May 21, 2009

Formation Capital purchases Memphis facility for $7.3 million

U of M-Area Nursing Facility Sells for $7.3 Million

The Wesley Highland Manor senior nursing facility at 3549 Norriswood Ave. near the University of Memphis has sold for $7.3 million to FC Highlands LLC, a single-purpose entity related to Alpharetta, Ga.-based Formation Capital. The sale closed May 11; the seller was Wesley Highland Nursing Homes Inc.

The 56,913-square-foot facility sits o­n 1.37 acres at the southeast corner of South Highland Street and Norriswood Avenue, just west of the University of Memphis campus. The Shelby County Assessor of Property’s 2009 appraisal is $3.6 million.

The transaction also included a pair of vacant lots o­n nearby Watauga Avenue. The properties back up to Wesley Highland Manor.

Michael Jones signed the trust deed as manager of FC Highlands. Jones, chief operating officer for Formation Capital, said the facility provided a “very nice physical plant, a very nice location and a good opportunity for us to serve the community.”

The transaction included an assignment of rents and leases, and FC Highlands also took out a $9.4 million loan o­n the property through First Bank.

Jones said the 30-year-old building, which underwent some renovations in 2005, is in good shape, although some improvements are planned.

“We will spend some money at the property to upgrade aesthetically,” Jones said. “I know our operating partner is talking about short-term stay rehab facility or facilities within the building. We’re still evaluating our options but we do plan o­n spending some capex (capital expenditure) dollars at the property.

“We’re excited to have closed o­n the property. We think it’s a wonderful building and it’s a nice addition to our portfolio.”

Health Services Management Group LLC, based in Cleveland, Tenn., will operate the facility. The company also operates Ashton Place Health & Rehab Center and Mid-South Health and Rehabilitation Center in town.

As for other acquisitions in Memphis, Jones said Formation Capital continually keeps an eye o­n senior housing facilities that would make valuable assets.

“We are actively in the market,” Jones said. “Whether we can find something in Memphis or not is to be determined.”

Source: The Daily News o­nline & Chandler Reports