Cornerstone Real Estate Funds recently announced together with its strategic alliance partner and sub-advisor Servant Healthcare Investments, that it has finalized its purchase of Sherburne Commons, a 60 unit senior living community located on the island of Nantucket, MA. Cornerstone/Servant was selected as the winning bidder to acquire the community after its prior owner filed for Chapter 11 bankruptcy protection in 2008. Cornerstone/Servant negotiated a purchase price of $6.0 million with the community’s secured creditor (Sovereign Bank) pursuant to a plan filed and approved by the U.S. Bankruptcy Court. Sovereign Bank cooperated in funding operations during the bankruptcy process and closing costs and working capital requirements will bring the total transaction size to roughly $9.5 million. The town of Nantucket was also integral in the transaction in that it helped gain the necessary approvals to secure a long-term ground lease which was important in allowing the community to continue operating.
To manage the community, Cornerstone/Servant entered into an agreement with Riverwood Retirement Management, Inc., an operator experienced with continuing care retirement communities and other high-end senior living communities. As part of the transaction, Cornerstone/Servant and Riverwood have agreed to explore with the Town of Nantucket potential opportunities to partner on other senior services provided on the island.
According to “This not only represents a fantastic real estate opportunity to acquire a property well below cost, but it also helps keep the Sherburne Commons residents from being displaced from their homes, improves the quality of care services they receive and enhances their quality of life,” said John Mark Ramsey, Servant Healthcare CEO.
Sherburne Commons was built in 2007 and was owned and operated by a non-profit entity. The facility is an independent living, assisted living and memory care community consisting of 40 apartment homes in the primary building and 20 cottages on a 20 acre parcel of land. The apartment homes and cottages range from 355 square feet up to 2,405 square feet. It was built at a construction price of approximately $33.0 million dollars, proceeds of which were obtained from a tax-exempt bond offering. In 2007, the Community’s architects received the Best of Seniors Housing gold award from the National Association of Homebuilders recognizing the Community, as the “best of the best.”