Oxford, North Carolina is a 60 bed Assisted Living Facility. Our management company has taken over the management of this facility as of November 2017. Current ownership of this facility has no prior Assisted Living Facility operating experience and is not able to operate the facility themselves. The previous manager of the facility had experience in Assisted Living Facility operations but had no management experience and as a result, the facility has been poorly run. It is in fair physical condition. We plan a very light rehab of the facility to freshen its appeal.
We are under agreement to acquire the facility in early 2018. Due to the poor management and resulting limited cash flow, our purchase price is well below the potential value of the property as cash flow matters are corrected. We anticipate that corrections in two key areas of management will increase the value to average market for this size property in the state, resulting in a 33% increase in its value over our acquisition price.
The two areas that have most impacted the cash flow and current value of this facility are over-staffing and under-billing of the state for the services rendered to the residents. We have already begun addressing both of these areas through properly defining staff responsibilities, trimming staffing, and proper documentation of the services rendered to the residents so that the services can be properly billed. We anticipate that most cash flow matters will be resolved prior to our acquisition.
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