Municipal Capital Appreciation Partners

Investment in Four Healthcare Facilities

In 2002, MCAP purchased four assisted living facilities, whose size and location allowed for both physical expansion and organizational improvements.

Strategy

  • Closely monitor the weekly occupancy and leasing reports for the facilities, allowing MCAP to analyze leasing progress, changes in rental rates and future projections of occupancy
  • Expand two facilities
  • Obtain FHA insurance and/or bond financing
  • Sell bonds for long term capital gain

Value-Added Actions

  • Sold one facility after research showed a renovation would not provide an adequate return
  • Formed management company, Commonwealth Assisted Living, to manage and reposition the facilities
  • Invested in capital improvements, including the addition of Memory Care Facilities, resulting in substantial increases in net rental income
  • Refinanced facilities several times, returning capital to investors

Results

  • Interim refinancing distributions and net operating income from property operations were the primary sources of investment return.
  • Developed an alternative exit strategy to provide investors with several options. Most investors chose to receive a distribution in-kind of an interest in a new Virginia limited partnership, thereby retaining their ownership interest in the assisted living properties and deferring taxable gains and benefitting from future growth