Municipal Capital Appreciation Partners

Investment in Nine Healthcare Facilities

MCAP identified and acquired nine assisted living facilities in Virginia between December 2004 and January 2008. The purchase prices were attractive, the facilities had room for expansions and they were located in ideal markets. MCAP has invested $14.7 million as of the Third Quarter of 2012.

Strategy

  • Replace the existing management company with Commonwealth Assisted Living, an affiliate of MCAP, and institute organizational efficiencies.
  • Renovate the facilities and reposition them within the market
  • Add or enlarge Alzheimer’s Memory Care facilities and make additional expansions
  • Exchange interest in facilities for newly issued municipal bonds
  • Work with purchaser to credit enhance bonds with FHA or FNMA insurance
  • Sell bonds for long term capital gain

Value Added Actions

  • Secured $17 million bank financing for eight facilities
  • Secured $1.2 million acquisition financing for the ninth facility and $3.8 million to refinance debt on an existing facility
  • Refinanced initial $17 million loan and received $6.5 in additional proceeds
  • Secured $14.8 million Fannie Mae refinancing on two existing properties, which provided $2 million in proceeds
  • Reborrowed $4 million from bank loan
  • Repositioned facilities in the market
  • Initiated staff changes at facilities
  • Added to managerial staff at Commonwealth Assisted Living
  • Extensive renovations at all facilities and addition of Alzheimer’s Memory Care services at eight facilities.

Results

  • As of the Third Quarter of 2012, MCAP operates and owns all nine facilities, and the return has exceeded MCAP’s total investment. Through improved operations and expanded services, the appraised values of the nine facilities, as of the Second Quarter of 2012, are 139% higher than MCAP’s acquisition cost.