Utilizing its extensive investment experience in the seniors housing business, Fremont Realty Capital formed a joint venture to acquire and reposition a portfolio of 24 assisted living communities.  The investment capitalized on cyclical and secular trends favoring investment in existing assisted living communities, a non-traditional real estate sector.  The successful venture exemplifies Fremont Realty Capital’s ability to identify and work with highly skilled and leading operating partners that can implement and execute cyclical and secular investment strategies.

In October 2002, Fremont Realty Capital partnered with C.P. ’02 Pool, LLC to form Fretus, acquiring a portfolio of 24 assisted living communities containing in excess of 1,600 residential units.  The portfolio was master leased to Emeritus Corporation, one of the largest national operators of assisted living residential communities. At the time of investment, the portfolio enjoyed excellent geographic diversity across six states, 13 metropolitan areas, and 24 submarkets in the Sunbelt and Midwest, but was underperforming.  Occupancy levels and average operating margins throughout the portfolio were below market averages for competing properties.  In addition to making an investment ahead of a cyclical recovery in the senior housing market, Fremont Realty Capital’s investment capitalized on the favorable secular trend of a growing population of seniors needing senior housing.

The venture improved the performance of the portfolio through immediate enhancements to management, marketing, operations, unit pricing and the addition of special care units for residents with dementia in a majority of the communities.  This coupled with the turn around in the senior housing sector, as anticipated by Fremont Realty Capital in making the investment, and excellent operational acumen of the master lessee operator, resulted in significant growth in occupancy and rental rates led to a near doubling of net operating income from investment inception.  The result was an extremely attractive return on the investment, and one that far exceeded the original proforma.