Just a bit over 10 years ago, in August 2013, TJM Properties made an announcement. It was selling 15 of its senior living communities.
The decision, at the time, was part of the Clearwater firm’s move away from the segment and into hotels.
But as so often happens, things change.
TJM, founded in1979 by real estate entrepreneur Terry McCarthy, has gotten back into the retirement home business in a big way, purchasing five senior living facilities over the past several months. And as fate would have, the five were part of the batch sold in 2013.
“There was no rhyme or reason to that timing other than a good opportunity close by that we're familiar with,” says Matt McCarthy, the firm’s director of operations and Terry's son.
Opportunity is an important word when discussing what TJM is doing today and what it has done in the past. Not to say the firm isn’t strategic. You don’t survive in the business for 44 years without being smart.
But TJM’s big sell off in 2013 and its buy back in 2023 share a common trait: the decisions were made because the timing was right, and the deal was right.
“Given our prior history with all of these properties, and still having a regional team in the area, made the decision to jump back into the industry a no brainer,” McCarthy says. “Given our past knowledge and success with these communities previously, we felt we could not pass up the opportunity.”
Back in 2013, TJM owned 19 senior living facilities and was in the market to expand.
McCarthy says the company first got into the sector in 2001. it started buying a few facilities every year and as it grew its portfolio, it fine-tuned its operations.
Things were progressing well, and the company was bullish on the sector when in 2013 McCarthy and his partner at the time, Dale Schooley, attended the National Investment Center for Senior Housing & Care conference in Chicago.
The plan, McCarthy says, was to meet up with colleagues, get some valuations and to try to find deals.
“We were looking to purchase,” he says. But seeing what some of the properties were bringing got him and Schooley thinking that maybe it was time to change their approach.
Back in Clearwater, they began to analyze and price-out the portfolio — something they hadn't really thought of before because of the constant growth.
“The valuations at the time were enough, and blew us away enough, that we said, ‘Maybe we’re for sale,” McCarthy says.
Later that year TJM sold 15 of 19 properties to a REIT for $220 million, according to Business Observer archives.
With the facilities mostly gone, the firm shifted its focus to buying full-service hotels and to this day owns four — one each in Atlantic City, Syracuse, Columbus, Ohio, and Philadelphia.
Even though it got into the hotel business, TJM never fully exited senior living. After the sell off, it held onto four properties for a while and today maintains three of them.
But for the most part, McCarthy says the hotels were keeping “our hands full and we were focusing on other stuff.”
Then, an opportunity presented itself.
The firm had a chance to buy Bayside Terrace in Pinellas Park, a three story, 162-bed facility that it sold in 2013.
If TJM was going to buy another senior living facility, this one made sense. It was close to the firm’s Clearwater office and between two others it already owned, the Oaks of Clearwater, and the Princess Martha in downtown St Petersburg. And while its support staff had shrunk after 2013, being local helped.
“We figured if we were going to pick up another one, that one made perfect sense,” he says. It’s “regionally based and we have the team right here, even though we haven't really had as much of a regional presence as we used to.”
The firm bought Bayside Terrace in February.
It closed on two other facilities June 1 and then two more July 1.
After nearly exiting the sector a decade ago, TJM has bought a total of 934 senior living facility beds in Pinellas Park, Winter Haven, Lakeland, Brooksville and Lake Placid in five months.
“Now we've just been settling in because after not growing for a little while on this side of the company. We have our hands full for sure,” McCarthy says.
Despite taking on a lot of new responsibilities, he says the decision to get back into these particular properties was “kind of an easy” one. For one, they were familiar with the facilities and knew what it took to run them.
And, while he won’t disclose what TJM paid for the properties, the deals, he says, made financial sense as well. He says they were all 30 cents to 50 cents on the dollar "from when we sold, which is a similar valuation, price point, to when we purchased them in the early to mid 2000s.”
McCarthy says for right now TJM is satisfied with where it is with the communities it has bought. The focus is to get them running smoothly.
Since the purchases, he says, there have been cash infusions, unrepaired storm damage has been fixed, improvements have been made to the exterior and sales teams have been empowered to make sure rooms aren’t sitting empty just because work needs to be done.
The idea, he says, is that by being a small office with a hands-on approach, TJM can do what’s required to run a senior living facility. That can be tough for larger companies and REITs based elsewhere.
In TJM’s case, the smallest facility has 150 beds and the largest 324 beds, and each is within an hour drive of the office. That’s it’s sweet spot, McCarthy says, allowing it to make sure each one is being run well and has what it needs.
“For us, it's not much of a science. It's people. People like to like where they live. So, you make it inviting, and you have personal touches.”
But, this is still a business and the company’s approach has proven itself to be profitable once before. The hope is it will again.
If the opportunity presents itself, of course.
“We quickly went from not really focusing on growing that side of the company to growing it real quick,” McCarthy says. “And jumping back in, knock on wood, will hopefully repeat history.”
Louis Llovio is the commercial real estate editor at the Business Observer. Before going to work at the Observer, the longtime business writer worked at the Richmond Times-Dispatch, Maryland Daily Record and for the Baltimore Sun Media Group. He lives in Tampa.