Senior Housing

When the owner of this independent living community passed away, his estate hired a chief restructuring officer (CRO) to assist it in managing a pre-bankruptcy situation.

25900 Euclid Avenue
Privately Owned Real Estate Euclid, OH
Sale Price: $5,250,000

Business Challenge

When the owner of this independent living community passed away, his estate hired a chief restructuring officer (CRO) to assist it in managing a pre-bankruptcy situation. The CRO in turn hired the AW team to accelerate the sale of this asset. Specifically, the AW team was charged with selling the operating 196 unit senior housing business as well as the real estate (an approximately 178,000 sf building set on 19.39 acres). The goal was for the estate to be able to use the proceeds from the sale to satisfy creditors and thereby avoid filing for bankruptcy. If the AW team could sell the operating business plus the real estate for a sufficient dollar amount by a date certain, the estate could satisfy the creditors. If not, the AW team would be tasked with conducting a 363 sale/bankruptcy auction of this asset and it would likely sell for a much lower price.

The sale of this property was particularly challenging due to its location in an economically challenged area just outside of downtown Cleveland. Specifically, the primary market area was lower income and could not support the higher rents that could be achieved in other suburbs of Cleveland. Additionally, some anticipated regulatory changes relating to fire suppression requirements threatened to add substantial cost for any new owner.

Solution

The AW team engaged a consultant who specializes in senior housing to assist in developing a disposition strategy. Based on the close knit nature of the senior housing buyer community and the understanding that the most desirable senior housing assets typically sell in the off market period (versus on market), the AW team recommended a confidential off market sale.

Results

The AW team aggressively promoted this independent living community for sale to its nationwide proprietary database of brokers and investors. Within 30 days, the AW team had offers from qualified buyers around the country.

Ultimately, the best buyer for this asset was one that owned a similar facility nearby. Despite the regulatory changes that threatened to squash the sale to this buyer in the eleventh hour, the AW team worked diligently to keep the transaction on track. The AW team successfully negotiated a sale price that was more than sufficient for the estate to satisfy its creditors and the transaction closed in time for the estate to avoid filing for bankruptcy.

- CLIENT TESTIMONIAL
John Smith

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John SmithCEO & Founder - Porto - Porto