Headed by former Brookdale Senior Living (NYSE: BKD) chief John Rijos, CPF Living Communities is acting on its previously announced plans to invest $250 million in senior living properties over the next few years, following the company’s recent acquisition of a 350-unit facility in Topsham, Maine.
Specifically, the company plans to grow by acquiring senior living communities, including those that are distressed or underperforming. The investment, however, goes beyond the $250 million in equity CPF intends to invest in the sector, as it plans to use that equity to acquire more than a billion dollars worth of senior housing properties with leverage in the coming years.
CPF Living Communities’ purchase earlier this month of The Highlands of Topsham for approximately $37 million is among the first transactions undertaken by the company, a subsidiary of Chicago Pacific Founders.
Before acquiring The Highlands, the independent and assisted living community was operating at 88% occupancy, slightly lower than the industry average of 90.5% in the fourth quarter, according to the most recent available data from the National Investment Center for Seniors Housing & Care (NIC).
In the three months that CPF and its partner, Minneapolis-based Grace Management—which CPF acquired a majority interest in last year—have been under contract at The Highlands, they have worked with the local management team at the community to bump current occupancy to 97%.
The run from 88% to a 97% occupancy rate, Rijos said is the result of CPF’s “secret sauce” in leveraging pent-up demand in the area and targeted marketing to active prospects.
Over the next three years, CPF anticipates it will invest in anywhere between 25 to 30 communities, most of which will be along the lines of 100- to 125-unit facilities incorporating either a combination of independent-assisted living or assisted living-memory care, Rijos tells SHN.
The Highlands of Topsham is on the larger side of CPF’s targeted investments.
With 350 units of independent, assisted living and memory care, The Highlands is the one of the largest senior living communities in Maine. The community’s 75-acre campus also includes 150 estate homes, several historic mansions and a Town Hall Village that dates back to the 1800s.
Entering into a 50/50 joint venture with Sea Coast Management, the largest senior living developer in Maine and the seller of The Highlands, CPF will complete the final phase of construction at the campus, which is converting Town Hall Village into four senior living rental apartments.
In addition to the Town Hall conversion, which is slated to begin next month, CPF also plans to renovate the “Scribner House,” a home built in 1840 that was once occupied by David Scribner, a shipmaster, local community leader and Deacon of the Topsham Baptist Church.
Redeveloping the Town Hall and restoring Scribner House to its original 1800s look will cost approximately $1.25 million, Rijos said. CPF is still debating how Scribner House will be used and what needs it will serve within the greater campus.
As part of the ongoing construction at The Highlands, the venture between CPF and Sea Coast will also see to the development of 11 estate homes on the campus. Depending on the custom build-out, these residences will be marketed at asking prices between $300,000 and $400,000 each, Rijos said.
Construction is expected to take place over the next 18 months to two years on these projects, as the company continues its investment strategy and deploys its $250 million pipeline over the next three to four years.
While future deals have yet to be disclosed, CPF does offer a hint as to its next project; the company has signed a purchase and sale agreement for a “high profile” independent and assisted living community in Sun City, Ariz.
Written by Jason Oliva