Cambridge Realty Capital Companies Senior Vice President Brent Holman-Gomez (top right photo) describes a scenario involving two under-performing nursing home properties in Southern Indiana.
The owner wanted to sell, and the company brought in to manage the properties under a consulting agreement, Transcendent Healthcare LLC of Fishers, IN, wanted to purchase the properties.
But it wasn't feasible for Transcendent to fund the transaction using conventional sources.
Holman-Gomez says Chicago-based Cambridge Investment and Finance Co., Cambridge’s investment and acquisition arm, was approached by Broker Chris Hyldahl (middle right photo) of Marcus and Millichap on behalf of Transcendent and the seller to see what might be worked out.
Under the new arrangement, the two investment entities agreed to lease the real estate to two separate limited liability companies, Transcendent Healthcare of Owensville and Transcendent Healthcare of Boonville.
The understanding between the parties was that Transcendent would nurse the properties back to clinical and fiscal health and keep any profits made from operations above the rent. By 2009, the properties had improved substantially.
With no new capital other than "sweat equity," the properties' performance allowed Transcendent to purchase the properties and obtain HUD-insured mortgages for both.
When the properties were refinanced earlier this year, Cambridge fulfilled the final end of the bargain by placing debt on the property that cost just as little as the original rental payments, Holman-Gomez noted."Effectively, the management company was able to move from lessee to a fee simple ownership position without seeing its real estate costs rise. And Transcendent’s fee simple ownership positions in the properties did not require the firm to make any new capital investment," he explained.
Contact:
Evan Washington
Phone: (312) 521-7603
Fax: (312) 357-1611
E-Mail: ew@cambridgecap.com
Twitter: http://twitter.com/CambridgeCap
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