St Mary’s hospital redevelopment

Tomahawk, WI

The Developer owns and seeks to redevelop the former Sacred Heart Hospital facility, containing more than 90,000+ square feet, on a full city block in the heart of Tomahawk, Wisconsin, a community serving about 50,000 people.  Redevelopment will occur in 3 phases over an 18 month period into senior assisted living facilities, and allied businesses, include a new nursing school (which holds provisional accreditation pending completion of the building) and nurse placement program (nurse registry, which holds letters of intent at present) The City of Tomahawk has provided tax abatement, accelerated permitting and changes in zoning to make this project happen.   The State of Wisconsin is actively pursuing a funding subsidy for the project as well.  A number of studies, both private and public, show that this redevelopment will likely be opened at capacity.  Letters of intent, long term leases and a resident waiting list for the assisted living facility currently exists—prior to completion of Phase 1a redevelopment.

Early stage redevelopment (Phase 1a) has begun.  The building is in good condition and the Developer has a permanent office in the building at present.  The Developer is seeking immediate investment of a million dollars in equity to restructure equity ownership in this enterprise, and to open the facility to the “allied businesses” by the end of 2008, complete initial licensure of the assisted living facility and provide space for about 40% of the current waiting list of residents.

Initial equity investors will receive a 70% ownership in the real estate via a title holding LLC, and will also receive 70% of net income after debt service of any income from the building.  These equity interests may be arranged via a 1031 exchange, or by capital contribution.  Initial investment interests may be subject to repurchase by the 30% owners, upon request of the investor after operation.  Developer will provide at least an annual 20% ROI priority return (on a nonrecourse basis) to the initial investor after the project opens.  Initial projections suggest returns could be in the 50% range.  In addition, initial investors will be allowed management roles in the project if desirable.

In addition, the Developer is seeking up to three million dollars in investment capital as bridge funding, in the unlikely event government tax credits, loans or other programs are interrupted or delayed, to complete Phases 1b through 3, to produce the completed facility by mid 2009, with space for over 100 assisted living residents, allied County and City offices, and other businesses who have expressed written interest in leasing at the site.  This $3M in capital will be paid out of a refinance event likely to occur in year two of operation.