POINT LOMA SENIOR LIVING - LoopNet€¦ · Golden Living Point Loma is a 113 bed (going to 125 bed) senior living facility in San Diego built in 1975. Historically it provided only

POINT LOMA SENIOR LIVINGSALES PACKAGE

3223 Duke Street

San Diego, CA 92110

10/16/17

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GOLDEN LIVING POINT LOMA - SENIOR HOUSING IN SAN DIEGO, CA

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SUMMARY

In 2015, Robert Gould, owner of Menlo Management Company (MMC), bought a property

with two other investors at 3223 Duke Street in San Diego. The property is a senior citizen

assisted living and memory care facility. The property currently nets $75,000 per month, or

$900,000 per year before debt service. The owner of the property is 3223 Duke, LLC. The

property will net in excess of $950,000 per year by the end of the year. In 2018 it will net in

excess of $1.3 million.

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OVERVIEW

Golden Living Point Loma is a 113 bed (going to 125 bed) senior living facility inSan Diego built in 1975. Historically it provided only assisted living care.

In June of 2015, the owners formed a new company, 3223 Duke LLC, andchanged management. The investors believed that the facility was not optimizedto its fullest capacity and that a new management team, with approximately 30years of combined experience in managing senior housing facilities, couldincrease cash flow.

Therefore, as part of their turnaround plan, the facility is being reconfigured toprovide additional services. Combined with the expertise of the new team, andrenovations to the facility, Golden Living Point Loma will currently provide thefollowing levels of long term care:

❖ASSISTED LIVING | 95 beds (Existing)

❖MEMORY CARE | 18 beds currently, going to 60 beds (Existing)

Increasing these types of care will increase the revenue per resident, since

Memory Care commands much higher monthly revenue and it will reduce

turnover since after age 80 most residents need a facility that can provide

memory care.

SAN DIEGO COASTLINE

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PROPERTY INFORMATION

❖OVERVIEW: The property is located in a prime location that is less than one milefrom the Pacific Ocean and San Diego Harbor.

❖ADDRESS: 3223 Duke Street, San Diego, CA 92110

❖DESCRIPTION: 113 bed licensed senior living (going to 125 beds) built in 1975and remodeled within the last 5 years. Additional renovation is inthe works to expand the care type.

❖STATUS: The current owners own/operate three facilities. They are expandingoperations, with a fourth facility in 2018.

❖NET INCOME: $900,000 NNN, going to $1.3 million in 2018.

❖BUILDING SIZE: 30,832 sq. ft. building.

❖GROUND LEASE: Expires April 30, 2049.

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STREET MAP

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AERIAL MAP

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AERIAL MAP

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INTE

RIO

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EWS

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FLOOR 1

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FLOOR 2

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CURRENT STATUS

Golden Living Senior Living in the Point Loma Area of San Diego is a 113 bedassisted living facility. New management took over in June, 2015. At the time thatmanagement was changed, 62 beds were occupied (55% occupancy). Since then,new management has filled over 20 beds (72% occupancy), and has completed(January, 2016) construction of a Memory Care wing. Beginning in the fourth quarter2017, phase 2 of Memory Care will begin construction.

The Memory Care Wing has 18 beds. It is 90% leased. The Memory Care expansion(phase 2) will create 12 beds and will take approximately 3 months to fill up.

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RENOVATION PLANS

12 rooms (18 beds) on the second floorhave been converted to Memory Care.Construction was completed in mid January2016. Licensing for Memory Care hasbeen obtained and the facility will expandthis product type in 2017 - 2019 to 76beds. By the end of 2018, the entiresecond floor will be Memory Care.

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HISTORY

Golden Living of Point Loma was an assisted living facility with only 62 residentswhen current management took over in June, 2015. Today there are 82 occupiedbeds and the gross income is up over 60%. A Memory Care facility was added in2016. It is now full and is in the process of being expanded by 12 beds. Eventually(within 15 months), the upstairs will be converted to memory care and will eventuallyhouse 76 residents. The average monthly income for Memory Care is currently$3,392 per bed and the new tenants are paying in excess of $3,500 per month. Thegoing rate for Memory Care in the area exceeds $5,000 per month.

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ASSISTED LIVING WAIVER (ALW)

The State of California has set up an assistance program for low income qualified aged and disabled residents. There is a waiting list for housing under this program. To date, 16 Golden Living residents have come from the program, with one to three new residents signing up monthly. ALW has a waiting list.

None of the competing San Diego projects are active with ALW as they are seeking a higher rent than ALW will pay. The reason for this is because these projects, with the exception of Westmont at San Miguel Ranch, are 98% +/- full.

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ASSISTED LIVING WAIVER

Background

In March 2006, Medi-Cal began paying forassisted living care for qualified aged anddisabled residents of Los Angeles, Sacramentoand San Joaquin counties under the AssistedLiving Waiver (ALW). A key goal of theprogram was to enable low-income, Medi-Caleligible seniors and persons with disabilities,who would otherwise require nursing facilityservices, to remain in or relocate to a communitysetting in a Residential Care Facility for theElderly (RCFE) or public subsidized housing . Theprogram was converted into a five-year federalwaiver program as of March 1, 2009. Pendingfinal approval, the waiver program will berenewed through February 28, 2019.

Scope of Program

The ALW is currently operating in thecounties of Alameda, Contra Costa, Fresno,Kern, Los Angeles, Orange, Riverside,Sacramento, San Bernardino, San Diego,San Joaquin, San Mateo, Santa Clara andSonoma. However, some of the counties inwhich the ALW program is operating do notcurrently have any RCFEs participating inthe program.

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ASSISTED LIVING WAIVEROverview

Participants in the ALW have access to the following services:

Assisted Living Services: The following is a list of some of the services that must be provided to ALW participants. These services may be provided in an RCFE, or by a licensed Home Health Agency to residents in public housing.

Assisting in developing and updating an individualized care plan for each resident

Personal care and assistance with activities of daily living

Laundry

Housekeeping

Maintenance of the facility

Providing intermittent skilled nursing care

Meals and snacks

Providing assistance with self-administration of medications

Providing or coordinating transportation

Providing recreational activities

Providing social services

Care Coordination: These services include identifying, organizing, coordinating and monitoring services needed by participants .

Nursing Facility Transition Care Coordination: These services help transition participants from a nursing home to the community.

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Eligibility

Participants must be eligible for full-scope, no share-of-cost Medi-Cal benefits and require a nursing facility level of care. The latter requirement is key to eligibility because the program is designed to serve people who would otherwise need nursing home care. Contracted Care Coordination Agencies use a standardized assessment tool to determine the clients need for nursing home level of care. The project serves people age 21 and older.

People living in other counties can receive services if they are otherwise qualified, willing to relocate to one of the participating counties, and work with an enrolled care coordination agency.

Care Planning

Using the standardized assessment tool, care coordination agencies will determine the level of care and services necessary for each participant.

Care coordinators will establish individualized service plans for each participant, including services that are covered by Medi-Cal and services funded by other sources. Participating RCFEs must develop a care plan to implement the service plan for each resident.

A licensed, Medi-Cal certified home health agency will implement care plans for participants who live at public housing sites. In this setting, the services provided are called Assisted Care.

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Payment Rates

Participants pay for their room and board, and Medi-Cal pays for their care and services. In 2015, for participants with monthly SSI income of $1,145.00, the room and board rate is $1,014.00. For participants with income of $1,165 or greater, the room and board rate is $1,034.00. Medi-Cal pays the RCFEs and home health agencies for five levels of care and services, with daily rates ranging from $52 per day for tier 1 to $200 per day for tier 5. RCFEs and home health agencies cannot negotiate the services to be delivered or the payment rate.

Choosing a Facility

Participants select the facility or provider of their choice. Care coordination agencies will inform participants about available facilities and providers. RCFEs are allowed to reject a participant. However, once a facility admits someone, it must provide necessary services and adapt services as the person’s needs change. All providers are expected to deliver all four levels (tiers) of care.

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HOW TO APPLY

To begin the application process, contact he Care Coordination Agency in your county: http://www.dhcs.ca.gov/services/ltc/Documents/CareCoordinationAgencies.pdf

For more information about the ALW program, contact: http://www.dhcs.ca.gov/services/ltc/Pages/AssistedLivingWaiver.aspx

Assisted Living Waiver

Department of Health Care Services

Long-Term Division

1501 Capitol Avenue, MS 4503

PO Box 997437

Sacramento, CA 95899-7437

Phone: 916-552-910520

http://www.dhcs.ca.gov/services/ltc/Documents/CareCoordinationAgencies.pdf

http://www.dhcs.ca.gov/services/ltc/Pages/AssistedLivingWaiver.aspx

Q3 Q4 Q1 Q2 Q3 Q4

Occupancy 82 84 86 88 90 92Ordinary Income/Expense

Income 650,000.00$ 676,000.00$ 703,000.00$ 731,000.00$ 760,000.00$ 790,000.00$

Total Income 650,000.00$ 676,000.00$ 703,000.00$ 731,000.00$ 760,000.00$ 790,000.00$

Gross ProfitExpense

Automobile Expense 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$

Bank Fee 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$

Capital Improvement 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$

Education and Classes 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$

Food & Groceries - $6/day 44,250.00$ 45,250.00$ 46,250.00$ 47,250.00$ 48,250.00$ 49,250.00$

Insurance Expense 19,000.00$ 19,000.00$ 19,000.00$ 19,000.00$ 19,000.00$ 19,000.00$

Marketing/Referral Fees 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$

Landscape 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$

Gloves & Diapers 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$

Repairs and Maintenance 3,000.00$ 3,000.00$ 3,000.00$ 3,000.00$ 3,000.00$ 3,000.00$

Meals & Entertainment 400.00$ 400.00$ 400.00$ 400.00$ 400.00$ 400.00$

Professional fees -$ -$ -$ -$ -$ -$

Rent Expense -$ -$ -$ -$ -$ -$

Small Tools and Equipment 400.00$ 400.00$ 400.00$ 400.00$ 400.00$ 400.00$

Payroll Taxes 35,000.00$ 35,000.00$ 35,000.00$ 35,000.00$ 35,000.00$ 35,000.00$

Payroll 265,000.00$ 265,000.00$ 265,000.00$ 265,000.00$ 265,000.00$ 265,000.00$

Supplies 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$

Miscellaneous -$ -$ -$ -$ -$ -$

Utilities 30,000.00$ 30,000.00$ 30,000.00$ 30,000.00$ 30,000.00$ 30,000.00$

Land Lease 10,634.00$ 10,634.00$ 10,634.00$ 10,634.00$ 10,634.00$ 10,634.00$

Management Fee 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$

Property Taxes 12,500.00$ 12,500.00$ 12,500.00$ 12,500.00$ 12,500.00$ 12,500.00$ Total Expenses 437,284.00$ 438,284.00$ 439,284.00$ 440,284.00$ 441,284.00$ 442,284.00$

Net Ordinary Income 212,716.00$ 237,716.00$ 263,716.00$ 290,716.00$ 318,716.00$ 347,716.00$ 850,864.00$ 950,864.00$ 1,054,864.00$ 1,162,864.00$ 1,274,864.00$ 1,390,864.00$

4% Quarterly Growth with Memory Care

Annualized

Golden LivingProfit & Loss 2017/2018

2017 2018

GOLDEN LIVING

PROFIT & LOSS EXPLANATION

Average Rent When Purchased In May 2015

(No Memory Care was offered)$1800/Resident/Month

Current Average Assisted Living Rent

(66 Residents)$2400

Current Memory Care Rent (16 Residents) $3400

Current Rent Combined $2650

Our goal is to have each roomgenerate a minimum of $5,000per month. We currently have 23rooms that were originally sold asprivate. Those residents will beoffered an option of retainingthe private room at market rate($5,000/month per room) oraccepting the semi-private status.

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OUR FUTURE PLAN

❖The memory care average will increase from $3,392 to $4,000.

❖Convert 23 private rooms to semi private adding 23 potential new residents (notices began being delivered in September 2017).

❖Average new resident income is $3,000/assisted living resident.

❖$4,000/memory care resident.

❖Increase the number of memory care rooms from 12 to 18 within 90 days. (The department of social services approval is required for this change and has been applied for.)

❖Memory care will increase by 4 additional beds by converting the existing dining and recreation area to resident rooms and converting the second floor activities room to dining and recreation.

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THE OVERVIEW OF THE GOLDEN LIVINGPOINT LOMA INCOME STRATEGY

As of June 2017, 12 Rooms on the second floor have beenconverted to Memory Care. Over the next 12 to 18 months,depending on how long it takes to move the current population ofAssisting Living tenants downstairs, the entire second floor will beconverted to Memory Care.

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MEMORY CARE

Phase 1: A Memory Care Wing was completed in 2016. It is comprised of 10 rooms and has 20 beds. Phase 2 is underway.

Phase 2: We are moving people currently in the 7 rooms identified as Phase 2 of the new Memory Care phase upstairs. These people are currently in Assisted Living and will be moved to other Assisted Living beds downstairs. The new Memory Care wing will open in late 2017. We expect to be 90% leased in Phase 2 (4 beds a month), by the end of the 4th Quarter. We will fill the beds using the Assisted Living Waiver program (state sponsored low end housing) within and market rate tenants.

Phase 3: We will begin Phase 3 of Memory Care upstairs which will comprise 10 more rooms in the 2nd Quarter 2018. We will again move current Assisted Living people downstairs.

Phase 4: The remaining units (8 rooms) upstairs will be added into the Memory Care wing in the 4th quarter. We will convert the existing lounge section into 2 new rooms, bringing a total of 10 rooms to Phase 4 of the Memory Care wing. New Memory Care beds are currently being leased out at $4,000+ per bed. We will move the remaining upstairs Assisted Living people into the downstairs space in the 4th Quarter or 1st

Quarter of 2018 depending on availability.

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CURRENT OWNERSHIP GROUP MENLO MANAGEMENT

COMPANY

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MENLO MANAGEMENT❖WHO WE ARE

The Menlo Management Company is run by RobertGould. Mr. Gould has over 40 years of experience incommercial real estate acquisition, development, andportfolio management.

President and current owner Robert Gould has been withthe company since 1975. Together with a staff of thefinest property management professionals available,Menlo Management has a proven track record ofsecurity and professionalism that is only poised to grow.

❖WHAT WE DO

We aim to offer an unparalleled experience in thecommercial real estate sector. In the currentproperty climate, only the most professional andknowledgeable management is able to effectivelytraverse the varied property management landscape.Menlo Management adds value to its tenants by providinga stable, ideal environment for their businesses to thrive.MENLO MANAGEMENT is headquartered at

750 MENLO AVE, MENLO PARK

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ABOUT US

ROBERT GOULD, President

Mr. Gould has been with the Company since 1975, serving as President since 1986.In his almost 40 years of real estate and banking experience, Mr. Gould has gainedexpertise in every aspect of real estate investment and management. This experienceincludes the development or management of 18 neighborhood shopping centers, 10office projects, and 14 residential projects, all in Northern California. Previously, Mr.Gould was an officer and board member of the Pacific Real Estate Investment Trust.Earlier, he was with Barclays Bank PLC, and the Real Estate Management Division ofShell-Mex & BP Ltd. He was a founder of Menlo Securities, Inc. and a member of theNational Association of Securities Dealers. He is a licensed California Real EstateBroker, and holds a Ph.D. degree from Bryn Mawr College.

Our team is a group of highly experienced and proven professionals who provide personalizedservice with an entrepreneurial focus and flexibility.

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MENLO MANAGEMENT COMPANY

FINANCIAL SUMMARY

Menlo Management controls and manages in excess of $80 million in propertiesthroughout California. Annual management fees per annum exceed $1.4 million withnet income of $500,000. In addition, the company receives additional fees forfinancings and sales. The investor pool for these properties exceeds 200 investors,many of whom have been with Menlo for over 20 years.

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MENLO MANAGEMENT PROPERTIES

➢MT. SHASTA SHOPPING CENTER

134 Morgan Way, Mt. Shasta, CA 96067

➢VILLAGE OAKS SHOPPING CENTER

1185 Arnold Dr., Martinez, CA 94553

➢WESTGATE RALEY'S SHOPPING CENTER

3685 Mt. Diablo Blvd., Lafayette, CA 95695

➢DESCO PLAZA 1

3685 Mt. Diablo Blvd., Lafayette, CA 94549

➢MENLO PARK CORPORATE

750 Menlo Ave., Menlo Park, CA 94025

➢CORTE MADERA PLAZA

21 Tamal Vista Blvd., Corte Madera, CA 94925

➢POINT LOMA

3223 Duke St., San Diego, CA 92110

➢67th BUILDING

4850 67th St., San Diego, CA 92115

➢HOSPITALITY HOUSE

5400 Kiernan Ave., Salida, CA 95368

MANAGED BY FRANCES CLAUDE,

Asset Manager

MENLO MANAGEMENT COMPANY

MANAGED BY ELIZABETH ROADS,

Asset Manager

ASSOCIATED SENIOR CARE PROPERTIES

MANAGED BY Menlo Management Capital, LLC

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GROUP 1 GROUP 2 GROUP 3

A. 134 MORGAN WAY, MT. SHASTA, CA GROUP 1

STREET VIEW & AERIAL

B. 1185 ARNOLD DR., MARTINEZ, CA GROUP 1


C. 601 WESTLAKE CENTER,DALY CITY, CA

GROUP 1


A. 3685 MT. DIABLO BLVD.,LAFAYETTE, CA

GROUP 2


B. 750 MENLO AVE., MENLO PARK, CA GROUP 2


C. 21 TAMAL VISTA BLVD.,CORTE MADERA, CA

GROUP 2


A. 3223 DUKE ST., SAN DIEGO, CA GROUP 3


B. 4850 67TH ST., SAN DIEGO, CA GROUP 3


C. 5400 KIERNAN AVE., SALIDA, CA GROUP 3


RESUMEGEORGINA RODRIGUEZ RAMIREZ, OWNER, CO-MANAGER,3223 DUKE, LLC

Ms. Ramirez manages and is the owner of this company as well as two other assistedliving/memory care facilities.

❖4850 67th Street, San Diego, Ca. (48 beds)

❖5400 Kiernan Drive, Salida, Ca. (80 beds)

Ms. Ramirez is overseeing, along with Michael Maloney, the building improvements on3223 Duke and the total renovation of 4850 67th Street.

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RESUMEDAN SALCEDA, MANAGING DIRECTOR & OWNER,GOLDEN LIVING HEALTH MANAGEMENT, INC.Mr. Salceda has over 16 years of acquiring, operating, and arranging equity and debtfinancing for senior housing properties:

❖1999-2004: Part owner/minority shareholder, San Bernardino Retirement Living, 200 bedSSI assisted living facility.

❖2004-2009: Executive Vice President, Senior Care Management (SCM). Grew company fromfour assisted living facilities to 24 properties and over 3,000 beds. Arranged all acquisitionsand equity and debt financing for the company. Raised $2M in equity and private loans.

❖2006-Present: President and largest shareholder, Golden Living Point Loma, 113 bedassisted living facility.

❖Mr. Salceda has a J.D. from the USC Gould School of Law and over fourteen years ofexperience in land entitlement and redevelopment prior to entering the senior housing industry.

❖Currently owns and manages Golden Living Point Loma, San Diego.

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PROPERTIES UNDER MANAGEMENTKIERNAN VILLAGE ASSISTED LIVING, SALIDA, CA

An 80 bed Assisted Living/Memory Care facility. Golden Living Health Management willassist in the management beginning March, 2017. The property has begun the process forlicensing for congregate care, acute care in December of 2016.

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PROPERTIES UNDER MANAGEMENT4850 67TH STREET, SAN DIEGO, CA

A 40 bed facility that will be rehabilitated beginning in May, 2017. Plans are being drawn andthe process has started to obtain licensing for 20 memory care beds and 24 congregated livingbeds. It is located in a pleasant residential neighborhood near the University of San Diego.

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CARE PROVIDERS

1. Villa Bonita Senior Living, Chula Vista

2. Atria Collwood, San Diego

3. Sunrise of Bonita, Chula Vista

4. Sunrise of La Jolla, San Diego

5. Paradise Village, National City

6. Merrill Gardens at Bankers Hill, San Diego

7. Westmont at San Miguel Ranch, San Diego

8. Golden Living of Point Loma, San Diego

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FORMER FACILITIES MANAGED

CORONADO RETIREMENT VILLAGE299 PROSPECT PLACE, CORONADO

AERIAL

FORMER FACILITIES MANAGED

ARCADIA RETIREMENT VILLAGE607 W. DUARTE RD. ARCADIA, CA

AERIAL

MARKET STUDY SPREADSHEET

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CARE FACILITIES REVIEWS ADDRESS & CONTACTASSISTED LIVING PRICING

(MONTHLY)

MEMORY CARE PRICING

(MONTHLY)"MOVE IN" FEE

DO YOU DISPENSE

MEDS? EXTRA FEE?

1. VILLA BONITA SENIOR LIVING **3434 BONITA RD., CHULA VISTA

JAMIE 619-678-1851$2395 - $3295 $2995 - $4995 $2,000 INCLUDED

2. ATRIA COLLWOOD ***5308 MONROE AVE., SAN DIEGO

SHARON 619-286-3583$3100 - $4800 $3500 - $7200 $2,000

DEPENDING ON DOSAGE

$300 - $500

3. SUNRISE OF BONITA **3302 BONITA RD., CHULA VISTA

MICHELLE 619-470-2220$3450 - $5370 $4350 - $6330 $1500 - $2800

DEPENDING ON DOSAGE

$420 - $720

4. SUNRISE OF LA JOLLA ****810 TURQUOISE ST., SAN DIEGO

MEGAN 858-488-4300$6300 - $8370 $3750 - $5700 $3,500

DEPENDING ON DOSAGE

$420 - $690

5. PARADISE VILLAGE **2700 E. FOURTH ST., NATIONAL CITY

MISSY 619-475-5050$2795 - $6400 $4500 - $6500 $2,000 INCLUDED

6. MERRILL GARDENS AT BANKERS HILL ***2567 SECOND AVE., SAN DIEGO

NANCY 619-752-1099$4375 - $6475 N/A $5500 - $7500 INCLUDED

7. WESTMONT AT SAN MIGUEL RANCH **2325 PROCTOR VALLEY RD., CHULA VISTA

MELISSA 619-730-9403$3145 - $7045 $5300 - $6200 $2,000

DEPENDING ON DOSAGE

$395 - $700

8. GOLDEN LIVING OF POINT LOMA ***3223 DUKE ST., SAN DIEGO

MARIA 619-222-1109$2250 - $3500 $3000 - $4500 N/A $150

LONG TERM CARE STATISTICS(TODAY)

❖12 million Americans require long term care.

❖6.7 million are over 65 years old. This care is either provided by facilities like Point Loma, Golden Hill Assisted Living, or by families.

❖There are 7.2 potential caregivers (ages 45 – 64) for every person aged 80 or older.

❖There are 40 million residents aged 65 or older, 13% of Population.

❖There are 1 million assisted living beds available today.

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