment in the project was $6.2M. To date, over $11.6M in distributions have been made to the partners. Based on the current market price of $15.5M, there is a remaining liquidation value of $6.4M. This would result in a total cash return of $18.0M on a $6.2M investment.