ISL Success Stories
The ISL story of success is most poignantly demonstrated in case studies of turnarounds and new development projects over recent years.
Right Side of the Tracks
In 2003, a purpose-built new property located in the Inland Empire of Southern California had consistently experienced lackluster results for more than three years under management by one the largest senior living companies in the country. The property averaged 65% occupancy and disappointing results. The owners needed relief from low financial returns.
They decided to bring ISL in as the operations management company. ISL quickly identified a demotivated team. They did not believe in their product and lacked marketing focus.
They believed that their property was located on the "wrong side of the tracks" and would never be successful. Turnaround was initiated by infusing the team with confidence and passion for their product and service to residents.
A marketing focus now consistently results in above 95% occupancy. That focus also identified opportunity to convert one wing of the property to memory care, which closed the back door to residents seeking higher levels of care.
Today the property delivers over $112,000 net operating income each month.
Operations Optimized
In 2006, an owner group brought four underperforming properties in its portfolio to ISL for review. With the decision to transition the properties to ISL management, a rally for targeted results was immediately launched. Swift transition began with site visits by each discipline within the ISL team. Opportunities for change at the properties were quickly identified and action plans were launched. Each property presented a unique mix of opportunities, including community leadership, expense management, census development, rate
adjustments, employee morale and training, resident care assessments and state licensing. Within 18 months of ISL operation, net operating income increased 39.55%.
Applying a 9-cap, the portfolio value increased more than $16.2 million.
Catch-22
A converted hotel property in a prime market in Southern California was performing with lackluster results. It was suffering from a poor physical plant. Due to all-inclusive rates, revenue was not maximized. Rental rates were low and not competitive in the market. There was also an expense control opportunity. Net operating income was only $35,000 per month. The property was suffering from a Catch-22. Needed capital improvements were postponed for profitable results which hindered potential new residents from moving into the property. With ISL management, a plan was executed to maximize rate opportunities and control expenses. In return, the owners agreed to a partial refurbishment. The strategy was successful turning a low return into $138,000 net operating income per month. With the operational success, ISL brought a qualified buyer to the owners.
The owners executed their exit strategy, which resulted in the sale of the property for an increased sales price of $6 million.
Expense Management
An 89-unit memory care community in the Pacific Northwest was transitioned to ISL management in 2005. At that time, the property consistently peaked at 95% occupancy, but still did not meet its debt service and the owners were feeding cash into the operation every month. From the day the ISL team stepped in, not one more dollar of owner capital was infused. Successful turnaround was accomplished by implementing expense controls. The property now averages $125,000 net operating income per month and maximizing revenue.
Since ISL's operation of the property, the owners have refinanced the project twice and realized more than $4.8 million in distribution.
Profitability for Equity Fund-Owned Portfolio
In 2005 a portfolio of equity fund-owned properties in Texas and New Mexico had been managed by one of the largest senior living companies in the nation for several years. The management company had failed to deliver results for the fund's exit strategy. When ISL became the operations manager, the fund's goal was to drive net operating income to poise the properties for sale.
This was accomplished in only 12 months and resulted in the sale of all three properties at the targeted prices.